Re: willing to pay them enough
Probably a bit more subtle than that in some cases. The magic number isn't salaries it's "head count". If a business can tell the stock market they're reducing head count by getting rid of X,000 staff the wise heads in the stock market nod approvingly, stock price goes up and so does the value of manglements' stock options. Of course the work still has to be done so the redundant staff have to be replaced.
In other circumstances things are closer to reality. Work load isn't constant. To some extent a manager can smooth that out by deferring some work at busy periods but not entirely, especially if an important project comes along when everybody's fully committed. There's also the factor that staff availability isn't constant; people go on holiday [mp]aternity leave, get sick, retire, even die. Nobody's going to be able to staff at such a level that even minimum staff availability leaves enough bums on seats to cover peak demand. The flexibility of contract staff evens things out.
There's also a few cases where someone only needs particular expertise for very short periods at widely spaced intervals: I had one client where it was a matter of visiting for a day every few months - and occasionally dialling in to sort them out when they had an urgent mess.