Reformátusok Lapja, 1969 (69. évfolyam, 1-12. szám)
1969-10-01 / 10. szám
REFORMÁTUSOK LAPJA 13 HOW MUCH SHOULD WE PAY OUR PASTOR IN 1969? “RISE IN LIVING COSTS GREATEST IN 17 YEARS” was the front page headline in one newspaper recently. The article went on to point out that today the cost-of-living index is rising at a faster pace than at anytime since the inflationary spurt produced by the Korean War back in 1951. This rapid increase in living costs may be the most important factor to be considered in setting the pastors’ salary for 1969. Frequently the two considerations given the most weight in setting the pastors’ salary for the coming year are the state of the parish’s treasury and the performance of the minister. Both are important, but there are several other factors that also should enter into the calculations. THE IMPACT OF INFLATION The most highly visible of these factors is the current inflationary spiral and the resulting rise in living costs. From 1958 to 1965 there was only a slight increase in the cost-of-living index. This rise averaged only a little more than a point a year. Beginning in mid- 1965, however, the United States moved into a period of inflation. The cost-of- living index stood at 109 in March 1965 (the 1957-59 period equals 100). A year later it had climbed to 112 and by June 1967 it was up to 116.1. In May 1968 it had zoomed up to 120.3 and then went on up to 120.9 in June. This would be a rise of 4.8 points in one year. There is every indication that this spiral will continue through at least the early part of 1969. WHAT DOES THIS MEAN? To understand the effect on the pastor’s salary, consider the case of the minister who received a cash salary of $6600 in 1965 and who has been receiving raises of $300 annually. In 1966 he was paid $6900, but his actual buying power increased by less than $100 because of rising costs. In 1967 he received $7200, but again his actual buying power rose by less than $100. In 1968 he is being paid $7500, but his actual buying power is almost exactly the same as it was in 1967 — inflation ate up the entire $300. If he receives another $300 raise for 1969 his cash salary will be $7800, but his buying power in the market place will be less than it is in 1968 — and only $180 greater than it was back in 1965! In four years a $1200 increase in salary will increase his purchasing power by less than $200. Over $1,000 of this increase was nullified by inflation. THE EFFECT OF SOCIAL SECURITY A second important factor to be considered in setting the pastor’s salary for 1969 is the change in the legislation on Social Security. A minister is regarded as a self-employed person by the Social Security Administration. This means the local church does not have to pay the employer’s normal tax on the pastor’s income. For the local church which pays their pastor a cash salary of $7800 this means a saving of $343. This “saving” for the parish is offset by the fact that the minister has to pay approximately one and one-half times the regular rate. In recent years there has been a sharp increase in the Social Security rates. For the minister who had a cash income of $6600 in 1965 and expects to receive $7800 in 1969 this represents a doubling of his payment. On his 1965 income he paid a Social Security tax of $259.20. On an income of $7800 in 1969 he will be paying $538.20 in this tax. This increase of $279 more than offsets the increase of $180 in his purchasing power that was left after he received four salary increases totalling $1200. In other words, the pastor who received a cash salary of $6600 in 1965 and who is scheduled to be paid $7800 in 1969 is actually experiencing a loss of approximately $100 in his buying power in the market place as a result of the rise in living costs and the changes in the Social Security tax. RECENT WAGE AND SALARY TRENDS In setting the pastor’s salary for next year, the parish finance committee also should consider the general rise in wages and salaries. In recent years most members of the labor force have received increases averaging between five and eight percent per year. The starting pay for college graduates this past June was about six to eight percent higher than a year earlier — and the 1967 average was about seven percent above the 1966 figure. The median income for all male professional and technical workers rose from $8354 in 1965 to $8773 in 1966 — an increase of $419. The median income for men with five or more years of college training was $10,041 in 1966 — up from $9,613 a year earlier. The median family income for all families in the United States was approximately $8,000 in 1967 compared to $7,436 in 1966 and $6,957 in 1965. Perhaps the most important yardsticks are the following two sets of figures. During the first three months of 1968 personal income in the United States was 7!4 percent above the first quarter level for 1967. This compared to a gain of slightly less than seven percent in 1967 over the 1966 level. Per capital personal income in the United States has been rising at an average annual rate of between six and seven percent since 1964. By contrast, according to a recent survey completed for Ministers Life and Casualty Union, ministers’ salaries have been rising by an average annual rate of 3)4 percent. WHAT ABOUT THE FRINGE BENEFITS? Typically the pastor of a local church is paid a cash salary and is supplied with either a house or a housing allowance, and the church pays all or part of his annual pension payment. Many — but not all — congregations reimburse the pastor for the cost of driving his car on church business and also pay the utility bills for the parsonage. In addition, an increasing number of congregations are paying part or all of the cost of a health insurance policy, reimbursing the pastor for the expenses incurred in attending conferences and meetings and providing some form of allowance for books and subscriptions to religious journals and magazines. More and more congregations are granting a full month’s vacation to the minister and a significant number are now providing for paid sabbaticals for study or travel. These benefits should be taken into account in calculating the total compensation of the pastor, but they should be analyzed realistically. For example, it is not unusual to find a pastor receiving a 7,000 cash salary living in a $40,000 parsonage. This means that the minister is receiving 35 percent of his total remuneration in the form of expensive housing accommodations. If he had his choice on the subject he might prefer to receive an extra thousand dollars in salary and live in a $25,000 or $30,000 parsonage. Since the congregation owns the parsonage, however, they often tend to prefer to put the extra money in an expensive house rather than pay it out in salary. CONCLUSIONS For the parish that is seeking more specific advice in setting the pastor’s salary for next year here are three alternatives that merit consideration. 1. The congregation that wants to increase the salary of their pastor at the same rate wages and salaries have gone up for other members of the labor force will be paying their pastor 28 to 29 percent more in 1969 than they paid in 1965. Thus the parish that paid $6600 in 1965 should plan to pay about $8400 in 1969. 2. The congregation that simply wants to have their minister have the same buying power in the market place in 1969 that he had back in 1965 will be paying 14 percent more than they paid back in 1965. If their pastor is covered by Social Security they should add another 3 to 6 percent (depending on whether he was covered by Social Security in 1965) to this because of the rise in the Social Security tax rate. If they increase their ministers’ salary by about 17 to 20 percent he will be maintaining his level of buying power, but losing ground in relationship to what other people are earning. A raise of this extent simply means they will be offsetting the impact of inflation. The parish that chooses this alternative and that paid $6600 in 1965 should plan to pay between $7700 and $8000 in 1969. —Lyle E. Schaller
