Cost to manufacture is not more than wages, but cost to purchase a good is always more than the total cost of labour needed to produce it, so long as profit exists.
The money isn’t free so much as redistributed from taxation elsewhere, think of it as the same as subsidising industry except only to the workers of that industry (instead giving it to owners and expecting the savings to trickle downwards). You could also consider it an income tax rebate with more fine-grained control of who gets it.
It doesn’t seem particularly ground-breaking of a concept; I see the value in investing money into necessary but unprofitable industry though my concern is that if you subsidise wages of a business with a profit incentive, management may lower wages to compensate.
It definitely has its roots in Debian, but when you need to use that weird closed source application for work, if it has a “supported” (for a given value of support) Linux distro it’ll be Ubuntu.
I personally prefer straight Debian myself, or something entirely different but when asked for a recommendation by friends it’s Ubuntu.