Because employees are not represented by unions? If 100% of a person's work is going to be useless, why should he get a 20% pay cut, or rather, 80% pay? And if 100% of a person's work is useful, he'd immediately start heading for the exits if he got a 20% solidarity cut against his will.<p>This is seen very clearly in sales departments, which simply do not have such notions of solidarity. It's usually a zero-sum game where if you do not bring in a sale, your rival in the organization will and pocket the spiffs, commissions, and grow his rolodex to take to the next gig. Imagine giving a top salesperson a 20% solidarity cut. He will be out the door in a heartbeat, and take his friends with him!<p>Startups cut employees when they want to conserve cash (when funding environment becomes much tougher and there's more competition for the same amount of money, investors start calling the shots with participation and other measures to protect their stakes and get better deals), or when the business itself goes into negative growth territory. In the former, R&D is cut while sales investment is held the same (or perhaps even increased), whereas in the latter, R&D is cut deeply and sales (and marketing) investments within the company shoot up. Either way, R&D gets a hit.<p>EDIT: If the company has product, it is almost always R&D folks that will be canned first, because the company can temporarily hit the brakes on improvements and new products/adjacent market penetration activity, while growing sales to get out of the mess. It is almost unheard of for sales folks to be fired if the growth is still positive or close to zero, because that would be an instant death sentence for the company.