The company won't actually be able to identify these 10% you mention, or when it does they might keep them because they are cheaper than you.
In the end you are looking at good people or even yourself being affected by layoffs. I'd take the pay cut over the risk of losing my job or well performing coworkers.
And I was affected by a layoff just recently, but layoffs don't really hurt good engineers. You just find another job. My whole team was nuked back in November. But I found a new job within a month, and at a 25% pay increase. So taking a cut would have been a terrible deal. They say the market is bad, but I think that just means bad for bad engineers. Whereas quality really didn't even matter a year ago.