No idea why they would ignore such direct existential danger for their companies.

Risk Management (that's what they named the LLM after they fired the people responsible for that) is probably telling them that there will be a huge pool of willing applicants to work for less money than the people they let go, that talent is fungible, etc.

The real fun part is when people start asking for hiring bonuses to come in and unfuck the company slop. They won't start trying to hire people until they start losing customers which means the quality of the product is lower than it was when they took on the customer. If it takes them longer to fix their codebase than it would for a competitor to start from scratch and outdo them on marketing or advertising, then they'll go under.