A growing labor shortage in Nevada is pushing the Silver State's average wage level at small businesses sharply higher even as hiring remains flat, a new report by paycheck-services company SurePayroll shows.
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On the surface, increasing salaries might not make sense given flat hiring, but Michael Alter, president of the Skokie, Ill.-based company, said Nevada's particular growth dynamic explains both trends.

As resort operators and bigger service companies bolster hiring to prepare for the coming wave of hotel-casino openings on the Strip, small companies have trouble hiring, and they have to work harder to keep existing employees. Winning the talent war often requires higher pay and improved benefits.

Also, with population growth down -- the Clark County demographer said in October that the county's expansion rate fell from 5.3 percent in July 2006 to 2.7 percent in the same month a year later -- there are fewer candidates available for hiring, Alter added.

"It's simple supply and demand," he said.

According to SurePayroll, average wages at small businesses with 100 or fewer workers in Nevada jumped nearly 15 percent since December to $32,900. The national average was less than $32,400 in October. Average staff sizes at small companies, however, rose just 1.5 percent to 5.04 workers in the first 10 months of the year.

Nevada's average small-business paycheck remains below the Western regional average of about $34,000, so there's room for salaries to continue to increase, Alter said.

"The question is, given the speed at which salaries are escalating, it may have an impact on small businesses and their ability to keep growing," he said. "If it continues to get that much more expensive to find workers, it certainly will reduce the profits they're making. The flip side is, businesses with a stronger consumer bent will find that their customers might have more purchasing power."

Local small companies say they're experiencing the pay spike firsthand.

Alice Roussos, owner of Interior Motives in Las Vegas, said paychecks at her interior-design firm have increased about 14 percent to 15 percent in the past year. The higher pay comes despite a lower staff count: Roussos let two members of her five-employee company go earlier this year after demand dipped for makeovers among homeowners and inside new-home sales offices, model homes and clubhouses.

"When you have a small staff, it's really important that you have quality people, so keeping workers happy is a critical issue," Roussos said. "I don't want to have to start from scratch. Retaining someone who is useful and talented is cheaper than going out, finding someone new and starting over."

Roussos is also reducing overhead, combing through expenses such as worker's compensation to cut budgetary bloat. It could be a year or more before business has recovered enough to add workers, and even then, she'll likely bring them on as independent contractors rather than full-time employees.

Yet, Roussos expects salaries for her existing workers will continue to jump noticeably in 2008.

"The expense will be worth it," she said.

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