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."
The sharp decline has paralleled healthy monthly employment reports. Employers added a net 288,000 jobs in June, capping the first five-month stretch of gains above 200,000 since 1999 at the height of the dot-com boom.
The consensus forecast of economists is that the government will announce next week that employers added 225,000 jobs in July, according to a survey by the data firm FactSet.