why don't companies do pay cuts instead of lay offs?

Why would a demoralised employee work? Better to have none than have some.

You can upset 10 employees by letting them go or upset 100 by pay cuts.

because pay cuts are a big demotivator. People will crib and complain and reduce productivity. There wont be any gratitude. instead , fire a few, the rest will work harder trying to get into the good books of the manager. You can then reduce pay, they wlll work even harder.

People will stop giving output, also when people are fired support staff is also reduced like line HR, office boys IT department .

In my prev org, they tried this with varying salary cuts ranging from 10% to 50%, one by one people left including star performers

Pay cut for really under-performers is ok but if they do for all then it will be bad

Apart from the financial constraints [Layoffs vs pay cuts] of cost reduction, pay cuts usually lead to the top performers or the latter end of bell curve leaving [I do good work, I can find it elsewhere at the same pay easily] whereas layoffs can be performance based and can be made selective by nature [pay cuts being more org wide or tier based]. It’s true that layoffs are horrible for those afflicted and also created FUD for the larger org, but in comparison paycuts lead to a loss of your better/best employees, reduced productivity and are equally demoralising for the larger org.

The layoff are essentially to fund the increment for the good performers. If there is no appraisal, all good performers would find a job and leave eventually and company would be left with low performers

Sometimes it’s more about making the org leaner.

Not all employees contribute equally, I.e. some have much greater dependency. And that means you need to retain your 80% of team at expense of remaining team's salary

No appraisals= pay cuts