Why do companies overwork their employees rather than hiring more?

Because it costs even more money to hire a second person. You're only looking at salary. You also have to pay a second set of benefits. And since the time periods where that much work is available is not permanent, you would have to train someone to work only a few months. Training costs a lot since the new employees don't work as well as the established ones. And then when you lay them off, you have to pay more in unemployment insurance.