Surveys: Smaller companies more willing to add jobs

The staffing drought has ended at Premier Office Systems.

The Las Vegas Xerox sales agency didn’t make a single hire in 2010, but it’s expanding at a comparatively brisk pace in 2011.

The company added a salesperson at the beginning of January, and President Colin McTernan said he’s set to bring on yet another sales staffer in mid-February. The hires will boost his staff from seven to nine, though the company will remain below its prerecession employee count of 12.

“It’s just a matter of having more feet on the street to try to cover the market better,” said McTernan. He said that his company expects to see a 30 percent jump in sales in 2011. “We were down fairly significantly in the last couple of years with our staffing, so we are just trying to inch our way back up to where we were a few years ago.”

If two new studies are any indication, thousands of small businesses in Nevada and across the nation are in a similar hiring mode.

Figures from Intuit Payroll’s monthly Small Business Employment Index shows that payroll clients with fewer than 20 employees added 70,000 jobs nationwide in January, for a 0.3 percent bump in the small-business labor force. Intuit doesn’t track numbers in Nevada, but its research found that small businesses added 0.2 percent to their work forces in the Mountain division, which consists of Nevada, Arizona, New Mexico, Utah, Idaho, Montana, Wyoming and Colorado.

And numbers from SurePayroll’s Small Business Scorecard reveal that Nevada companies with fewer than 100 workers added 0.3 percent to their staffs from December to January.

Michael Alter, president and chief executive officer of Illinois-based SurePayroll, called that a good growth rate; only two states — Arizona and Oregon — bested it, at 0.9 percent and 0.7 percent respectively. If the pace continues, small-business staffs across the Silver State should expand by 3.6 percent in 2011, Alter added.

Susan Woodward, a consultant who helped conduct Intuit’s study, agreed that hiring trends are looking up for the year. When you consider that small businesses grew on average less than 1 percent a year in the past 30 years, a 0.3 percent bump in one month provides a strong showing. Plus, Woodward noted, small businesses nationwide have added more than 1 million jobs since October 2009.

“Small businesses are generally leaders in recoveries for a couple of reasons,” Woodward said. “They’re much more nimble than big businesses at taking advantage of a softer labor market, partly because they don’t have a human-resources department and they can decide to hire someone and just do it. They also use more unskilled labor than big businesses do. So small businesses are growing, and our numbers indicate that most of the job growth in the recovery so far has been among these smallest businesses.”

That flexibility is on display inside local small companies, many of which are adding workers simply because the market has so many available prospects.

“I’m hiring mainly just because I found a couple of really good people,” McTernan said.

He added that he might hire yet another worker toward the end of the year if business warrants it.

At The Davis Group Insurance and Consulting in Las Vegas, growth is also up thanks to sheer hiring opportunity. The agency of six didn’t downsize in the recession, but it’s about to add a full-time administrative worker, and plans call for a part-time client-retention specialist and two full-time salespeople by the end of the second quarter, said Sylvia Davis, who co-owns the agency with her husband, George Davis.

“Over the past year and a half, we’ve recognized that the business environment has changed, and you can’t really sit back and be idle,” Davis said. “You have to reinvest and change.”

And with unemployment so rampant in Las Vegas, the city has loads of jobless salespeople who bring plenty of their own existing client contacts, Davis said.

“We know people out there who were connected, and they have something to offer us,” she said. “There are a lot of really talented people out there. We feel the business will grow by bringing them on. We’re not really starting from zero with somebody, because the candidates are different now. They already have client bases of their own.”

Alter said small companies that serve as vendors to large businesses are doing especially well, as those big operations invest in upgrading infrastructure and making other capital improvements. Small operators in health care are also performing well. Even businesses in the leisure sector have shown signs of hiring life, though they’re still a way off from their prerecession levels.

“Still, if you think about where the market was in 2008, this is a dramatic improvement,” Alter said.

The hiring picture isn’t all positive.

For starters, Nevada’s small-business growth rate remains well below expansion in better times. Even if the state’s hiring increases 3.6 percent in 2011, it’ll be considerably less than the 5.4 percent it averaged in 2006, Alter noted.

What’s more, small-business pay is down, falling to an average of $31,825 in January, down from $32,640 in the same month a year ago.

Alter said he believes that salary dip comes from a boost in independent contractors. The share of contractors on staff among Nevada’s small companies rose to 7.3 percent in January, up from 3 percent a year earlier. That gain indicates that businesses are hiring outside consultants to handle specific tasks rather than bringing on full-timers to help.

Current job-growth trends among small businesses are problematic for other reasons, Woodward said.

Though a small-company recovery is better than no recovery at all, it’s not the best scenario for workers, she said. That’s because smaller firms tend to offer lower pay and fewer benefits than their bigger counterparts.

Plus, small businesses by themselves can’t begin to plug the holes the recession tore into the nation’s and Nevada’s job markets, she said. It will take the country three years to return to full employment given existing hiring patterns.

Experts were mixed on whether small businesses would continue to shoulder the recovery load.

It helps that Congress ironed out confusion over the potential for new tax rates in 2011 and 2012, Alter said, because it’s hard to expand when you’re not sure what your tax bill will be.

“You can’t run a business in maybe-land,” he said.

But businesses are substantially more productive today, doing more work with fewer people, and that could curb the need for additional workers. Nor are consumers spending briskly, as unemployment remains above 9 percent nationally and 14 percent locally. That could translate into sustained sluggish sales.

“People are still, for the most part, spending on what they need, and not on what they want,” Alter said. “There’ll be no robust jobs growth until people start spending on what they want.”

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