Apparently what matters, for many workers, is the direction of any change in pay, far more than the actual level of pay. If so, then Bewley has not explained the anomaly after all. The answer is that any adverse morale effects from layoffs are far less serious than those produced by wage cuts. It's like soldiers. Pay cuts affect everybody.
Layoffs affect a small percentage of the employees.
The effect of a layoff on the morale of survivors is temporary, provided that they are taken care of. But his interviews uncover a great deal more. People who are interested in markets and the proper place of regulation have often been puzzled by the role of severance benefits. In theory, such benefits might well be offered by self-interested companies seeking to attract good workers. They might also be sought by self-interested workers, knowing of the possibility of layoff.