Labor's a really interesting input, because the quality can actually improve just by spending more on it. It's usually not at a 1:1 rate, but better paid people often do better work, just because they're being compensated better.

Then there's the added benefit of actually attracting more talented workers at those higher wages.

I thought about this a lot when I had a job in retail. We were paid slightly over minimum wage and I did approximately 4x the average amount of work, pretty much just because not working was way more boring than working. I was pretty sure that if they were paying double they could have attracted more people as productive as me and gotten just as much done with fewer workers for less money.