Saturday, June 12, 2004
Copyright © Las Vegas Review-Journal

Small businesses adding workers, research shows

Small-company head count in Nevada grows by 6.2 percent in first quarter

Horizon Business Systems shipping and inventory manager Wes Stubblefield works Friday at the company's Las Vegas warehouse. Horizon's staff has grown in the past couple of years. Photo by Samantha Clemens.

Small businesses in much of the country added workers in the first quarter and reduced their reliance on temporary workers in favor of permanent employees, a national payroll outsourcing firm reported.

In Nevada, small-business head count grew by 6.2 percent in the quarter to a company average of 4.37 employees, said Ken Gaebler, spokesman for Chicago-based SurePayroll, which processes $2.5 billion in payroll annually for more than 11,000 customers.

With respect to payroll, Nevada small-business salaries shrank by 7.1 percent from a year ago. Gaebler said payroll shrinkage may result from the timing of the survey and that patterns differ from state to state.

Nationally, small-business head count grew by 2.3 percent in the first quarter, with an average of 5.55 employees. Small-business salaries grew by 2.2 percent to an average of $30,911.

"Definitely, there are pockets of the economy rebounding in small business," Gaebler said. "Businesses are increasing in size and paying more to employees, which is a good sign. That would indicate they're making more money on the top line. They're more comfortable hiring people for permanent positions."

New data from the U.S. Small Business Administration's Office of Advocacy confirm how important small businesses are to the American economy.

For at least the past two decades, small businesses, which are defined as companies with 500 or fewer employees, generated two-thirds to three-quarters of net new jobs.

Small businesses helped save America from an economic collapse in 2001, creating all of the net job growth in the troubled year, said Randy Robison, Nevada director of the National Federation of Independent Business.

He cited the dot-com bust that triggered a national recession, seemingly daily spectacles of corporate scandals, an energy crisis in the nation's most populous state and terrorist attacks that stabbed at the financial heart of the nation.

"Regardless of the ups and downs of our economy through various cycles, small businesses are the one consistency," Robison said. "We're talking three to five folks, so when the dot-com bubble busts, it wasn't the small guys going out of business. The mom-and-pops kept their operations going."

Nevada contributed 11,426 net new jobs to the U.S. economy in 2001, no thanks to big business, which shed 3,482 jobs, he said.

Economists are saying the "jobless recovery" is behind us, but that's not what the U.S. Department of Labor numbers show, said David Stern, principal of Stern and Co., a corporate communications firm in Las Vegas.

More than 1 million jobs have been recovered over the past five months and gross domestic product is averaging 5.5 percent growth over the past three quarters.

However, there were 8 million unemployed workers, with 1.5 million who wanted to work and were available for work. Of those, 476,000 were "discouraged" workers.

"Those numbers have remained the same for the past 16 months," Stern said. "This, coupled with an unchanged 5.6 percent unemployment rate, is the core of the real story. The economy, though strong, is nowhere near strong enough to generate the job growth required."

The highly touted manufacturing element of the unemployment index added 32,000 jobs.

"But what is forgotten here is that manufacturing remains a small component of the work force," Stern said.