State limits subsidy for new low-wage Las Vegas call center

David Strow

Friday, Sept. 17, 1999 | 11:07 a.m.

The Nevada Commission on Economic Development denied a tax abatement for a new Las Vegas call center Thursday, saying the wages offered at the center were well below the average state wage.

Interim-Customer Care Solutions was seeking a $276,000 sales and use tax abatement for its new call center, set to open Sept. 20. The commission did, however, grant the company a deferral on those taxes.

The center will employ 177 people. Company officials say the center's main customer, American Express Corporate Services, is urging the company to add as many as 150 more jobs in Las Vegas. The center will take inbound calls providing travel reservations for clients of American Express.

Company officials told the commission they decided on Las Vegas because of the workforce's experience with the travel and hospitality business, as well as its ability to supply workers used to working round-the-clock shifts.

But commission officials took issue with the center's wages -- about $8 per hour to start for inexperienced employees, rising to $12.50 for experienced employees who work odd-hour shifts. The state's average wage is $14.12, and one of the prerequisites for receiving a tax abatement is that jobs must match or exceed that wage. The average wage for the center will be $11.19 per hour.

"Any time we hand out incentives with the net effect of lowering average wages ... we are subject to criticism," said Commissioner Peter Thomas. "Much of that is focused on call centers.

"In a case when the average wage is not met even when the employee is fully mature, I find it very difficult to give out incentives."

The Nevada Development Authority pushed hard for the abatement. The NDA pointed out that the center would result in $1.3 million in tax income over the next two years. Moreover, the center would have an economic impact of $3.1 million over a five-year period, according to the NDA.

NDA officials said new applicants, under new state regulations, aren't required to meet the average wage criteria, so long as they are investing more than $1 million, and hiring more than 75 employees. And they pointed out that there was a demand for the jobs in Las Vegas, even if they were below the average wage.

"You don't look at the wages, you look at the taxes generated," said NDA President and Chief Executive Somer Hollingsworth. "If we're not looking at the tax base created by the nongaming side, we're missing the boat."

The NDA's Debbie Smith attacked the $14.12 figure as "nebulous," and said that, as economic developers, they were simply helping to meet the demand for lower-wage jobs that exist in Southern Nevada.

"Call centers are just where we fit right now," Smith said. "I feel very strongly that this company does qualify."

But Berlyn Miller, vice chair of the commission, argued that few companies could expect to receive incentives without meeting the average wage criteria.

"Two of three was for the exceptional company, not just for any company that applies," he said.

In the end, commissioners decided to award a deferral based on the company's promise that it planned to hire at least 36 new employees who would make the top end of the company's starting wage scale. The company will be audited by the state to ensure it has met that requirement.

In a separate action, the commission put off a decision to abate $525,000 in taxes for a new printing company locating in Las Vegas, expressing concerns that a tax abatement would give the company an unfair advantage over existing printers.

Haig's Quality Printing Nevada Inc. is relocating its corporate headquarters from Las Vegas to California. The company specializes in very high-quality printing, and plans to install the state's first six-color printing press.

Company officials said they planned to invest about $10 million in capital equipment here and have 15 employees. The company's average wage will be $14.44 an hour.

"This far surpasses the quality of anything now offered in Nevada," Smith said. "The majority of the people working here will be highly skilled, making closer to $18 an hour."

But commissioners saw red flags after hearing that about 60 percent of the company's business will be in the Las Vegas market. The company primarily sells to casinos, hotels and travel agents.

"Four different printers have come before us, and we did not grant the abatement," Thomas said. "We need to see a differentiation, why you have a different case than the ones they brought here. That's what I have to be convinced of.

"I'm troubled by what this does to local printers who did not receive these incentives."

After it became apparent the company didn't have enough votes to receive an abatement or deferral, Haig's agreed to have its application re-examined. The company was asked to demonstrate in more detail that its business would be unique in Nevada. Commissioners also requested more information on how much of a role incentives played in the company's decision to locate in Nevada.

Commissioners also pushed back the abatement application of Custom Services International Inc., though it seems likely that the company will receive approval at a future meeting.

Custom Services wants to open a 130-employee plant in North Las Vegas that will manufacture condoms. According to company officials, the plant will be only the second in the United States to produce condoms; currently, the only U.S. manufacturer is Carter-Wallace, which produces the Trojan line.

Custom Services' main markets are Latin America and China.

The company intends to invest about $8.5 million in its North Las Vegas plant. At an average wage of $11.46 an hour, the company's wages are below the state's average, but commissioners looked favorably on the application because of the uniqueness of the operation.

"The commission can't make a cookie cutter decision on every company," said Commission Executive Director Bob Shriver. "This will have a significant social and health benefit."

The application was withdrawn, Shriver said, because the company didn't complete its necessary applications on time. The commission will re-examine the application by November.

The commission also approved the training application of Pan Oston Co., which manufactures retail fixtures for grocers and discount retailers at a plant in North Las Vegas.

The company has gone from 30 to 45 employees so far this year, and company officials said they still need to hire additional specialty welders and machine operators. The company will be eligible to receive $1,000 per employee trained through the community college system, so long as it matches the state's contribution by 25 percent.

Although the company's average wages were well below the state's average, commissioners were impressed by the company's medical plan. The company offers full insurance to employees and all dependents with no premiums.

"I think you've persuaded me with that medical program," Thomas said.

The commission also approved the training application of Forem USA, which operates a telecommunications equipment plant in Sparks.

The company sought $49,000 to train employees in the manufacturing of cellular infrastructure equipment. It has expanded from 36 to 74 employees in the past nine months, and plans to hire an additional 29 employees.

The company's average starting wage is $13 to $14 per hour, rising to $15 to $16 per hour after two years' experience.