Why do companies Lay off workers when the could reduce their work week or wages???
Maybe because it’s a slow bleed that is painful for everyone. And rather than work for less money, it would be better for the affected employees to be free to look for a better paying job elsewhere.
Civil Service rules passed by Congress virtually makes what you suggest impossible. Built in rules like if you change the job classification of a Federal Employee to a lower pay grade, they still get the same salary for 3 years, so it does nothing to cut pay. Then there are the appeal rights whenever pay is reduced. This isn’t based on Union contracts, this is Civil Service Law.
A lot of companies do reduce wages before laying people off.