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It looks like John Kerry is right about salary deflation in the United States, a payroll service executive said Thursday.

The country has gone from a jobless economic recovery to a "pay less" economic recovery, said Michael Alter, president of Skokie, Ill.-based SurePayroll, which processes payrolls for 12,000 small-business customers.
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The hiring index climbed from a starting basis of 10,000 in January to nearly 10,600 in August, while the pay index dropped from $1,000 to about $992 during the same period.

SurePayroll's Small Business Scorecard tracks the economic health of the country based on paychecks, not surveys.

"The data doesn't lie. Hiring is up, salaries are down," Alter said. "The good news is you finally got a job. The bad news is you're probably making less than you made in your last job."

In Nevada, the small-business head count grew by about 7 percent in the second quarter to 4.68 employees per company from a year ago. With respect to payroll, small business salaries shrank by 8.1 percent to an average of $26,980, SurePayroll reported.

Nationally, head count was up 2.2 percent, with the average small business coming in at 5.67 employees. Salaries decreased by 1.7 percent to $30,360.

Overall, Las Vegas showed 4.7 percent job growth in July from a year ago to total employment of 853,100, according to the Nevada Department of Employment, Training and Rehabilitation.

The median wage for all occupations in Las Vegas was $13.03 an hour and the average was $16.36 an hour. Management positions paid a median wage of $34.48 and an average of $40.16.

Alter said there are multiple engines that drive economic recovery, one of which is employment, and that's definitely happening.

However, the jobs are usually at the same level of pay or above what they were during a recession, and that's not happening, he said.

Interest rates that were lowered during a recession begin to rise, which puts pressure on the housing industry, he added. Combine that with higher energy prices and you have "inflation without showing inflation," Alter said.

"People have less disposable income. Prices are up, salaries stay down."

Along with monthly and quarterly data, the payroll company generates a 12-month rolling average of indices that track small-business head count and salaries, thereby eliminating seasonal effects.

"With payroll data, fourth-quarter bonuses can skew the data, so you really have to use a rolling average for trend analysis," Alter said. "Rolling-average trends are also predictive -- we haven't hit bottom on this yet."

Copyright © 2004. Las Vegas Review Journal.