If it was all contract work it'd be better, probably. Devs would have representation, like actors or film directors, and they'd sign up for a project at a premium in the understanding that they're getting paid for the downtime after the project ends.
The kinda shitty part is that everybody is a full time employee but you still get frequent layoffs after projects end. That's the worst of both worlds, especially in the US where there are basically zero mandatory protections. In places with actual labor regulations it's... kinda expensive and self-defeating.
It is true that the layoffs get reported but the hires do not, so a lot of devs get rehired fairly quickly or start new projects and studios, so it always seems like there are devs getting kicked to the curb when there's a baseline of churn and cycling. That said, 2023 has been a very, very, very shitty year for the games industry for a number of reasons. Which sucks, because it's been a great year for games themselves.