WASHINGTON -- The risk of losing your job is getting smaller and smaller.
As the U.S. economy has improved and employers have regained confidence, companies have been steadily shedding fewer workers. Which is why applications for unemployment benefits have dwindled to their lowest level since February 2006 -- nearly two years before the Great Recession began -- the government said Thursday.
The trend means greater job security and suggests a critical turning point in the economic recovery. It raises the hope that workers’ pay will finally accelerate after grinding through a sluggish recovery for the past half-decade.
When the economy sank into recession at the end of 2007, employers cut deeply into their staffs. And then during the recovery, they hired only hesitantly. Instead, they sought to maximize the productivity of their existing employees.
But in recent months, the picture has brightened. Employers have added 200,000-plus jobs for five straight months, and the unemployment rate has reached 6.1 percent, the lowest since 2008.
Now, the steadily declining level of layoffs suggests that employers may have to hire even more aggressively and raise pay if they want to expand their businesses, said Joel Naroff, president of Naroff Economic Advisers.
"They’ve been continually working their workers harder and longer," Naroff said. "As a result of that, we have consistent growth and you can’t lay off people anymore.
The shortage of laid-off workers searching for jobs means that more companies may need to pay more to attract talent. Thus far, wage growth has essentially only kept pace with inflation, and household incomes remain below their 2007 levels.
Most businesses have so far been hesitant to raise wages, so there may be a lag before workers see higher paychecks.