This is ignoring two things:

1) The $125,000 is a starting salary, which will go up substantially if the hire proves successful. There are lots of future earnings to consider when working in this type of position.

2) The psychological perception of the work and income. Does the person realize or care that he is working 50 hours a week @ $25/hour, or does the person care that he is making $125,000 annually? I am not a behavioral economist (IANABE?), but I'd have to imagine that this is a huge factor -- the salary vs. hourly mindset.