Call centers blooming in LV

David Strow

Tuesday, Sept. 7, 1999 | 11:09 a.m.

Las Vegas will always be known for its casinos. But as the area tries to diversify its economy away from gaming, a new call center industry is emerging.

In the past five years, no less than 20 call centers have opened in the Las Vegas Valley, each employing in excess of 100 people. The 20 largest centers in the area now employ more than 9,000.

Two more centers, operated by Bank of America and Ford Credit, will employ a combined 1,300 by the end of next year. Call centers take incoming or make outgoing telephone calls for business purposes.

"When you have 5,000 people a month moving here, a third will be looking for a job," said Somer Hollingsworth, president and chief executive of the Nevada Development Authority. "(Call centers) are able to put them into the system.

"The call centers have had such great luck and are able to expand so easily that word is getting around. Las Vegas is a must see."

But with that comes concerns that call centers might not be the kind of employer Las Vegas wants to attract.

"What we don't want to do is give encouragement to people who pay $6 and $7 an hour," said Ray Vega, a North Las Vegas businessman and member of the Nevada Commission for Economic Development.

"The ones that require more skills pay more ... those are the ones we'd like to see," Bob Shriver, executive director of commission, said.

Employees of the centers insist they're not the low-paying sweatshops many imagine them to be. Lisa Weaver, an employee at MicroAge Teleservices, said her stepfather encouraged her to go into the business and her mother recently decided to join also.

"It's a nice atmosphere to be in, and the people are friendly," Weaver said. "When I first started, it was something I was just going to do for now, but after being in it for 10 months, it's something I want to stay in."

A new market

At one time, a call center was considered a tremendously important diversification for Las Vegas.

That was 1984, when Citibank began looking at Las Vegas for a new call center. So important was the opportunity that the Nevada Legislature took the state's usury laws off the books specifically to entice Citibank.

Today Citibank employs about 2,100 in its Lakes-area credit card processing and customer service center.

But over the last five years, Citibank has been joined by a multitude of call center operators, with tasks ranging from catalog sales to technical support. The NDA has identified 39 such operations in the area, and at least two more are looking hard at Las Vegas.

Why all of a sudden?

One factor, Hollingsworth said, was what he calls the disintegration of the Phoenix market. After reaching 70 call centers about 18 months ago, the Phoenix market became saturated.

"For 10 cents an hour, (Phoenix call center workers) would leave one center and go to another," Hollingsworth said. "So they shifted to Las Vegas.

"The work force in Phoenix just began to become undone because of so many call centers. We could reach a point where we saturate the market too. If it happened in Phoenix, which is a much bigger market, it could obviously happen here too."

Shriver says the call centers are a natural function of the city's booming population and its "24-hour town" reputation.

"Once you reach the million-population plateau, you will start attracting call center inquiries," he said. "Phoenix went through this, as did Salt Lake City ... these are cities that fit the profile."

Keith Schwer, director of UNLV's Center for Business and Economic Research, acknowledges that the region would prefer to have high-tech, high-paying jobs, but says that's a limited option because of the region's labor pool.

"High-tech companies are looking for people with advanced degrees and experiences," Schwer said. "If the work force does not have that kind of background, then you attract other types of businesses."

Art Batchelder, an employee at MicroAge's center, said he'd originally tried to find a high-tech computer job after coming to Las Vegas, but eventually took a job as a customer support rep in the MicroAge center.

"The technical field just wasn't available, and I was looking around to keep my hand in computers in some form," he said. "When MicroAge opened up, I came down here to take a look."

Keeping employees

A common perception is that call centers universally pay low wages. That's true for some, but not all.

According to the NDA, the average call center paid $12.45 an hour in fiscal 1998-99 -- about 11.8 percent below the state average. The average employment per center was 242.

The NDA includes a separate category for "noncall centers," which include back-office support operations. These centers pay an average of $15.08 an hour -- 6.8 percent above state averages -- but employ only about 35 per center. These centers require workers with more skills and expertise.

Starting wages typically are well below that figure. Ford Credit, one of the newest centers in the area, will pay a starting wage between $15,000 and $25,000 a year, depending on experience. MicroAge Teleservices, which employs about 350, starts employees between $8 and $10 an hour, the equivalent of $16,640 to $20,800 per year for a full-time employee.

But pay scales rise with experience. The average wage for call centers in Southern Nevada is $25,896 a year, assuming a 40-hour work week, while the state's average wage is $29,370.

The Las Vegas metro area recorded per capita personal income of $25,250 in 1997, virtually dead even with the national average, according to the Bureau of Economic Analysis. But it trailed the state's per capita personal income of $26,514. Moreover, the area's per capita income grew 8.3 percent since 1995, trailing the national growth rate of 9.7 percent.

"Everyone seems to be earning a decent living, and I'm certainly not complaining," Batchelder said.

Hollingsworth believes that wages alone don't paint the entire picture.

"What happens is everyone's looking at entry-level wages, but some of these call centers have gymnasiums, child care. They're going all out for employees, and some are paying commissions."

These add an average of 30 percent to the wages, making the average effective wage $16.19 per hour for a call center employees, Hollingsworth said.

Citibank, for example, has an on-site corporate child care center for its employees.

The highly competitive Phoenix call center industry should serve as a lesson for companies to keep their wages competitive, he said.

"If you don't pay decent wages here, if you're paying less than $9 an hour, you're going to have a lot of turnover. If a company is seeing a lot of turnover, we can almost bet they're paying $9 an hour or less. That's the nature of the beast."

Vega, who runs a wholesaling company, agreed, saying it's nearly impossible to retain employees with a wage below $8 per hour. The work force targeted by the centers could just as easily get work through the Culinary Union and earn the state's average wage at a minimum, he pointed out. He expressed concern that companies may begin to think that Las Vegas is a region where newcomers can get away with much lower wages than elsewhere.

"I think if they don't pay well, they won't get a good quality of people," Vega said. "With the Paris just hiring, that's going to pull people from other places ... take them from everyone.

"I wouldn't try to start anyone for $7 to $8 an hour. They wouldn't stay with me."

Chris Read, manager of MicroAge's center, said annual attrition at the Las Vegas center averages 70 percent to 75 percent per year -- but noted that's still well below the industry average of 130 percent a year. Most attrition occurs in the first 45 days of employment, while wages are at their lowest levels, he said.

"It's a little bit of a system shock," he said. "When they come in sometimes they have expectations that don't tend to pan out. After that our retention is very good."

Schwer doesn't think the call centers should be dismissed because of their low-wage image. Many centers locating in Las Vegas are high-tech, and pay better wages -- and that the centers offer a new kind of job opportunity for those workers without those high-tech skills, he said.

"It's creating jobs and incomes, and the force of the market is operating," Schwer said. "If it's not a good job opportunity, people don't go there.

"If anything, any time you increase the demand for labor ... you are driving prices up. You are picking up people who want to work part time, and you are offering an opportunity for someone a more traditional firm would not offer (a job)."

An incentive to come

Call centers may not be a prime target of recruiters, but they do sometimes receive incentives from the state of Nevada.

In the last year four centers -- Edison Enterprises, Centerra Financial Services, Globe Source Technologies and the California State Automobile Association -- received incentives from the state. On average, these incentives save companies about $300,000 in their first year of operations.

Since Nevada does not have a income tax, it offers incentives in the form of reduced sales, business and property taxes. It also offers grants used to train employees in the community college system. The goal of the incentives is to help diversify the state's economy away from gaming.

To qualify for tax waivers, a company must typically pay at least the state wage average, and employ at least 75 full-time employees. For sales and business tax waivers, a company must make a capital investment of at least $1 million. For property tax waivers, that rises to $50 million.

Sales tax deferrals and training grants are much looser. Each requires an average wage of 80 percent of the state average, or $11.30 an hour, and only 10 full-time employees. The amount of deferred taxes varies by case, while training reimbursement is capped at $1,000 per employee.

What incentives can be, Shriver said, is a bait to attract more substantial local investments by some of the nation's top companies.

"The goal is, you can work with them to potentially acquire other portions of their business," he said. "That's always the ultimate goal."

Vega believes that the state should be careful when applying incentives to call centers. One way to do that, he suggests, is to have the state's department of taxation screen companies that receive credits to ensure that the companies are paying the promised wages.

In his opinion, any kind of below-average wage job shouldn't receive incentives unless it's going into a rural area that needs jobs.

"I look at each one individually," Vega said. "Bank of America is much more credible than someone I've never heard of.

"It depends on where it is, what the future of it is. We should not be doing telemarketing. We have to have close scrutiny of these people."

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