Cutting wages would have been better than layoffs some are better without the job at the lower pay, because they can get another one, or because they have other income or wealth or support to fall back on, but they have the option of quitting.
You get more job losses, and thus also more fear of job losses, when wages are sticky. That the stickiness of wages is a problem in such situations is accepted by economists of all different "schools", they just have different opinions about how to deal with it, from the Keynesian's talking about more government spending (or in some cases tax cuts), to the monetarists arguing for increasing the money supply (in the most extreme cases with quantitative easing), to the Austrians arguing that the private sector needs to adjust and recover from its malinvestment...
Hoover and FDR didn't just face problems from the relatively "natural" stickiness of wages, they pushed them up, at a time when corporations couldn't afford them, this reduced employment, and production, thus making people poorer, and likely to consume less. |
