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.
"But when the dam breaks, it's really going to break," Naroff predicted.
Some firms say they're already dealing with wage pressures.
Cleveland-based Applied Medical Technology has raised hourly pay for warehouse employees from $8.25 to $10. It did so both to attract new hires and because it heard that some of its employees had quit for raises elsewhere, said Jeff Elliott, the company's chief financial officer.
The company also started holding pizza parties and summer cookouts. Elliott said it's cheaper and easier to keep existing employees than to find and train new ones.
Throughout the economy, layoffs have fallen so much that the number of people seeking unemployment benefits plunged last week to a seasonally adjusted 284,000, a low last achieved in February 2006. And after accounting for U.S. population growth, the number of people applying for unemployment aid has reached its lowest point since 1999.
The four-week average of applications, which smooths out week-to-week fluctuations, has dropped to 302,000 from 348,500 when the year began.
"In the weeks that follow," said Michelle Girard, chief economist at the Royal Bank of Scotland, "claims look likely to hold at or below the 300,000 mark."