I'm not sure how "farm this out to the 1099's" is a solution to this problem. You're shedding the expense either way, and the same group of people who are frustrated about the layoffs now are also frustrated at organizations who find loopholes to use "contractors" instead of "employees" to avoid benefits, taxes, etc.

But, the bigger issue is, knowing that you should give this to contractors would have required the same foresight that would lead to you not hiring anyway. In other words, if you knew enough to know that you shouldn't hire full time people because you might lay them off, then you probably knew enough to not do this in the first place...so you wouldn't have to let anyone go.