You'll also get more burnout on the remaining people, which will reduce productivity. It's a balancing act that really shouldn't be dismissed as "just fire anyone who's not productive enough; I'm sure that won't be a problem for the rest of the team".

I'm talking about firing the people who are basically doing nothing. They're likely a drain on everyone else already. You get rid of the dead weight, I personally feel morale will improve. Do you like knowing people are making the same salary as you, basically doing nothing? I know of cases where people were doing like 2 hours of work... a week.

On the one hand, the visceral reaction is "no, that sucks". On the other hand, that's 2 hours less work I need to worry about every week, which is better than nothing. So it entirely depends on how much work there is, and how much they're actually doing, since it's almost never actually zero. Someone doing 2 hours of work a week is not a drain, they are literally making other people have less work. A drain would create more work (which is certainly possible, but that's a different scenario).

My morale is determined by how much work I have to do, how supported I am by my bosses, and how much input I have on the work I'm doing. That's... really it. Unless someone else is causing me to have more work by being here, or making my job harder, or blocking my input, then I don't really care whether they're doing "as much work as me" or how much they're getting paid. And in that regard, firing them -- which would leave me with more work, as I'd have to pick up the work they were doing -- would lower my morale, not improve it.