By Herschel Patton
Several good articles have been written lately concerning preacher pay. Preferred Risk Insurance Company has circulated a leaflet entitled “How To Properly Insure Your Church and Provide Intelligently For Your Minister.” Under “How Much Should Your Minister Be Paid,” the leaflet says, `Ask yourself these questions . . . .
1. Would you be willing to work the hours your minister does for the pay he receives?
2. Could you support and educate your family on your minister’s salary?
3. Is your minister’s salary keeping par with today’s high cost of living?
4. Considering your minister’s education and what ,similarly educated men in secular work are receiving, is he being fairly compensated?
5. Could you provide the standard of living you expect of your minister on his salary?
6. If you had to give an account of your stewardship before God, would you feel that you have treated your minister fairly and honestly?
Remember living expenses have risen nearly 20 percent in the last five years according to the Consumer Price Index. The Department of Labor also reports that most professions have had 12-21 percent salary increases in the same period. How about your minister?”
The leaflet from Preferred Risk; goes on to mention some things involved in a church paying it’s minister a fair living salary, such as . . . .
“OPERATING /BUSINESS COST. Car expense runs from $1,000 to $2,000 more than for the average church investor. The Internal Revenue allows 15 cents a mile for the first 15,000 miles and 10 cents over that. Should your church do less?
HOSPITALITY AND ENTERTAINMENT. Luncheons, missionaries, and others in the home, etc.
CONTINUING EDUCATION. Travel on church business, conventions, library books, and supplies for church business.”
These are things that would come under the heading of expense account with secular works. Of course, Preferred Risk recommends that churches insure their preachers, since they have no retirement benefits, so that if he is disabled or taken from his family, he and they would be provided for.
Brother Norman E. Fultz of Dyersburg, Tennessee has written and published a very fine tract on “The Support Of Preacher,” wherein he presents the scriptural right of preachers to support and some misconceptions that many have concerning this matter. Brother Connie Adams had a fine article on this theme in the April, ’76 issue of Searching The Scriptures in which he clot only presented scripture authorizing such support, but pointed to numerous conceptions and notions, not according to knowledge, that many have. He also presented income standards in today’s business world, with fringe benefits, cost of living raises, etc. as measuring tools for determining a preacher’s wage. Brethren Tom O’Neal and Bill Cavender have recently had fine articles on this subject in the bulletins they edit.
Why This Article?
Why, then, should anything more be written on this theme since such scriptural teaching and informative things have already been fairly well circulated? Simply because men are still ignorant, or mis-informed as to what the preacher is actually paid. Many have read these fine articles and concluded “We are in line.” They look at the weekly amount that is paid the preacher, then at the house that is furnished and perhaps a few other benefits such as Social Security or hospital insurance and say “He’s well paid.” What is generally overlooked is the fact that the preacher is a self-employed person. This means his “in-take” is not his salary, for he has “Operating/ Business Cost,” considered “overhead,” or “Expense Account money” in the business world. In other words, it costs the preacher to make his income so that his total income is not his salary any more than the cash register receipts is the salary of the business man. There seems to be a need for some factual information in relation to “intake” and a “living wage,” which hasn’t been made clear.
The only way to get factual information on what preachers are actually paid is through a survey, which I have recently made. I mailed out a questionnaire to 100 preachers in the church (conservative preachers) all across the United States. The questions dealt with the preacher’s age, how many years preaching, schooling attained, size and contribution of church, salary received in money and benefits, taxable income (after deduction of Operating / Business Cost) and whether or not the preacher had additional income. I received 78 replies to this questionnaire. Of course, numerous preachers were not in the survey (I didn’t have their address), but enough did respond to give information as to what is generally true concerning “What we pay the preacher.”
Operating / Business Cost
What will perhaps be startling to some is the amount of “Operating /Business Cost” the preacher has. The Government allows the preacher to deduct car expense (for business. He can’t deduct his total milage. Some is personal), and other expenses involving materials and actions essential to his work. These expenses are deducted from the preacher’s total income to arrive at his real or “taxable” income. This figure represents the preacher’s salary and not the total amount paid. In the survey, the difference between amount received and taxable income was from $3,000 to $7,000. In most cases it was from 4 to 5 thousand. The average was $4,326.00. Averaged in this were some preachers who work at other jobs yet preach on Sundays. Naturally their “overhead” was not as much as those giving full time to preaching. Their expenses were in the $3,000 category whereas the full-time preacher’s expense was generally between 4 and 5 thousand. This is money that must be deducted from what the preacher is paid before his salary or wage is determined. To illustrate, a preacher whose total income for a year is $12,000 receives, after $4,326.00 is deducted as Operating Cost, a wage or salary of $7,674 per year. On this he must pay taxes and live.
As a part of the preacher’s salary, housing is often furnished. Sometimes a church gives the preacher a housing allowance and he furnishes his own; other churches own a house and furnish this to the preacher. It is more profitable to the preacher to be given a housing allowance and furnish his own house for in this way he builds up equity in .a house that would eventually be his. He also receives a double tax break in that he can deduct the interest part of payments and the house allowance is not considered taxable income.
Connie Adams wrote concerning preacher housing, “Usually when a house is provided as a part of his wage, the preacher’s pay is reduced by the amount of the payment. If he lives and preaches 40 years under such an arrangement, he will have enabled the brethren to purchase and pay for two houses and he will not even have a rent receipt to show” (Searching the Scriptures, 4/76, Vol. 17).
Brother Fultz, in his tract, said “The preacher has to pay self-employment Tax (Social Security ) on the fair rental value of the house and utilities which are provided. And consider this, a preacher works several years with a church and is provided a home as part of his salary. His salary has helped the church buy the house, and when he moves, it stays; and he does the same in his new location. In addition, any property appreciation has accrued to the church . . . after forty years of preaching, he has paid for a couple of homes, but he does not have either them or the equity they represent” (Tract on The Support Of Preachers by Norman E. Fultz, p. 12).
While the government does not consider the rental value of a house furnished the preacher taxable income (but as a fringe benefit comparable to numerous fringe benefits paid in the business world), it is considered by brethren as part of the preacher’s salary and he must pay S.S. taxes on it. However, as seen, this income is very little to the preacher. In the long run it is more income to the church than it is to the preacher. The rental value of a house is not, therefore, actual income to the preacher. It has been estimated that only about 40 percent represents value or benefit to the preacher. When brethren look upon two or three hundred per month paid to the preacher in the form of furnished housing as salary, they have a false figure in mind. The preacher’s salary, from this standpoint, is much less-about 60 percent less.
Some may raise the question, How could “Operating /Business Cost” run from 3 to 7 thousand dollars per year? A major expense here is automobile expense. All are aware of the great increase in automobiles and fuel the past few years. Most businesses furnish their employees a car and an expense account for travel on business. The preacher must furnish all this out of his salary. Remember, the government does not allow the preacher to deduct ALL his mileage, only business. Preferred Risk Insurance Company estimates the preacher’s car expense to run “from $1,000 to $2,000 more than for the average church investor.”
Another rather large item under “Operating/ Business Cost” is continuing education and source materials. The preacher must, if he keeps himself informed and equipped, be continually buying books, subscribing to numerous journals, taking courses (in school or by correspondence). Frequently he spends for various research materials in a certain field. Just recently, I purchased $23.00 worth of tapes on vital study material needful in my work. In preparing for a debate, a preacher usually orders every book and tape on the subject. Gathering material (making the survey) for this one article cost me $40.00 in postage, copying service, and envelopes. Many preachers furnish their own desk, typewriter, filing cabinets, etc. Just one good note-book holder, in these days, costs about $6.00 and the special note paper for it is just under $2 per 100 sheets. There is additional “dress clothing” and “cleaning” bills for the preacher. The cost in this area is, of necessity, held to a bare minimum of what is really needed by most preachers, for there must be something left of their salary to live on.
Another “Operating / Business Cost” for preachers listed by Preferred Risk Insurance Company is Entertainment, and related expenses. This is something that definitely runs higher for preachers than other members of the church. Who is it that generally keeps the preacher during a meeting, feed and/or sleeps a transient preacher-missionary? Entertains with meals in the home the young people, elders and deacons, newcomers, and other in general? Receives more graduation and wedding announcements in a year than others? Whose wife is hostess or a hostess for more weddings and baby showers? No preacher resents or regrets what is done along these lines for it is all’ done gladly and willingly, but it IS something that involves expense.
There are still other expenses that preachers have that would come under the heading of “Operating /Business Cost,” but with the cost of things in these days, these are sufficient to show how that such would easily amount to the average of $4,326.00 per year. (This figure is often higher, or lower, according to where one lives.).
Besides what would come under the heading of “Business Cost,” there is another item, not deducted as business, which takes a considerable amount from what the preacher has to live on, and that is his giving. The average preacher usually gives a larger percent of what he receives back into the church than others. His regular contribution usually represents at least 10 percent, and usually more, of the total amount he is paid, before “Business Expenses” are deducted. Personal deeds of benevolence, which takes money, like taking food or giving money to needy ones, taking members without conveyance to the doctor or Medical Center, driving miles (sometimes hundreds) to comfort a family in sorrow, etc. adds up to a considerable sum during a year. Here again is something that the preacher does because he wants to, therefore does it willingly and cheerfully, and for which he has no regrets. I mention it here because it is something to be considered when thoughts are on what a preacher receives and spends.
A Fair Living Wage
What is a fair living wage? Recently an A.P. report in the newspaper said, “The typical urban family of four requires $15,000 a year to maintain a moderate standard of living, the Labor department said Saturday. This, because of inflation, is $1,200 more than in the previous year. The same family can live at an austere level for $9,800 a year, or at a level allowing some luxuries for $22,500 a year, the government said in its annual analysis of hypothetical family budgets.”
According to this report, a preacher with a family needs an income of $15,500 for the year “to maintain a moderate standard of living.” Many churches, elders, and individual Christians think they are paying their preacher according to this “moderate” standard, looking at his total income. Just what are the facts?
In the survey that I have made, only two preachers approached the $15,000 per y’ear salary (after Operating / Business Cost were deducted). One in the North receives $385 per week salary with housing and car allowance specified in salary as non taxable income. The church also paid his Social Security tax. His total income is $21,000 per year. Operating / Business Cost ($6,000) reduced his actual income to $15,000. One in the West receives $350 per week, with housing furnished. His weekly pay, allowing about $200 per month for the furnished house, makes his total income about $20,000. His taxable income (total pay less Business Cost) was $15,000.
Twenty percent of all preachers in the survey were in the 12-14,000 bracket. These were from the states of Kentucky, Alabama, Texas, Tennessee, Missouri, Virginia, and California. Their weekly pay ranged from $235 to $350 plus such things as housing, Social Security, Car allowance, and hospital insurance. In some cases some of these items were included in the weekly pay check; in others, they were in addition to.
The average annual taxable income of all preachers in the survey was $9,568.58. Only five in the survey had no college training. Fifty three percent of all surveyed were college graduates, with degrees. Eighteen percent had their Masters or had done post graduate work. Of those whose taxable income from preaching was from 12 to 15 thousand per year, ages ran from 33 to 60, with from 11 to 42 years experience, and all except one had done some college work. Thirty seven percent of all surveyed had college degrees (up to Masters) with from 4 to 47 years preaching experience, yet received from preaching less than $12,000 per year salary. A little over 30 percent of these received in salary less than $10,000 per year. Of course, a number of these also teach school / college, and some are receiving retirement income. In other words, some in the survey who are thus prepared, yet receiving less than $10,000 per year, receive other income.
Age and experience are not generally taken into consideration when what we are going to pay the preacher is being considered. According to the survey, there are young college graduates, under thirty years of age, with from four to ten years of experience, whose salary is as much, often larger, than. some who have from 25 to 40 years experience.
A Work of Faith
This survey confirms what most people know, that those who do it are not in it for the money. Their training and experience would enable them to make much more (at least the moderate living standard determined by’ the government) in other endeavors. However, this desire to save souls and faith in the Lord’s promise “to supply necessities” constrains them to preach. Their need; not supplied by brethren, the Lord supplies in other ways such as blessing him with income from other sources. It is not surprising, therefore, to note from this survey that since preachers generally receive much less than the $15,500 (moderate living for a family) government standard, yet have children to educate and obligations such as others have, forty percent of all surveyed have income other than from preaching. This usually is in the fields of inheritance, wife working, teaching, writing, investments, or part time work at other endeavors.
It is encouraging to note that brethren across the land today are becoming more aware of the things involved in preacher support and are seeking to pay the preacher a fair living wage. At least, there seems to be a desire to do what is fair and right as they learn what is proper. Some, however, are still uninformed, hence there are those who say “We pay our preacher well” while others say “he is underpaid.” In this article, I have sought to furnish information that will enable all to determine and know “What We Pay The Preacher.”
One of the largest churches in the South with a contribution in excess of $1,700 weekly, paid their preacher (A college man with over 30 years preaching experience) $200 per week and furnished housing. They considered themselves paying their preacher well. He received $10,400 in actual pay. The house furnished was owned by the church, and counting it as $200 per month (even though no equity, mortgage interest, and appreciation accrued to the preacher), amounts to $2,400 per year. Thus, the preacher received $12,800 total income. Subtract from this $4,326.00 (the average Operating/ Business Cost for preachers) and he would have $8,474 salary. Out of this he has to pay taxes, including Social Security-currently over $1200-which would amount to at least $2,000, leaving a living wage of $6,474.00 for the year. This amounted to about $128.00 per week. Was this preacher being adequately paid? The brethren there thought he was! It is not surprising that this church has a rather frequent change of preachers.
Determining the Amount
To determine what we pay the preacher, take the weekly pay check (Fox example, say it is $250.00, or $13,000 per year) and add to this housing furnished ($200 per month is excessive if house is owned by the church) in the amount of $2,400. This brings the yearly income to $15,400:00. Add other benefits (car allowance, hospital insurance, Social Security) in the amount of $1,500-at least. This makes his yearly income $16,900.00. Subtract the average $4,326.00 for “Operating /Business Cost” and the preacher’s annual income in $12,574.00. If the preacher’s salary is permanent for the year and he is among the few “big meeting preachers” and is allowed to preach in several meetings, his profits for the year may be increased by another $500 to $1,000. Out of this total amount the preacher must pay all income and Social Security taxes, hospital insurance (much of which is fringe benefits in industry) which amounts to around $2,500 per year. This reduces his actual take home pay to around $10,074.00 per year. This example reflects the present average paid preachers (college educated and experienced) by good size churches with weekly contributions of several hundred dollars per Sunday.
These facts have come as a surprise to some elders when they were seeking to employ a preacher they desired. What they paid their former preacher, when he came and when he left-maybe over a period of several years-had been “the standard” for them. Now, they are surprised to find they can’t get one for that standard. They failed to keep pace with “cost of living raises.”
There is a tax benefit that elders can legally give preachers that is helpful to them. Housing, hospital insurance, and payment of Social Security (half or all) is not taxable income for preachers. While I have made paying these things, in this article, part of the salary churches pay their preacher, if the church pays these things separately rather than including them in the regular pay check, they are not classed as taxable income but are fringe benefits. By taking over these expenditures a church can give the preacher a raise that is truly helpful in that it does not increase his tax payment. This information comes from one who has just recently retired after thirty years with the Internal Revenue Service.
Truth Magazine XXI: 10, pp. 154-158
March 10, 1977