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The number of small business employees in Nevada is falling, although many of those who remain are making more money, an Illinois-based payroll company reports.
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The data compiled from 13,000 national small business clients of SurePayroll, a provider of payroll outsourcing services for small businesses, show that Nevada businesses with 100 or fewer employees are bucking the national trend.

Small business payrolls grew 2.5 percent nationally while wages fell an average of 3.3 percent since the first of the year.

Nevada small businesses, on the other hand, reported employing an average of 4.43 workers, a 1.7 decline since January, according to the SurePayroll Small Business Scorecard. At the same time, the data showed small business workers' salaries in Nevada rose 13.2 to an average of $28,346.

Jeff Waddoups, associate professor of economics at the University of Nevada, Las Vegas, said the tendency of small businesses to increase salaries and decrease the number of employees is a reflection of the larger economic condition.

"The economy has been picking up, adding jobs. My guess is the bigger businesses around here would be adding jobs," he said, suggesting many people working at smaller companies are leaving those positions to work for the larger companies.

"When you are talking about small business, you're talking about people who would rather work for a bigger business because of benefits and other resources," Waddoups said, adding that many small business employees are "involuntarily self-employed."

"And the people who don't go to work for the bigger companies are making pretty good money, so they don't want to go work for someone else," Waddoups said.

Amy Pittle, owner of Action International Business Coaching in Las Vegas, disagrees with Waddoups' explanation for the Nevada numbers.

The trend of hiring fewer people and paying them more is a new development in Southern Nevada that she expects to continue regardless of economic changes.

"The focus isn't on saving money. It's a wash in a lot of cases," Pittle said. "It's about the heart and soul of your business being the people who work for you. If you get better people you don't need as many," said Pittle who is a business coach to 15 area clients.

Pittle, who works with local florists, Web design companies, tanning salons and bakeshops, said the trend in the area is quality not quantity.

"Owners are willing to pay more for the right people," Pittle said. "Businesses are spending more time looking for applicants because they want to find the right people."

The three other states that diverged from the national trend of increased employees and lower paychecks were North Carolina, which showed a 2.6 decline in employment and a 3.6 percent increase in salaries; Washington, where employment fell 9.2 percent and salaries grew by 10.3 percent; and Michigan, which reported 10.8 percent fewer employees and a 1.9 percent jump in wages, according to SurePayroll.

Waddoups, the UNLV associate professor, said that if the economy continues to improve, Nevada's trend toward fewer but higher-paid small-business employees should continue. But if we fall back into a recession "then the ranks of small businesses will continue to increase again." The four trend-breaking states share a common denominator: They rely on big businesses to infuse their economies, suggested Matthew Shapiro, chairman of the economics department at the University of Michigan.

Nevada relies heavily on the gaming industry, the Air Force and the educational sector to feed its economy. North Carolina, with its research triangle, relies on the technology industry and education sectors. Michigan's economy is driven in large part by the automobile industry, and Washington's economy relies heavily on Boeing Co.'s business.

Shapiro said big businesses drive demand in smaller companies.

"It's a lean production setup," Shapiro said, explaining that big companies outsource specialized components of their business to smaller operations. "Car companies don't make the seat cushions for cars, they hire another company to do that.

"It's a puzzle as to why this recovery has been so slow with regards to employment," Shapiro said.

He suggested, however, that the economic recovery could soon trickle down to the smaller companies.

Las Vegas Legal Video, a technology solutions company for lawyers, is one of those small businesses waiting for larger companies to call on its services so it can start hiring more employees.

The company has lost seven of its 10 employees in the past 12 months.

"We had to lay people off," said Andre Lagomarsino, the store's general manager. "We increased the salary of one guy because he threatened retirement, and another guy gets more because he has a lot more experience. He's won Emmys."

Lagomarsino said the decision to increase his employees' salary was based solely on a need to retain his talent, but until business picks up he won't be able to hire any more employees.

Copyright © 2004. Las Vegas Review Journal.