I disagree with this conventional wisdom and think it stems from wishful thinking on the part of hiring companies. With all things equal money becomes a secondary concern, but few developer are going to take significantly less for a position. Conversely if a company where to place an ad stating that they are paying 120% of the best market rate available, they would have quality developers lined up around the block. If money where the last concern then every developer would be working on their own problems, because they would find them far more interesting than what most companies have to offer. When I see this kind of advice, I cannot help but suspect the rest of the advice. More honest advice would be don't be cheap more than any other hire (with maybe the exception of sales) a good developer can earn his keep 10 fold, as such expect to compensate them well.

The other issue I see is there is no mention of finding remote developers. For the last few years I have assembled several all remote teams with members in Louisiana, Florida, NY, the valley, Australia and so on. With all the SaaS and Skype there is little need for a development team to be collocated. Finding talent is much easier when you are drawing on a global pool of talent. When we hire, we never hire based on compensation and always hire based on the best talent we can find wherever they are, unless their rate is astronomical we pay above market rate if they request it.

This makes tons of sense. Apart from Forrst and GitHub (and Dribble), good old fashioned 1st or 2nd degree connections can be gold in non-coastal centers for tech and design talent. My co-founder is located in Pittsburgh and has begun to see lots of interest from other founders who want to key into the scene there (CMU, etc) and he is very happy to help, because well, it's cool to help startups, but also it's a forcing function for him to engage with top talent in his own backyard.

I'm willing to bet if most of us went into our contacts we would find a "hub" like my co-founder in cities like Pittsburgh, Austin, places in upstate NY, etc, who would be keen to help out.

PS: Do people find the job board at Dribbble useful?

I do not understand why so many companies are still stuck in the "stone ages" (perhaps "factory ages" is more apropos) when it comes to sitting everyone down in the same physical location. Communication is relatively simple nowadays, so you can still "see" the person if need be (e.g., Skype). Our Team has been successful with email and a few tele-conferences. I recently traveled to one of our regional offices (unfortunately most ppl in the company still work at these), and sat in some cubicle wondering "aren't we more civilized than this?"

End rant. If you want good ppl, then PLEASE consider hiring remote workers.