In a union (and possibly in a sane non-union) environment, in that situation you get demoted and can bump someone below you, who can then bump someone below them, until the lowest rank gets eliminated (or a vacant position just becomes un-vacant).

Makes sense when managers are hired from within and retain the ability to do the job of the people they were managing. And 10000000% makes sense from a peter principle point of view: https://en.wikipedia.org/wiki/Peter_principle

Definitely does not work when managers are parachuted in from elsewhere or in a fungible "a manager is a manager and can manage any team". That happens in government a lot.