Some truth to this for sure, but I think the bigger elephant in the room in these discussions is always commute times.
So many people have really substantial commutes, not because they have just decided they want to live far from employment, but because housing near their employment is often unavailable or financially out of reach.
This comes down to failures around housing development and community planning.
In a well planned communitiy, business and industry should be able to house their workers close to work. That will usually mean that appropriate housing at various price points will have to be found in neighbourhoods where people can walk, bike, or take a short ride of public transport.
This is much more commonly available in small cities and towns, but anyone who has had that kind of situation will realize what a burden it lifts. In large cities it's often impossible to get a situation like this. It's a shocking difference, years ago when my kids were young, we moved from a situation with a long commute, to my husband having a 10 minute bus ride, that dropped him almost door to door. He could walk in a pinch, for that matter. It added a huge amount of family time and core time to his day.
In the town I work in now, a lot of people in my workplace will go home for lunch!
This is something that would require a lot of thought and change to make happen, however. But it's much more of an issue than an employer saying they want the job the are paying for to be done in a particular place. In fact, more people using WFH is likely to make the problem worse.