Since it’s unlikely that anyone on your church staff is in the top 1% of earners, when it comes to compensation, wage stagnation must be a consideration when building a church budget. Wage stagnation is the term that describes little to no growth in employee wages over a period of time. Drew DeSilver at Pew Research says that even though paychecks today are larger than they were 40 years ago, inflation has kept the purchasing power relatively flat. That means the average hourly rate of $4.03 1973 had the same purchasing power that a $23.68 hourly rate would today. For churches, the tension often happens when allocating the already tight resources. Suddenly funding the mission is no longer just supporting missionaries out in the field, subsidizing youth camp costs, and buying curriculum. It is making mortgage payments, paying utilities, insuring the property and officers, and, of course, paying the staff. While keeping wages flat may seem like a way to maximize donations to achieve the mission and accomplish ministry objectives, it is necessary to evaluate the impact of wage stagnation on the most valuable resource in the church – people.
Cost of Living
The Burea of Labor Statistics Consumer Price Index shows the 12-month consumer price index is now at 6.8%, the largest increase since 1982. This data proves what most have been experiencing – your dollar is not going as far as it used to. Without being too cynical about how people actually give compared to Biblical giving, this is most likely hurting the donations at the church. Increased costs of goods and services and decreased donations combine forces to keep wages flat for the staff, making the perfect recipe for tough times creating a church budget. A recent Barna survey shows that 38% of Pastors have thought of leaving the ministry. The bottom line, ministry is hard work. Retaining good staff is essential to any organization attempting to fulfill its mission, even more so for the Church. When building the church budget, start with a COLA (Cost Of Living Adjustment) factor for all employees. Defaulting to 3-5% COLA is an easy way to hedge wage stagnation and demonstrate value to the hard-working staff.
Most would agree that it is nice to be acknowledged and appreciated. That’s why it’s imperative that churches, just like any other organization, formalize a method to review the performance of the staff. It keeps an open dialog on key performance indicators, allows management and staff to celebrate wins, and provides a forum to set goals and designate areas to improve. When an employee demonstrates a track record of ideal performance, showing appreciation with an increase in salary or bonus is appropriate. The Message says it best, 1 Timothy 5:17-18, “Give a bonus to leaders who do a good job, especially the ones who work hard at preaching and teaching.” Avoid wage stagnation by designating a portion of the compensation budget for merit increases. Specifying an amount at the beginning of the budget process shows intentionality to go beyond the cost of living.
There is a lot that goes into building a comprehensive church budget. Most church budgets allocate about half (45-55%) to compensation costs. That is why getting the compensation piece right requires planning, patience, and prayer. More than just knowing the categories, factoring in ways to stave off wage stagnation is part of the equation to build a successful church budget.