The short answer is because shit rolls downhill. For a longer and more nuanced answer, there's multiple factors to consider.
The main issue is that the company is trying to cut costs immediately. This is usually for two major reasons:
- Reassure investors to keep them from dumping the stock and driving down the company's value
- Save as much money as they can from their current stockpile for other projects still in development.
If the company goes under because it can't make payroll company-wide, everybody is doomed regardless. A gecko will sacrifice its tail in order to escape with its life. A crab will tear its own claw off to survive. A company will always cut staff to keep itself afloat.
The next factor is that each major experience level up a dev attains tends to be a geometric difference in productivity. [A large task that would take a junior dev two months to complete might take a mid-level dev one month and a senior dev only a week or two]. This is why senior devs are entrusted with the bigger and more critical tasks. Further, the typical quality of work that a senior dev produces is much higher than what you'd get from a mid-level or a junior. I'm a senior dev and I cost the team a large amount of money to keep, but paying for just me is still significantly cheaper than paying a pair of mid-level designers or three/four juniors.
The next factor is that most big layoffs come after a project has shipped. This is because a given project is at its maximum headcount right before it ships - you need all hands on deck during full production, building and validating all of the content in the game. There needs to be other projects in development to pay for those people after the game launches. If the game launches well, a significant portion of the team can stay on to do post-launch content and the others can join in-progress projects at the studio or at other studios owned by the publisher. In the case of a bad launch the post-launch content gets cancelled because there just aren't enough players to make building the post-launch content financially viable and the people who were supposed to build it have no new project to pay for their salaries.
There's also the factor of how projects have different needs at different times. You always need a core team to get a project off the ground - engineering who can put together the foundations of the game, design that can prototype and build core gameplay, art that can establish a new visual standard for a new game. But you likely don't need an army of designers to build content for a game that doesn't have any core gameplay yet, gameplay engineers to flesh out systems that haven't been designed yet, artists to model and skin characters that haven't been concepted yet, or QA to test content that hasn't been built yet. You need those folks when you're in production and all of the groundwork has been laid.
These are the nominal reasons why job cuts always start from the bottom - the juniors and mid-levels have the least to do when a game gets cancelled or a bad launch happens and the cost to keep them all adds up significantly. The fact that it also shields decisionmakers and middle managers is, of course, also in there. This is also why I never offer or expect loyalty to or from an employer, especially a large publicly-traded one. They will never sacrifice their own survival (or even advantage) to keep me, so I should never expect more than a business relationship from them that could end at any time.
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