That seems incredibly short-sighted. Even if you're right and they leave when the economy picks up, when exactly do you think that's going to happen? It could be another four or five years into the future... or it may not happen at all.
Completely agree. I've taken plenty of contracts and jobs that were below my usual rate not because I had no other options but because it was interesting work or I really liked the team/people.
Most folks will look at a job first as income, but also consider the work being done, the people around them, etc. Job satisfaction has a lot going for it, too, and many companies know it - they know they can pay less than normal wages and their employees will stay because of the work environment and the way the company functions as a whole.
I always say hire the best person you can for any job, and then don't give them a reason to leave!
Exactly. It's the NFL draft scenario - take the best player available, regardless of what your needs are, because, well, they're the best player available.