Is it more fair that the person in Kentucky has a much higher quality of life than the person in New York
Quality of Life isn't objective. People who choose to live in New York probably wouldn't have a better quality of life living in Kentucky and vice versa, even at the same pay, because so much of what defines quality of life for those people is tied up in the things that New York or Kentucky can uniquely offer.
While we all know that folks have preferences, your salary determines whether or not you can live the life you want. A salary that grants you a comfortable life in Kentucky with a decent amount of spending money (especially if you buy a cheap house) won't give you the options in New York. In some salary ranges, housing costs alone are going to do it and will be the difference between a stressful, penny-pinching life and living with some cushion. This is the objective area of quality of life.
Even between, say, Chicago and NYC is a huge difference if the salaries are equal (because housing prices are cheaper in Chicago, and the quality of cities isn't going to be so different).
If you mean "New York City", then please say that when comparing it with another state, because I can tell you from first-hand experience that large swathes of Upstate New York have a similar cost-of-living to much of Kentucky.
location-based quality of life is mostly wherever you have been long enough to make family and friends, except for a small window of young flexible adults.
Quality of Life isn't objective. People who choose to live in New York probably wouldn't have a better quality of life living in Kentucky and vice versa, even at the same pay, because so much of what defines quality of life for those people is tied up in the things that New York or Kentucky can uniquely offer.