On the other hand, should the distance a employment candidate lives from work be material to the companies employment decision?

This only seems like a difficult question if it's one worker having the conversation with their employer. The moment it's one employer vs. all their workers, the answer is obviously yes, with the employer left footing the bill.

Why would the employer have to foot the bill when they could just fire all their workers and hire people who live closer? Because our housing market is hell and nobody lives closer. Either businesses will have to pay for commutes directly by treating them as hours worked, or they'll have to pay for them indirectly by relocating their offices to places where workers actually live.

Given how sprawled we all are, the latter will be the more expensive option. At least, until sufficiently large businesses lobby governments to subsidize the costs of relocating their offices... ugh.

Maybe employees deserve compansation for commutes,

If companies charge to have their workers commute to work locations to do jobs for them, then yes, they should.

Basically the flip side of the coin of, for example, a plumber coming out to your house to fix a leaky pipe charging you for him to actually come out to the house regardless of any work done when he gets there.

and maybe a company changing their in-office policy should include compensation to make up for the impact to the employees lives.

Well a company should make sure compensation is satisfactory enough for the best talent to do the best work for them.

Should an employees housing options be dictated by the employer?

Only if employees can dictate where employers have their offices at, to make their commuting life easier.

On the other hand, should the distance a employment candidate lives from work be material to the companies employment decision?

I don't think a company would want to restrict themselves by using that as a criteria, because someone who is much better for the position but lives farther away may be excluded for the person who lives closer who cannot do the job as well.

Cost to employer is calculated based on many factors, the capability of the worker doing the work is one of them.

It’s a nuanced debate.

Actually, I'm big on nuanced conversations, but I really don't think it is in this case, I think what you been expressing is more strawmanning than actual real world scenarios.

In the military, housing on post is free, and those who chose to live off post receive a housing allowance. You could say this is a comparable arrangement. But the military also dictates where you live, and you don’t have quite the freedom as you do with a private employer.

I don't think you can use this as a justification for the points you've been expressing, as a military and a corporation are two very different things, and the responsibilities of persons to each of them is very different, and not comparable.

Huh, just something else to think about.

Well, real conversations are always better than just attempts to redirect the narrative, that's for sure.