Now from a management point of view...
I have a guy who has worked for our company for over ten years. He started at $20K per year and, with annual raises of 5%, is now making nearly $34K per year. His position barely warrants that pay level (simple receiving) and he has already made comments about getting his raise at the end of the year as if it were automatic. While we aren't thinking about letting him go, I could replace him with someone costing about $8K a year less in a heart beat. At some point he will be seriously overpaid for his job and we will have to make a decision.
This employee has made no effort to make himself "more valuable" to the company. He does his job, but does not actively seek out new responsibilities.
Put yourself in the place of an owner/manager. Do you keep raising his pay? Do you stop raising his pay and let him leave? Do you replace him and save your company money?
There are two sides to every layoff...
I generally agree with you BTW.
Also, I'm in a position that's about to be outsourced. I work in computers - to me, it's utterly foolish to get rid of a core knowledge base for a business by outsourcing. I have 5+ years of experience, and I'm low on the totem pole - there are people that are going to be gotten rid of that have been yer 20-25 years. I'm trying to look at it from a managerial perspective, and I still can't see how it can positively impact a business.
Why not be upfront and proactive about the situation?
In other words, schedule a meeting with your employee and tell him that he is at the top of the payscale for his current position and that he needs to branch out with additional or different responsibilities if he wants to continue to grow with the company.
Ask him if he has any ideas for making his department more effecient or ways to save money. Usually, someone who has done a job for X numbers of years has noticed something that could be better.
Then give him some of those responsibilities. I think it's the best of both worlds. He gets the idea that there's no free ride and he also gets fair warning to improve the situation. Plus, if he takes advantage and branches out into higher level skills, the company has the benefit of someone who knows the operation from the ground up.
If not, then when layoffs come, it won't really be a surprise.
If companies were responsible stewards, this is what they'd do.