WASHINGTON, D.C. -- Fewer than one in five U.S. full- and part-time workers currently worry that they will be laid off in the near future, down sharply from 29% last year. This marks a return of worker confidence to the upper end of the range Gallup saw in the years prior to the financial collapse in late 2008. Workers' concerns about maintaining their current level of benefits and compensation have also eased, though they remain higher than pre-2008 levels.

The results are based on Gallup's annual Work and Education poll, conducted Aug. 7-10. These data come at a crucial time, as the Federal Reserve openly debates when to begin raising interest rates, which have been at record lows for six years in an effort to spur economic growth. The health of the labor market is a key variable in the Fed's analysis of when to raise interest rates.

While conventional metrics such as the unemployment rate and speed of economic activity -- both of which have painted a brighter economic picture lately -- are helpful in assessing the labor market's vitality, measures of American workers' feelings of security are also telling. Since 2009, Gallup has seen a heightened, persistent fear among U.S. workers about their job status, pay, and benefits, even as the economy slowly recovered -- pointing to a difficult job market. This year may tell a different story -- one of a more confident workforce -- as seen by the large drop in the proportion of U.S. workers saying they are worried about having their benefits and wages reduced and being laid off. The data still show, however, that worries about several key job-related issues remain higher than before the financial collapse.

The worry that is probably most workers' biggest fear -- being laid off -- has dropped precipitously. Today's 19% worried is 10 percentage points lower than last year, and is nearly on par with layoff worries between 1997 and 2008, when an average of 17% worried about losing their job.

Reductions in benefits (34%) remain the most common job-related worry, as they have been since Gallup first asked this question in 1997. Even so, this year's reading is down nine points from last year and the lowest level since this figure nearly doubled after the financial crisis. In a similar vein, about a quarter of workers say they worry that their wages will be reduced (24%), down from 31% last August. However, both measures remain slightly elevated relative to where they were prior to the financial crisis.

At 23%, the percentage of employed Americans saying they are worried that their hours at work will be cut is the only item that did not see a noteworthy decline from last year. It is, however, down significantly from its 2011 high of 30%, although still higher than its 1997-2008 average (14%).

Although "outsourcing" often receives significant political attention, most American workers do not fear that their jobs will be shipped overseas. Fewer than one in 10 U.S. workers (8%) say they worry their company "will move jobs to countries overseas," down slightly from 11% in the previous two years.

Young Workers More Anxious About Being Laid Off

Young adult workers aged 18 to 34 are more likely to express signs of job insecurity than older workers. Nearly three in 10 young American workers (29%) say they worry about being laid off, almost double the 15% of 35- to 54-year-olds and the 13% of workers aged 55 and older (13%). Moreover, young workers' fear of being laid off has not decreased from last year, whereas this year, fewer older workers say they are worried about being laid off. Younger workers also are more likely than older workers to worry that their hours will be cut back.

Bottom Line

Determining to what extent the labor market still has "slack" -- room for improvement -- will be an important part in guiding the Fed's decision on whether to raise interest rates. The state of the job market will be a key topic at this week's meeting of top monetary officials and economists in Jackson Hole, Wyoming. A vigorous debate is expected. On one hand, the number of jobs added to the U.S. economy has picked up steam this year and the unemployment rate, at 6.2%, has fallen from its recessionary heights. On the other hand, the labor force participation rate remains as low as it has been since 1978, and wages remain stagnant.

The confidence of American workers themselves is also important to consider in this discussion. After the financial crisis and the grueling recession, the share of workers fearing layoffs or reductions in wages or benefits spiked, and these numbers failed to retreat over the past five years even as the economy came out of recession and the unemployment rate slowly improved. For many workers, even if the economy was improving, it wasn't making them feel any less anxious about their employment or compensation situation, a telling sign of the recovery's weakness.

Now, for the first time since the financial collapse, the percentage of U.S. workers worried about being laid off has fallen by double digits, and drops in those worried about having wages or benefits reduced are nearly as large. While workers still are more likely to say they worry on several questions now than before the financial crisis, these figures are down considerably. For the first time in a long time, fewer U.S. workers are worried in some way about their job, meaning the job market could finally be turning in favor of the employee.