The way I've seen it play out time and time again is the most expensive staff are let go first when money starts to run low. If you've never been let go, have you considered you simply might be undercharging?
1. First are the flight risks. They're likely to split soon after a layoff event anyway, so might as well factor them in.
2. Second are functions that would be otherwise crippled or left unable to do their job well (eg: if you fire a flight risk manager and her team is working on a project that will no longer be needed, might as well cut the rest). Smart companies do the whole layoff this way.
3. Performance based. Highly paid employees are generally highly paid for a reason, and their value in terms of revenue impact generally exceeds their pay. Judgement calls will be made about performance; if the company is old school and still doing performance reviews, they'll be taken into account, but they're most likely incorrect anyway.
Politics will always come into play, but people tend to take layoffs more seriously than either hiring or promotion, and make a huge effort to make the best decisions they can to leave the company with a team that they believe works.
As to why lay off instead of waiting for them to quit, probably because you've been told to reduce headcount now, not at some indeterminate future date.
If someone does play the aggressive pattern I'd highly recommend saving up a lot of cash so you can weather longer spells of unemployment. This is especially true if you intend to be selective in who you work for after getting laid off.
Full disclosure: at my first job, I went from 50K to mid-100's in less than 4 years. My current total compensation is in the high 2xx as an individual contributor. I would be surprised if that were under-market.
Perhaps you've worked for employers when they could afford to be decent - which is not quite the same thing.
Being fired for being too expensive is a very real thing. Ask anyone laid off by IBM recently, or who was put on a PIP and fired for non-performance a few months before qualifying for retirement and a company pension payout.
Tangentially, talk of non-productive employees always reminds me of this:
http://archive.computerhistory.org/resources/text/DEC/dec.be...
My guess is that you're working contract at a very lucrative rate? Or perhaps you're at some kind of financial firm that offers a hefty bonus :-D
1. https://www.glassdoor.com/Salary/Google-Senior-Software-Engi...
I'd love for this to be common knowledge.