With the job market still being as strong as it is, cutting pay like that would be a disaster.

If my employer told me they were cutting my pay by 20% one morning I would already be out doing interviews by the afternoon.

With layoffs you at least control what talent you are giving up in exchange for a smaller payroll. With across the board salary reduction, your most talented employees will get up and leave and the people who remain will be demoralized and poorly motivated.