July 25, 2005--Large employers will raise wages by an average of 3.7% through 2005 and increasingly prefer one-time awards such as cash or signing bonuses, according to a new study from Mercer HR Consulting.

The raises offered by larger employers are putting pressure on smaller companies to increase wages to compete for employees, experts said.

"Smaller employers are having to raise wages faster than the larger companies to keep and attract people," said Richard Galbreath, president of Performance Growth Partners, an Illinois-based HR consultancy whose clients include agricultural, manufacturing and healthcare companies averaging 300 workers each and concentrated in Illinois, Indiana and Missouri.

Galbreath said that among his clients, base pay offered has increased an average 5%.

Valerie Dickson, compensations specialist at Dynamic Corporate Solutions, a Florida-based HR consultancy, whose clients include financial services, not-for-profit, and manufacturing clients with fewer than 200 employees, said small employers "keep pace for the most part with base pay increases."

The National Federation of Independent Businesses, in its July Small Business Economics Trends report, noted that 24% of its members had increased compensation to workers in the second quarter of 2005, up from a range of 15-20% over the last two years, although it did not specify the amount of the raises.