Money is just 1 small part of the equation. People are motivated by other things such as freedom (ability to work remotely, set their own hours, set their own holidays), the ability to learn, respect (treating them like a partner/integral part of the business) etc. I haven't read it, but I've heard that Drive by Dan Pink[1] does a really good job at explaining this.

An example of this would be my Hire an Aspiring Entrepreneur strategy, which you can read about here: http://42insights.com/hire-aspiring-entrepreneur/.

The $4/hour part refers to hiring overseas contractors on places like oDesk. Again, you can get some fantastic people here by designing a position that gives them what they want in other areas. For example, contractors on oDesk are constantly looking for work, so giving them a permanent position where they are guaranteed a set number of hours per week is a great way to attract high quality candidates. I also wrote about this on my blog: http://42insights.com/how-to-hire-a-virtual-assistant/.

[1] http://www.amazon.com/gp/product/1594484805/ref=asliss_tl?ie=UTF8&tag=freeagentnati-20&linkCode=as2&camp=217145&creative=399349&creativeASIN=1594484805

Psychologists now classify motivation as intrinsic vs. extrinsic - are you doing something because you want to, or because someone told you to/offered you something? Importantly, for creative tasks like knowledge work, extrinsic motivators like bonuses are weaker than people's concern for a job well done. Many studies in a variety of situtations have shown the counterinuitive result that adding bonuses to a task makes people perform worse, give up quicker, and not do it on their own initiative.

The book Drive by Daniel Pink is an excellent walk through the research.

Especially on the $4/h part.