> The employees who stay get paid more than if everyone stayed

As someone who survived numerous rounds of layoffs, that's not true. The employees who stay get to work more (under more job security pressure) but that's about it. It's not like the wages of the workers who get laid off are reallocated as bonuses for the remaining employees.

Google pays a large amount of stock based comp, so at least that part of their wages will likely go up, at least in the short term.

It isn't the same sized pie in both situations. There's shit that won't get done by my team anymore. I just sent an email to a stakeholder group telling them that I have to kill a valuable project.

It isn't like if Google fired 95% of people that comp for the remainder would hit $10m a person.