That's a management judgement call. Some times they get it right, sometimes not. I saw management blow it back in the mid-'90's at a company I worked at then. We hit a tough patch and our management went beyond our typical multiple rounds of layoffs, and started instituting pay cuts across the board. Oh boy...less pay for more work performed.
We were told that we should just suck it up...we were lucky to have a job. Over the next year, they had
huge attrition in their mid-to-senior-level engineering staff. It hurt their ability to execute programs. Life's a beotch.