Why Churches Need to Strive for Fair, Competitive Pay

The past several years haven’t been easy for Cross Bridge Church in Rockledge, Florida, located on the state’s east coast. While members of the small Nazarene congregation struggled to recover from hurricanes that hit in 2004 and 2005, they suddenly found themselves reeling from the Great Recession—only worsened by job losses due to the area’s depressed aerospace industry. But, says Sylvia Eppig, the church’s accountant, after much sacrifice, the church is finally in a better place.

“We hired a new pastor a couple of years ago,” Eppig says. “He and our finance committee had to make some hard decisions. Many benefits like health care had to go.”

But the financial outlook of the church is now brighter.

“This past year we were able to give raises,” says Eppig. “Right now, our desire is to fairly compensate our employees. In fact, we’re working toward giving them compensation packages that are comparable to what other church’s give for similar positions.”

Whether small and struggling or large and financially healthy, many churches are giving greater attention to what other congregations are offering their employees.

“We’re trying to compensate people in the competitive market of the larger church,” says Matt Gates, business administrator at Victory Family Church in Cranberry Township, Pennsylvania. With a yearly income of around $5 million, Victory averages a weekend worship attendance of around 3,000 and employs nearly 80 full- and part-time staff members.

Nationally, about 44 percent of a church’s budget goes toward employee compensation, according to new survey findings published in Church Law & Tax’s 2016-2017 Compensation Handbook for Church Staff. Victory currently puts more than 55 percent of its budget toward salaries. “We’d prefer that to be 55 percent or lower,” says Gates. Still, he believes employees need to be fairly compensated. Competitive pay helps keep good people, he adds.

Senior staff members at Victory have made sacrifices at times to help. “One year our top-paid pastors chose not to take raises,” Gates says. “This allowed us to increase our lower-paid staff, and it also allowed us to funnel more money into ministry.”

Not all churches commit around half of their budgets toward salaries. Honolulu’s C4 Christ Centered Community Church, for example, strives to split its budget evenly. “Our goal is one-third for compensation, one-third for facilities, and one-third for ministry,” says Dale Saito, C4’s executive pastor. “Right now, we are at around 38 percent. We’d like to push that down some.”

Even though C4 has around 1,300 in attendance for weekend services, the church only has seven full-time employees and ten part-timers.

“This church is built on volunteerism,” says Saito.

This emphasis on volunteers allows C4 to pour more money into ministry, but it also allows the church to offer competitive compensation, including benefits like health care insurance.

“We provide health care for employees that are at 20 hours or more per week,” says Saito.

With more than 50 employees, Victory has a group health care plan. “I have really worked with our health care provider to avoid astronomical increases,” says Gates. “Believe me, though, we are very aware of how ACA can affect health care costs, but so far it hasn’t affected us that much.”

While health care remains a difficult issue, it’s still part of most church compensation packages. The number of church staff receiving health insurance varies from 40 percent to 75 percent, depending on the position, reports Church Law & Tax’s compensation survey.

Gender remains a major concern for equitable compensation. Some discrepancies may be explained by various factors, such as setting, church size, and budget. Other discrepancies aren’t so easily understood. Male youth ministers, for instance, appear to make around $9,000 more than their female counterparts in churches of similar size and budget—even though females, on average, have been employed at their respective churches about two years longer than males.

As a youth ministry associate with Slingshot Group, a hiring and job search organization for churches, April Diaz has observed this gender gap. She stresses that churches need to “pay for the position, experience, and qualifications rather than gender.”

“I am a big one for fairness of pay,” says David Fletcher, executive pastor of First Evangelical Free Church of Fullerton, California, and founder of XPastor.org. “If experience and education are the same and compensation is just based on gender, churches are not treating women well.”

Around one-third of full-time executive or administrative pastors serve in churches with an income of less than $500,000 and with a weekly worship attendance of under 300. Executive/administrative pastors in smaller churches (attendance 500 and under) receive a total compensation package (including benefits) of between $40,000 and $71,000. Executive/administrative pastors in churches with more than 1,000 in attendance receive, on average, $99,000.

“It used to be that a church of 800 needed an XP,” says Fetcher. “Now the world is much more complex.”

Like larger churches of the past, Fletcher says smaller churches now face complicated legal, insurance, HR, and other administrative issues that require greater expertise.

Fletcher says a small church needs to determine if it should hire a full-time executive pastor or if it can get by with an alternative arrangement. “There are a lot of competent people who are serving as an XP on a part-time basis or even for free,” he says.

Hiring and paying staff, says Fletcher, shouldn’t simply be about a paycheck or filling a position. There needs to be a long-term plan for employee development.

“Overall, the church has a very poor process for advancing and growing staff,” he says. “It’s like, ‘Here is your position. This is it for life.’ But what do you do with your worship leader when he turns 40 or 50? Many churches won’t hire a contemporary worship pastor who is over 50.”

When it comes to benefits, Fletcher says employee candidates should ask about a retirement plan. “Very few pastors ask that question when they get a job,” he says. “They just look at the salary.”

Similar to health insurance, the number of church employees receiving retirement benefits varies significantly (35 percent to 64 percent) from one position to the next.

Churches also need a plan when determining compensation, Diaz says. She stresses that churches should create salary ranges for job title or position, avoiding other reasons, such as financial need.

“A few months ago a church told me that if it hired a guy with a family he would be paid at the top of the range,” says Diaz. “But if the church hired a single guy, he would be paid at the bottom of the range. I said, ‘You can’t do that.’ You’re paying for the position, the responsibility, and the work that’s getting done. Whether or not that person comes with a spouse or a family shouldn’t be a consideration.”

Fletcher says that every church needs a “staffing plan and a compensation grid. They need to know the maximum and minimum amounts they will pay for a position.”

Most of all, Fletcher stresses that all employees should be treated fairly: “I am disappointed when I hear that any individual, gender, race, ethnicity, is not paid accordingly for the merits of the job. Fairness is key.”