> During recessions, employers tend to lay off rather than reduce wages
There's a good reason for that. I've seen both done. An across-the-board wage reduction means your most productive leave. A layoff is getting rid of the least productive.
I believe Germany has done the opposite. Unions have agreed to pay cuts so they wouldn't be let go. Part of the reason may be that wage levels are reasonably flat compared with the US, so the upside in switching jobs for a better paying one at a competitor is limited versus the hassle of doing so. In any case, it's an interesting alternative model which ensures stability for employees and employers alike.
There's a good reason for that. I've seen both done. An across-the-board wage reduction means your most productive leave. A layoff is getting rid of the least productive.