-graphs and charts
No one gets paid like a pastor. And maybe it’s a good thing.
After all, how many other professionals have their compensation debated and then voted on in a public meeting? And who else is an employee- usually-for income-tax purposes, yet selfemployed for social security purposes? Who has a benefit more misunderstood than the housing or parsonage allowance? It’s enough to make even an H&R Block accountant unplug her calculator before April 15.
In spite of the many nuances of the pastor’s pay package, each year approximately 400,000 churches across our continent somehow arrive at an amount to compensate their clergy. Where the figures come from is anybody’s guess, but we now know basically what the figures are.
Last fall, LEADERSHIP, in conjunction with YOUR CHURCH magazine, compiled the most extensive research to date on pastoral compensation, the 1992 Church Compensation Report. Approximately 4,000 churches reported compensation information for over 12,000 employees. Before we reveal the findings, however, let’s look at the categories of compensation and how we’ll report them.
Understanding Pastoral Compensation
Not everything a church spends to have a pastor is “compensation,” per se, and not everything paid to the pastor is “salary.” In order to keep the various types of compensation separate, we’ll use these terms:
Salary. Everybody understands this one. It’s basic pay, the dollars a pastor can use to live on.
Housing. This comes in two varieties. Some pastors choose their own lodging and are paid a housing allowance by the congregation to cover the costs of owning or renting a home. Pastors who live | in church-supplied housing obviously gain the mon- I etary benefit of not having to pay mortgage or rent. I Still, for self-employment tax purposes, they must report the amount they would pay in rent or mortgage if they rented or owned the parsonage. They may also receive a housing allowance to pay for out-of-pocket expenses associated with the parsonage, such as minor furnishings, utility bills, or lawn maintenance.
Benefits. The benefit portion of a pastor’s pay- 4 check may not be very visible, but well-planned benefits can boost spendable income. Often pastors receive such benefits as medical insurance, pension plans, group term life insurance, and help with the stiff self-employment tax payments.
Total compensation. Adding a pastor’s salary and housing usually gives a figure that compares with other people’s salary. When benefits are added to | the salary/housing figure, you have the total compsensation the pastor receives, the money the pastor ] is paid in return for service to the church.
Expense reimbursements. While the professional expenses reimbursed to a pastor do cost the church money, they should not be mistaken as pay. Instead, they ought to be treated like other church operating expenses, such as the electric bill. A pastor doesn’t benefit from the reimbursements; he or she simply rece)~~~ilives back money spent while ministering for the church. Such items as auto expenses, convention and continuing-education costs, entertainment and hospitality, books, subscriptions, and memberships often are paid by the church.
Total package. This is the bottom-line cost of having a pastor. Some of it is pay; some of it is operating expenses. All of it ends up in the church budget.
All the figures that follow are for senior pastors (heads of staffs that include other ordained ministers) and solo pastors (the only pastor at a congregation). While the 1992 Church Compensation Report covers associate pastors and many other positions, we’ll be talking about only senior and solo pastors in this article.
Twice before, LEADERSHIP has surveyed pastoral compensation-in spring 1981 and fall 1988. Most of the following references will be to the 1988 study, although you will find information from the 1981 survey in some of the graphs and tables.
Okay, now that we’re speaking the same language, let’s get to the news you’re after.
Pastors’ Pay Is Up
The mean (average) total compensation for pastors in late 1991 was $37,260. This figure is up 12.6 percent in the three and one-half years since our previous survey in early 1988. Since the Consumer Price Index has risen approximately 16 percent in the same period, pastors have fallen slightly behind, much of it because of the 6.1 percent increase in the cost of living in 1990. Graph A compares pastoral income since 1981 with the inflation rate.
The components of the total compensation bear individual examination (see Table 1):
Salary. Pastors now average $21,940 in cash salary, up only 7.4 percent over 1988’s $20,431. Notably, the senior pastors’ average of $27,142 is 32 percent above the $20,617 solo pastors’ average (see Table 2).
Housing. If we take into account both the equivalent value of a parsonage and the actual housing allowance paid to pastors without a parsonage, the average housing compensation is $10,092. This figure bests the 1988 figure of $8,646 by 17 percent. It’s obvious that a greater proportion of the salary/housing increase since 1988 came on the housing side.
As might be expected, senior pastors received more than solo pastors in housing compensation. Solo pastors averaged $8,623, compared with senior pastors at $12,307-43 percent more.
Pastors who lived in their own housing fared better than pastors living in church-supplied parsonages-meaning that the equivalent value pastors living in parsonages report to the IRS is significantly less than the housing allowances homeowning and renting pastors receive (see Table 3).
In fact, the 46 percent of pastors who are buying or renting homes received an average of $3,182 more housing compensation per year-37 percent more-than the 54 percent of pastors who live in parsonages.
Benefits. The total benefit package, which averages $6,431, has jumped significantly since 1988, when it was $4,320. That’s a 49 percent increase. Here’s how the individual components break down:
-The 66 percent of pastors who receive pensions retirement help average payments of $3,810. Senior pastors average $4,286, and solo pastors average $3,486. This benefit averages 12 percent of the salary/housing amount.
-The 38 percent who receive help with self-employment tax average an allowance of $2,871- about 9 percent of the mean salary/housing figure. For senior pastors the allowance averages $3,575, for solo, $2,413. Note: This is a fully taxable benefit that the IRS considers no different from salary.
-Churches for 77 percent of pastors who receive help with insurance (health, life, disability) paid an average of $3,745 in premiums. Senior pastors had $4,080 paid, and solo pastors averaged $3,513. Overall, insurance benefits were up over 50 percent from 1988 reflecting the rapidly spiraling costs of health care.
A word of explanation: If you add the $3,810 for pensions, the $2,871 for self-employment tax, and the $3,745 for insurance, you don’t get $6,431, the average total benefits package. Why? The first three figures were averages for those who receive the benefit. Since not all pastors receive all the benefits, the average total package will be lower than the combined total of the individual benefits.
Expense Reimbursements Are Rising
Compared with 1988, professional-expense reimbursements are up 35 percent. Combined
average reimbursements stand at $3,256 today and were $2,404 in 1988. In all, 78 percent of pastors receive at least one kind of reimbursement.
Among the various types of professional expense, the percent receiving reimbursements and the amounts received vary:
Auto. The 69 percent of pastors who receive transportation reimbursements were returned an average of $2,669. The senior pastors’ $2,958 was nearly $500 more than the solo pastors’ $2,489. At the IRS standard mileage rate of 27.5 cents/mile, the average minister would have to drive about 9,700 miles (about 31 miles per work day) on church business to justify this amount. In 1988, the auto reimbursement was $2,104, meaning this reimbursement has climbed 27 percent.
Convention/continuing education. The 62 percent whose churches picked up expenses for church conventions or continuing education were reimbursed an average of $750, although what senior pastors received ($919) was considerably more than what solo pastors saw ($629). Today’s average is up 57 percent from 1988’s $479.
Professional expenses (books, subscriptions, memberships, etc.). The 33 percent who received this reimbursement had an average of $639 returned to them for professional expenses. Senior pastors received about $100 more a year than solo pastors.
Entertainment/hospitality. For the only 14 percent who were reimbursed for entertainment and hospitality expenses, the average reimbursement was $827. Senior pastors received $941, while solo pastors got $684.
It Costs More to Sustain a Pastor
Here’s the bottom-line average cost to the church to have a pastor labor in their midst for a year: $39,821. Remember, that’s not what a typical pastor is paid (because the figure includes both compensation and expense reimbursements); it’s what it costs the church to sustain a pastor’s ministry for a year. In1988, the figure was $35,499, about 12 percent less.
There are other ways to look at this bottom-line pastoral cost. For instance, consider Table 4, which compares the average total cost of a solo pastor with both church attendance and the amount the average attender must give to sustain a full-time pastor.
Although pastors at smaller churches cost less- say, $24,900 at a church under fifty compared with $47,100 (nearly twice as much) at a church of 201-300 -the average attender at the small church would have to give at least $500 a year, compared with about $200 a year for the larger church, to meet the church’s obligation to the pastor.
Compensation Determinants
Does getting a bigger church mean receiving a larger salary? Probably. Which pay better: small town churches, or those in a suburb? The suburban churches.
If you were to live off the compensation of another pastor, who would be your best bet? Find an Episcopal rector, over 50, with a doctorate, whose church has more than 1,000 in attendance and a budget exceeding $1,000,000, who lives in a metropolitan city in the South Atlantic region.
Which factors mean the most in setting pay? Try these.
Position. Senior pastors characteristically earn $10-14,000 more total compensation than solo pastors with similar other circumstances and characteristics .
Education. Across the board, a senior pastor with a doctorate can expect to earn about $15,000 more total compensation than one without a college degree, and $7-8,000 more than pastors with a master’s degree. Average for senior pastors with a doctorate: $53,327. Average for those with a masters: $45,066.
Solo pastors with doctorates ($36,548 average total compensation) earn more than those with no college degree by about $10,000, and more than those with a masters degree by $2-3,000.
Community. A suburb of a larger city is the best-paying place for solo pastors ($36,537 average total compensation), followed by a metropolis ($34,074), small town ($30,905), and rural area ($26,034).
For senior pastors, the top two are reversed: a metropolitan city ($49,232) edges out the suburbs ($48,782). The small towns average $40,374 and rural areas $37,182.
Church budget. For senior pastors, total compensation varies most by church budget.
Total church budget Average total compensation
Under $100,000
$100,001-$150,000
$150,001-$200,000
$200,001-$300,000
$300,001-$500,000
$500,001-$1 million
Over $1 million
$36,494 $37,760 $41,484 $46,562 $50,112 $60,877 $78,421
For solo pastors, the range varies from an average total compensation of $22,849 for churches with budgets under $50,000 to an average of $46,335 for churches with budgets between $200,000 and $300,000.
Denomination. Senior pastors from the five best-paid denominations (Episcopal, Congregational, Lutheran, Presbyterian, and Reformed) average $53,115 in total compensation. The lowest paid denominations (not including Catholic, which averages $20,892) average $40,896, which is about 30 percent lower.
Gender. We have a surprise here: Female solo pastors average nearly 15 percent higher total compensation ($36,801) than their male counterparts ($32,020).
Female senior pastors, however, are paid total compensation nearly 37 percent below their male colleagues ($33,339 vs. $45,543).
Feelings about Compensation
Somewhere, scattered across this great land of ours, dwell a few thousand pastors who consider themselves ovcrcompensated. But they’re few-a mere 1 percent of senior and solo pastors.
A much greater band 66 percent of senior pastors and 59 percent of solo pastors-feel they are “fairly paid.” That leaves 34 percent of senior pastors and 41 percent of solo pastors who feel underpaid to at least some degree.
This survey, naturally, deals only with financial compensation. In actuality, no one gets paid like a pastor-in satisfaction for doing the Lord’s work, in the opportunity to draw close to God while “at work,” and in relationships with some of God’s most wonderful saints.
Copyright © 1992 by the author or Christianity Today/Leadership Journal. Click here for reprint information on Leadership Journal.
