If they are laying off their poor performers so they can hire the laid-off from other companies, wouldn't they just be trading lemons?

The strategy probably works regardless of macro economic conditions assuming you let go of "lemons" at a greater rate than you hire them, but it seems easier when the market isn't being flooded. You could maybe argue that layoffs at other companies are reducing the proportion of lemons, but it's not clear to me.

I think reducing headcount gives an immediate outlook of lower expenses without affecting revenue in the medium term. Tons of employees at these companies aren't working on projects that will have monetary significance within several years if ever.