It makes their wallet lighter but there is nothing a CFI can do unless he is with the student that is going to make a flight safer.
I can empathize with your position, but I'd have to respectfully disagree, having seen the policies in action.
Any student pilot solo flight started with an in-person review of weather, performance, navigation log, inop equipment, NOTAMs, etc. The student briefed the instructor, instructor made sure they didn't miss any important considerations. That's certainly an enhancement to safety, and added training value.
Instructor is immediately available to address any questions during the preflight. I believe students are far more likely to ask questions that they
should be asking if you're nearby, versus calling you on your time off. The same is true when they're parked at an airport 100 miles away. If they know you're monitoring them and on the clock, they're a lot more likely to reach out to you, with a justifiable expectation that you'll answer the phone.
As a company, we employed flight following for non-local flights. Many operators do this (as you know, 121, 135, and others voluntarily). Any student or instructor/student pair leaving the area was required to flight follow with someone at base. This was usually a simple text along the lines of "Landed KABC" and "48 gal on board. Leaving KABC for KDEF". This is a much more responsive system than FAA VFR flight plans. For a solo student, the instructor has seen the navlog, and knows precisely when the student lifted off the airport. A well-briefed and attentive instructor is an excellent resource if an aircraft is overdue. It's
absolutely a safety enhancement to have someone monitoring your flight.
An added benefit is having a pilot at the airport that can come pick you up if you end up grounded (has happened), or bring you a mechanic (has happened), or arrange to have the fuel card brought to you that you forgot (has happened). If the worst happens, you have a person that can initiate the Emergency Action Plan. If necessary, that person can begin an airborne search along your flight path himself, or arrange for it with another company plane that--due to company flight following--he knows is in the area, or coordinate it with ATC.
So, yes, for the reason above, I feel that it does enhance safety quite a bit. This was especially true for our school, which was in a mountainous area, had a lot of barren terrain between airports, and poor radar coverage down low.
How is it "work" if the CFI is doing nothing but standing by.
If I'm sitting around doing nothing I'm not working. And no I shouldn't get paid for sitting around doing nothing.
Noble, but I think most of the aviation industry would disagree with you. As a professional pilot, if an employer or contract client is stopping me from doing whatever the heck I want to do, wherever I want to do it, then I am "working", and I will be paid.
In fact, I just finished a 10 day contract. I only ended up flying three hours during that time, but you bet I was collecting a day rate to be immediately available. Nine of those days I did precisely zero flying. No significant contingent of the industry finds fault in that. It boggles my mind that so many people expect donated labor or donated availability from those professional pilots that happen to be using the privileges of a flight instructor certificate on top of their commercial certificate.