Economist: During a recession, a company can cut personnel costs either by laying off some employees without reducing the wages of remaining employees or by reducing the wages of all employees without laying off anyone  Both damage morale, but layoffs damage it less, since the aggrieved have, after all, left
Thus, when companies must reduce personnel costs during recessions, they are likely to lay off employees
Some companies will be unable to make a profit during recessions no matter how much they reduce personnel costs.