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SurePayroll survey shows Nevada small businesses have been hiring in '06

Don't tell Steve Kiss the Las Vegas housing market is tanking.

Kiss owns Kiss Cabinet, a 35-year-old local business that makes and installs ornate, hand-hewn cupboards for homes across the Las Vegas Valley.
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The homes the cabinet maker builds for range in value from $1.2 million to $30 million, and in that submarket, business has never been better for Kiss.

"Everyone keeps talking about things slowing down," Kiss said. "They're not slowing down at all. Our sales keep climbing."

So Kiss has boosted his company's staff from 25 to 30 since the beginning of 2006, adding salespeople, cabinet installers and shop workers.

A new report from a national payroll-services company shows that Kiss isn't the only local small business in hiring mode.

The June 2006 SurePayroll Small Business Scorecard, which surveys 16,000 companies nationwide, reveals that Nevada's small concerns have shaken off the recruiting torpor that stalled their job growth in 2005.

In the first half of 2006, Nevada businesses with 100 or fewer employees expanded employee counts by an average of 3.9 percent, Illinois-based SurePayroll's numbers show. That's a significant improvement over the first six months of 2005, when the state's small-business labor force shrank 2.1 percent.

The demand for workers has pushed compensation up. Nevada's small companies increased annual paychecks 3.7 percent, to $26,326, in the first half of 2006. In the same period a year ago, average salaries fell 3.5 percent.

Only Utah posted a livelier small-business sector, with a 4.6 percent rise in the number of workers. Salaries in Utah were up 1.4 percent.

Nationwide, employee counts fell 0.3 percent through June, though wages were up 4.1 percent. With an expansion rate of 0.3 percent, the West was the only region showing positive small-business workforce growth in the first part of 2006. Average pay in the West grew 6.3 percent.

SurePayroll President Michael Alter attributed Nevada's gains to a lull in local megaresort openings.

In early 2005, small-business owners in Las Vegas struggled to find workers amidst major additions to the city's hotel-casino landscape. The 2,700-room Wynn Las Vegas opened with 9,500 workers in April, and Caesars Palace was staffing up for the August opening of its 949-room Augustus Tower. The new properties, with their big-business compensation packages, starved smaller service companies of employees in areas ranging from information technology and janitorial functions to marketing and administration.

"With those new hotels at full employment and immigration into Nevada from other states continuing, there are now good people to hire at reasonable prices," Alter said.

Alter added that the new hotel rooms have provided expanded client bases for the support businesses that are "sprouting" around the city's flourishing travel and leisure industry.

He also said he suspected the net inflow of businesses continues to rise in Nevada because "it's a very cost-effective state to do business in."

If there's any downside for small companies in Las Vegas, it's a relatively shallow local labor pool.

Kiss said he would hire at least five more installers and three more cabinet makers if he could find qualified workers with the two-year minimum of experience that he prefers.

"We're still looking, and we don't seem to be able to fill all the positions we have," he said.

Behind the worker shortage is a sustained construction boom in Southern Nevada, Kiss said. Business in the custom and semicustom home markets hasn't slowed, Kiss said, and the hundreds of upscale high-rise condominiums that are poised to begin coming on line in 2006 will also create more demand for made-to-order cabinets. That burgeoning client base has strained the availability of employees in all construction trades.

"There's so much work out there," Kiss said. "Everybody gobbles up workers as fast as they can."

Business is on the upswing in accounting as well, due to Las Vegas' growing corporate base and an increase in federal regulations governing corporate accountability and financial reporting.

At De Joya Griffith and Co., a Henderson accounting firm that has a nationwide client base consisting mostly of public companies, managers have increased the roster from 11 workers to 15 workers since December. Yet, Jason Griffith, the firm's managing partner, said he'd bring on three more staffers if the local work force permitted.

"I've spoken with other accounting firms in town, all of which could hire two or three people right now if they could actually find the workers," Griffith said. "If (hiring) is up 3 (percent) or 4 percent right now, it could be up 10 percent if we had the available personnel."

Though 2005's acute spike in megaresort recruiting has abated, big corporations increasingly overwhelm small companies in every region and industry, Alter said. Major companies have advantages small businesses lack -- the ability to offer health insurance plus sophisticated hedging operations that help control the rising cost of raw materials, for example.

"Health insurance is a big differentiator for employees," Alter said. "The more employees you have, the lower your cost per employee is. Small companies just don't have that luxury."

Kiss said the $300 to $400 a month per employee that his company would spend on health insurance is out of reach for his business. He competes instead by paying what he said in his industry is "top dollar" -- $18 to $25 an hour for installers and $10 to $18 an hour for shop workers. He also provides paid vacations, promotes from within, provides raises based on productivity and emphasizes job security. Some of his workers have been with Kiss Cabinet for more than 15 years.

Kiss also reduces the need for labor through automation. For instance, the company switched from hand-drawing cabinet designs to using computerized drafting programs.

Kiss said there's a simpler solution to the labor crunch, and it doesn't involve health insurance or other benefits.

"High schools don't emphasize (vocational) training anymore," Kiss said. "In the old days, there used to be vocational schools that would at least give kids a start in cabinet-making, auto mechanics and other fields. Today, it's like everybody has to go to college. They don't have any other career tracks. Where's your skilled labor at? There isn't any."

Copyright (c) 2006. Las Vegas Review Journal.