Nevada small businesses pay

Stiff competition for workers suppressed staffing growth and unleashed pay increases among small Nevada businesses in 2007, a report released Friday said.

Numbers from SurePayroll, an Illinois paycheck-service company, showed a toughening hiring climate for companies with 100 or fewer workers.

"I think 2007 was a good year to be an employee of a small business in Nevada," said Michael Alter, president of SurePayroll. "For small-business owners, it was a more challenging year."

The average small-business paycheck in Nevada leapt 16.6 percent in 2007, to $33,395 at the close of the year, SurePayroll's research showed. That's above the national average of $32,609. Nevada was the only state in the nation to experience double-digit salary growth. Yet, hiring was flat, with the average staff size posting a 1 percent gain to end 2007 at 4.94 employees. That's down from a growth rate of 5.4 percent in 2006.

The state's share of temporary staff members rose late in the year, from 2.74 temps for every 100 small-business workers in August to 3.12 independent contractors for every 100 workers in December.

The statistics reveal a competitive labor market with a shortage of qualified workers, said Alter, whose figures come from a nationwide survey of 17,000 SurePayroll clients.

When the 4,000-employee Palazzo began hiring in June for the December opening of its casino, it launched a recruiting squeeze on small companies that should intensify as additional megaresorts come online in 2008, 2009 and 2010. Here's how Alter said the cycle works: Hotel-casino operators, with their bulging benefits packages and generous payrolls, absorb thousands of top-flight employees who might otherwise have opted for jobs with smaller service businesses. The resulting lack of strong prospects blunts expansion among small companies and hinders growth in staff rosters. At the same time, small-business owners must fatten compensation to keep existing employees from decamping for work with bigger companies.

The jump in contract workers is another symptom of the hiring pinch, as operations desperate to fill new orders turn to temporary help to make up for a shortage of permanent candidates.

"It would tell a similar story, which is, if I have to pay a lot more for workers, I'm not sure I want to hire full-time at those prices yet," Alter said. "And if I can't find enough good workers, I will not hire full-time at these prices."

Other watchers of the local economy see less strain on smaller enterprises.

Cornelius Eason, president of Priority Staffing USA, said anecdotal evidence among his clients and among the business owners he knows through the Las Vegas and Urban chambers of commerce points to a sturdier staff-growth rate of 5 percent to 7 percent in 2007, while paychecks rose 5 percent to 10 percent, "if at all," he said.

Nor has Eason seen a surge in requests for temporary workers through Priority Staffing.

Hiring and pay in the small-business arena should more closely reflect SurePayroll's current numbers a year from now, Eason said, as major projects, including Encore at Wynn Las Vegas and CityCenter, ramp up hiring later in 2008 and 2009.

"It's going to put pressure on small businesses, especially retailers and food-and-beverage companies, to pay more to hold on to their people," he predicted.

Some local business owners say they're already feeling that pressure.

PD Distributing, a wholesaler of Italian food, went from three employees to four when it hired a warehouse worker in 2007. The northeast Las Vegas company also goosed its staffers' pay by about 15 percent, estimated owner Gary Strabala.

"We've been busier," Strabala said. "The growth of the town is reflected in the growth of our business. As far as increasing pay, I have some good guys and I want to keep them."

Rolladen Rolling Shutters of Las Vegas recruited noticeably in 2007, growing from 9.5 positions to 12 positions. The company, which sells and installs security shutters for homes and offices, froze salaries after a dip in residential business followed a housing slump. But Rolladen also instituted benefits such as bigger fuel allowances and more overtime pay. The jump in after-hours wages added about 7 percent to Rolladen's local payroll, President Frances Minnozzi said.

Offsetting higher wages will require businesses to either raise prices or boost volume significantly, Alter said.

That's a tack Rolladen took in 2007: Some of its staff increases were in sales, and the business began advertising more aggressively. The emphasis on improving orders generated a 30 percent rise in sales from 2006 to 2007, Minnozzi said.

"Small-business sales are generally driven by the owner and one or two people, and we're seeing those people out on the street more and more, beating the bushes for more business," Eason said. "That's what my business is doing."

Businesses won't rely on new sales alone. As salaries consume more earnings later in 2008, Eason said, expect smaller companies to hold back on costs such as marketing and office equipment.

A flood of fresh talent into the local labor market, either through in-migration or a glut of high-school and college graduates, could ease the work-force crunch, Alter said.

Eason doesn't expect such an influx. Hotel-casinos will need 120,000 to 130,000 employees through 2010, and factors including a relatively high local cost of living and the potential for strict immigration reform could restrain the city's labor market.

"It's going to be a challenge to provide the work force needed," Eason said. "A lot of people are trying to figure out how to do that right now. I wouldn't paint doom and gloom for small businesses, though. Small-business owners figure out a way to thrive."

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or (702) 380-4512.