Compensation should be based on output. If hours translates to more output (like an assembly line worker or something) - great. Simply pay hourly and require minimum amount of hours (like 40) with options for "go-getters" to work more if they want. Plenty of jobs (like a lot of tech) should be based on "if you're producing what we need from you (or more if you want) we're happy" regardless of the hours.
How would you measure output? How do you measure "what we need from you"? As a software engineer a fair percent of my time was spent in collaboration that sometimes manifested itself in someone else's "output". Not advocating that hours are the best measure, but there does need to be an accounting of my time being available for others and not focused on my "output"
Story points can easily be translated to dollars. If an engineer and a product manager can agree that a story is worth 3 points, they can agree that it's worth, say, $1,500. Whether the work ends up taking 30 minutes or 30 days, neither party can complain because they both agreed on a price.