In addition to the issues everyone else has pointed out, unpaid volunteer mods give Reddit a lot of deniability.
If they switched to paid mods, they'd become much more strict on what content and opinions they allow, because to advertisers, things would switch from "reddit allows communities to moderate themselves and can't be expected to catch everything we don't like", where reddit can still get away with some amount of unfriendly content as long as it doesn't get too prominent, to "it's reddit's job to make sure that all content is advertiser friendly".
Similarly, if you have paid mods, what does that mean for subreddits which have the same topic, but were split over moderation disagreements? With volunteer mods that doesn't really matter to reddit, but if the mods cost reddit money, they'll want subs on the same topic to be consolidated, creating further friction and destroying communities.
If they switched to paid mods, they'd become much more strict on what content and opinions they allow, because to advertisers, things would switch from "reddit allows communities to moderate themselves and can't be expected to catch everything we don't like", where reddit can still get away with some amount of unfriendly content as long as it doesn't get too prominent, to "it's reddit's job to make sure that all content is advertiser friendly".
Similarly, if you have paid mods, what does that mean for subreddits which have the same topic, but were split over moderation disagreements? With volunteer mods that doesn't really matter to reddit, but if the mods cost reddit money, they'll want subs on the same topic to be consolidated, creating further friction and destroying communities.