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Unpacking Localization

Localizing salaries for pastors presents a unique set of challenges and required developing a new methodology.
Unpacking Localization
Image: bamlou | Getty

Creating the Localized Salary Recommendation section—a highly requested feature—presented ChurchSalary with a unique set of challenges.

In order to create this new tool, ChurchSalary quantified the level of influence that budget, size, and location each have on pastoral salaries. Armed with this knowledge, we devised a methodology to properly account for the influence that each of these variables has on compensation.

How does location impact salary?

With the help of Clarity Research, ChurchSalary performed an in-depth statistical analysis of pastoral salaries in the first quarter of 2020. This analysis helped us quantify the two primary influences of pastoral compensation—budget and size—as well as the third—location.

The relationship of these three variables is clear:

  1. Pastors get paid based on how much money is in the budget.
  2. A church’s budget is heavily influenced by size (or per person giving).
  3. Per person giving, as well as the cost of living and ministering in a community, are influenced by factors such as urban density and certain demographic characteristics.

In the language of statistical analysis, these three variables positively correlate with salary. Of these three, budget is the most highly correlated and has the most direct influence.

For all these reasons, congregations located in your community are not always a good yardstick for setting compensation, especially if their budget or size is different. Finding churches that pay “like you” requires a proper accounting of all three variables.

Avoiding rough and indirect methods

Two common methods for localizing salary rely on rough or indirect adjustments such as multiplying salary data by variables such as the cost of living index (COLI) or median household income. Both present several problems.

For example, COLI is a relative measurement of the cost of goods and services for the top quintile of US households. Because it is a relative measurement it intentionally exaggerates the difference between locations and this percentage difference does not translate into a dollar amount. In other words, a 10% higher COLI is not necessarily equivalent to a 10% higher salary. It may in fact equal an extra $1,000 or $8,000 worth of expenses.

To learn more about the pros and cons of localizaling salaries by multiplying by COLI or other metrics, check out “Unpacking the Cost of Living Index.”

Finding the most relevant dataset

With these challenges in mind, ChurchSalary created the Localized Salary Recommendation (LSR) section. The goal of this new section is to provide you with the most relevant dataset for employees at your church.

To accomplish this, our Salary Calculator analyzes real salary data based on the most similar full-time pastors serving at churches in communities similar to yours. Performing this analysis requires our system to sort through millions of possible combinations for each position, which requires a large sample size. That is why, even though we have 24,000+ employees in our database, the Localized Salary Recommendation tool is only available for full-time pastors (except for Media Pastors).

Each localization variable enables our Salary Calculator to look for matching employees. These matches are then used to create average salary figures for each variable as well as a localized salary recommendation.

Each localization variable is grouped into deciles (a group of ten). These deciles are specified on the left-hand side of the table with the averages listed to the right. The table contains an average for base salary and housing allowance, which are added together for a total figure.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."

Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

Lilly Endowment

ChurchSalary is made possible through funding from the Lilly Endowment Inc. As part of Lilly's "National Initiative to Address Economic Challenges Facing Pastoral Leaders," ChurchSalary—and our parent, Church Law & Tax—is committed to helping church leaders and pastors develop an atmosphere of healthy financial stewardship, especially in the area of church staff compensation.