At a time of soaring energy costs and housing prices, many employees are counting on a pay raise this year just to stay afloat. But what if you received a double helping of compensation: One raise to cover your escalating cost of living, and another to reward you for being a dutiful worker?

The 2005-06 budget Polk County commissioners approved in September included a 2.5 percent cost-of-living raise for all county employees. Those who receive satisfactory performance evaluations will receive an additional 3.5 percent increase.

City of Lakeland employees will get a slightly smaller costof-living raise -- 2 percent. Those who have not topped out in their step-plan pay scale will get an additional 5 percent if they get a satisfactory performance review.

If you work in the private sector and your tax dollars pay the salaries of government employees, those numbers can be hard to swallow, especially when the average raise this year is projected at just 3.6 percent, according to a national survey by New York-based Mercer Human Resource Consulting.

But compensation experts say appearances can be deceiving. In many cases, large raises aren't just a symptom of overly generous officials but the public sector's attempt to make up for years of low pay and to compete with private business for qualified employees.

In 2004, the average annual local government wage in Polk grew by 4.8 percent, more than double the 2.3 percent increase in the county's private sector, according to data from the U.S. Bureau of Labor Statistics.

Those fluctuations are to be expected, said Gordon Kettle, an economic consultant to the county and professor at Polk Community College and Webster University.

"When the economy is strong, private wage increases tend to surpass government wage increases because unemployment rates are low and the labor market is tight. Private employers must offer more attractive salary increases to retain workers in such an environment," he said. "During and around times of recession or a weak economy, government workers are less impacted because their revenues are not contingent as much on business conditions but are based on tax revenues."

"After 9/11, most of the private sector tightened their belts. Almost every small employer panicked. They used the excuse of the economic shakeup to freeze salaries," said E. James Brennan, a senior associate with the ERI Economic Research Institute of Redmond, Wash. "But the municipalities said, `So what?' They were (already) locked into pay plans. I think they widely recognized this was an opportunity to gain back some ground."

In 2003, private wages in Polk performed better as the economy and local labor market improved. And across the nation, private wages outpaced the public sector in 2004, but Kettle said Polk didn't follow that trend because of the impact from three hurricanes.

If raises for public employees seem excessive, sometimes it's because they're long overdue, said Andy Klein, principal with Mercer Human Resource Consulting.

"I've seen reluctance to adjust salaries even when there was a very good reason for doing so because of public (reaction)," he said. "Many government entities adjust themselves to the marketplace not on a regular basis but every five or 10 years. What they find is they fall behind, so the increases are all about catching up. It looks like a bigger number."

Percy Harden, Polk County's personnel director, said the county implemented a new pay system last year based on recommendations from the St. Petersburg-based consulting firm HR Management Partners . He said the firm adjusted salaries to public and private sector benchmarks, and developed a "step" system that provides a framework for annual increases.

"What you've got to realize is we're sandwiched between two major markets," he said. "We don't expect to match them, but we expect to be as competitive as possible."

Polk County Commissioner Bob English said the county still has a difficult time recruiting candidates for engineering jobs and other high-skilled positions because the salaries don't compare with what's offered in private business.

Dundee Mayor Kevin Kitto said his town has the same problem. One example: Dundee (where employees received a flat 4 percent raise for 2005-06) is offering $50,000 to $55,000 to hire a building inspector when the market value is about $70,000.

"We're not getting any lookers," Kitto said. "We're a small town. We're competing against larger towns that pay more, and the private sector."

HRMP President J.C. Ayers said, "Even the public sector needs to compare itself to the private sector to a certain extent because they're still competing."

One way for the public sector to lure top-tier employees is to offer a combination of cost-of-living and merit raises, Ayers said. About half the 250 Florida public entities that participate in HRMP surveys use a combination of pay increases.

"One of the major differences is that in the private sector you have a lot more latitude to be creative in terms of incentive pay," Ayers said. "In the public sector you can still have performancebased incentives, but it's not tied to a bottom line."

Gow Fields, a Lakeland city commissioner and owner of a local insurance company, said workers in the private sector can receive stock options and profitsharing plans -- incentives not available to public employees.

"From my own personal experience both as an employee and an employer in the private sector, the private sector does better," Fields said. "There's a great deal of prosperity in this community, and it's not because people work in the public sector. It's because of how well various companies and industries are doing within the private sector."

However, the average annual salary for local government employees in Polk has outpaced the private sector since 2001, according to the Bureau of Labor Statistics. In 2004 alone, local government workers earned an average $32,979, about 7.5 percent more than $30,664 for private-sector employees.

For 2005-06, Volusia County employees will receive a 2 percent wage adjustment in addition to a merit increase ranging from nothing to 4 percent, depending on a worker's evaluation. Most Brevard County employees will get a 2 percent cost-of-living raise, as well as a 1 percent merit increase.

A proposal for city of Tampa union employees would provide for across-the-board raises of 3 percent to 3.5 percent, but Mayor Pam Iorio wants to cut additional merit raises in half (reducing them to 1 percent to 3 percent from 2 percent, 4 percent or 6 percent) and offer something comparable to private-sector increases, according to the St. Petersburg Times.

For better or worse, public-sector pay increases are rising nationwide, said Brennan of the ERI Economic Research Institute. Recent data show that public entities are especially budgeting more money next year for management and high-skilled positions -- and the raises exceed those seen in banking, insurance and other industries, he said.

"It's going to hurt (elected officials) in the polls because the public is going to see these people getting a larger increase than they do," Brennan said. "In some cases they're probably consciously trying to make up for lost ground in the past. In other cases, they don't care. They've got the budget and the money."

"A 6 percent increase may sound humongous," he said. "But it's all relative. What if someone is 10 percent below the private sector? Does a 6 percent increase sound so huge now?"

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