Cutting some higher salaried employees is fairly typical when a company moves in a new direction (5E is already underway according to some sources since bringing Monte Cook on board, who also just recently moved back out to Renton from Milwaukee). I'm sure they'll hire on some young talent from the freelancing community into regular positions for lower wages as the heavy lifting begins beyond initial design then, after the release of the new edition, we'll see more layoffs again. It's the nature of the beast/business model they have.
That's too bad. I wish both gentlemen the best of luck in their future endeavors. Rich Baker did some excellent work for TSR and WotC on D&D, Alternity and the Forgotten Realms during the 2e and 3e eras - I hope we do see him over at Paizo soon.
Steve Winter edited some of my favorite early 80's TSR stuff, including the 1983 Greyhawk boxed set, which next to the AD&D DMG, may be my favorite RPG product of all time.
Hope you land on your feet, Steve, wherever you are.
After many years of exactly this, I have to say that I despise this business model. It must lead to constant fear among the employers of losing their jobs. In such an atmosphere, how are you supposed to create top standard creative work?