[ido]

    I would happily give up any yearly bonuses and 
    possibly even a slight pay deduction (as a single 
    guy I don't have many expenses) in order to keep 
    a fellow teammate from being laid off.

Assuming the company isn't really hurting for cash you lay off people that don't contribute more than what they cost.

You can either let them go or I guess cut their salaries, but cutting someone else's salary doesn't really solve the problem that you're paying someone more than what you're getting from them.