The second major takeaway I had from this past HC pastors’ conference is how to be fairly paid as a pastor.
One of my favorite traditions of the house church conference is that one night we all go out for buffalo wings. This time the topic of pastor salaries came up. Pastor Eric, Pastor Rein and Pastor Youngsu all started asking me questions about my salary and they were concerned about how low it currently is. I asked them how I could determine a fair amount. They gave some good principles to use as a guide. At the end I share some of my own calculations of what I think would be a fair salary using these principles.
From Pastor Eric — Find the public school teacher’s salary for your area.
- Pastors are a teaching profession like public school teachers. Also like school teachers, pastors are often underpaid. It is fair that a pastor be making at least a teacher’s salary. After doing some research I found that the average teacher’s salary is around $60,845. I told PE that this is a problem because our KSC senior pastor makes around $50,000 so it would be tough for me to ask for more than him. He told me that probably he has many other benefits from the church that would make the value of his package higher so I should look into that as well.
- PE also suggested an idea of how to pay for the raised salary if your congregation is not fully financially independent yet. In New Life’s early days they split the cost of his salary 50/50 with the KSC until they were more financially stable.
- PE also encouraged me to research more about clergy tax deductions. He said there are websites that will list all the available clergy deductions. New Life has a simple salary structure of 3 parts: Salary, Housing allowance, Itemized deduction. Although I have been a pastor for many years now I had never really tried this as a minister but am starting to do research on it and plan to go over it with my accountant also.
- What about salary increases? PE’s practice is that they do a standard increase of 2% plus the inflation rate of that year. So if the inflation rate was 4%, then he would get a 6% increase for the next year. An exception would be like the past year where inflation was abnormally high, for that his finance person chose a number that he deemed was fair.
From Pastor Rein — Find the median household income of your city.
- The standard of living varies greatly from city to city. So finding the median income for my specific city would be a great way to determine what is fair for our city context.
- He also said shared something Pastor Chai had said before about pastor’s salaries. Once you find the fair salary the church should put that salary in the actual budget and show a deficit. This way even though your church is not paying the full salary, they are at least seeing how much you are being underpaid each year.
From Pastor Youngsu — Find the average salary of your church members.
- The nice thing about this option is that it would be even more localized to my specific church context and not just my city. Even if Nashville has a certain standard of living that doesn’t mean that will exactly match our current church membership. I like this strategy but the only tricky thing about it is how to find out the salaries of your members. It is a sensitive topic and I’m not sure how I would go about that.
- He also added that after finding the average salary he takes off another $10,000 to factor in minister tax benefits.
What would be a fair salary for me in Nashville?
- Current Salary — $42,000 ($3500/mth, gross)
- Nashville Teacher Salary — $60,845 ($5070/mth)
- Teacher Salary Minus $10K — $50,845 ($4237/mth)
- Median Household Income Nashville — $62,515 ($5166/mth)
- Median Income Minus $10K — $52,515 ($4376/mth)
If I take the higher of the two (median household income) and subtract $10k for various tax benefits, then it looks like $4400 a month would be fair. Which means I’m probably being underpaid by $1100 a month currently. If our ESC splits that salary with the KSC for a temporary time then it would come out $2200 a month each.
I used to be shy about asking for more pay. I was too worried about being a financial burden on the church so I just accepted being underpaid for many years or asked for very modest raises. But my mindset is changing. Now that I know these principles I feel more confident that what I’m asking for is fair and reasonable. As PE tells his people “You need to eat? I need to eat too!” I would add to that “You have kids? I have kids too! You want to retire someday? I want to retire someday also.”
Do you have any other thoughts of how to figure out a fair salary as a pastor?