ChurchSalary reports include a cost of living index (COLI) to estimate local expenses relative to the national average. However, COLI alone can be misleading as:
- Employees can minimize the cost of living by buying smaller homes, living in more affordable neighborhoods, or being more frugal with purchases.
- The cost of housing is estimated by comparing the most expensive 20% of homes in your area versus the nation as a whole. This often doesn’t reflect the income bracket of church employees and houses in the median or entry-level range may be more affordable.
- Finally, some areas are more affordable than others—depending on where you live, wages may be higher than costs or wages may be lower than costs. Every community is unique.
As a result, a county's COLI figure does not always directly reflect what employees will (or should) get paid in your community.
To quantify the gap between the COLI and local pay, ChurchSalary conducted a study of average pay for 9,000 senior/solo pastors across 42 metro areas.
The results of that study enabled us to create the Local Income & Cost Analysis (LICA) tool, which is accessible to Expanded (and higher) members through our new Cost of Living Analysis app.
Worse Than a Coin Flip
ChurchSalary’s research revealed that the county cost of living index (COLI) predicts local pay at the metro level less than 25% of the time—worse than a coin flip. This spurred us to investigate up to 6 different metrics across four geographic levels as potential proxies for local pay:
- Metrics: Median household income, per capita income, median home value, regional price parity (County & Metro), COLI (County & Metro), and cost of labor (Metro).
- Geographic Levels: Census Tract, Place (City), County, and Metro.
Unfortunately, the coin flip problem persisted as our research revealed that the most reliable of these 17 candidates predicts local pay across all 42 test locations only 33% of the time. We simply couldn't identify a better single candidate that worked for every location.
Rather than searching for one silver bullet, we started looking for patterns and common thresholds among all 17 metrics across our 42 metro test areas. This analysis revealed a set of common thresholds or clusters in every location—one of which almost always lined up perfectly with our measurements of local pay.
Our new LICA tool empowers Expanded members to identify these patterns within their own communities.
The LICA Advantage: 17 guesses > 1 Guess
In the same way that surveying 17 people for pizza recommendations will give you a more reliable answer than asking one, the LICA tool leverages multiple data points to help you see trends and patterns in your community using pattern recognition and machine learning.
When you type in an address or select one of your locations, Cost of Living Analysis app finds the most recent demographic data published by the Census Bureau, Bureau of Economic Analysis, and several other sources. You can use this data to create charts and graphs that you can share with other church leaders.
Our research indicates that one of the 5 to 7 common thresholds identified by the LICA tool is the best guide for how to create a local pay adjustment. Which one you choose will depend on your church's compensation philosophy—which can be distilled into two questions:
- How close to the church do you expect staff to live (Census Tract, City, County, or Metro)?
- How competitive do you want pay to be?
Real-Life Examples
Let's examine how the LICA tool performs with real-world examples. The averages presented are not blanket guidelines; we recommend utilizing the Localized Salary Recommendation section and the LICA tool in the Cost of Living Analysis app for precise insights.
Example 1: First United Methodist in Chicago, IL
For First UMC in downtown Chicago, the LICA tool identifies six common thresholds—three of which are super helpful.
- 14.6% City/County/Metro (Income & Costs)
- 5.9% County/Metro (Costs & Labor)
- 3.1% County/Metro (Income & Costs
Actual local pay measured by ChurchSalary for senior/solo pastors in the Chicago metro area is 6.4%. This aligns very closely with the second positive common threshold of 5.9%, which includes the:
- Metro | Cost of Labor: 6.1%
- Cook County | Cost of Living Index: 5.6%
Note that for three out of the four examples listed here either the first or second common threshold above 0% is similar to or very close to our direct measure of local pay. This pattern is so consistent that, in general, we recommend that churches consider these are your first, best options for adjusting local pay.
Explore the proxy metrics used to identify this common threshold in the chart below.
Example 2: Lutheran Church of the Resurrection, Roseville, MN
For the Lutheran Church of the Resurrection in the Minneapolis/St. Paul metro area, the Local Income & Cost Analysis tool identifies six common thresholds—five of which are helpful.
- 40.9% Neighborhood (Income)
- 20.6% City/Metro (Income)
- 9.4% City/County/Metro (Income & Costs)
- 2.5% County/Metro (Income & Costs)
- -6.6% City/County/Metro (Costs)
Actual local pay measured by ChurchSalary for senior/solo pastors in the Minneapolis/St. Paul metro area is 9.4%.
Example 3 | North Fort Worth Baptist Church, Forth Worth, TX
If we plug in a *nearby residential address for North Fort Worth Baptist Church, the Local Income & Cost Analysis tool identifies five common thresholds—four of which are helpful:
- 10.8% County/Metro (Income & Costs)
- 3.5% County/Metro (Income & Costs)
- -2.3% All (Income & Costs)
- -15.0% Neighborhood/City (Per Capita Income)
Actual local pay measured by ChurchSalary for senior/solo pastors in the Dallas/Fort Worth Metroplex area is 3.5%.
*Note: A nearby residential address may be necessary for churches located in business areas to obtain comprehensive demographic information.
Example 4 | The Rock Community Church in Anaheim, CA
If we plug in the address for The Rock Community Church in the LA metro area, the Local Income & Cost Analysis tool identifies five common thresholds:
- 155.6% Neighborhood/City/County/Metro (Median Home Value)
- 54.2% Neighborhood/County/Metro (Income & Costs)
- 18.5% County/Metro (Income & Costs)
- 9.6% City/County/Metro (Income & Labor)
- -17.8% City (Income)
Actual local pay measured by ChurchSalary for senior/solo pastors in the Los Angeles metro area is 8.4%. This is extremely close to the 9.6% County/Metro threshold identified by the LICA tool.
While Los Angeles has significantly higher housing costs (156% higher), the overall cost of labor (12.1% higher), per capita income (7.6% higher), and median household income (9.2% higher in Anaheim) are not proportionally as high. This indicates that while some churches may offer more competitive wages, others only provide minimal adjustments. No matter how you slice it, serving and living in Los Angeles is simply less affordable than the national average.
Conclusion
Identifying patterns and common thresholds among local costs and income is a more reliable guide for adjusting pay than relying on a single metric.
ChurchSalary is committed to analyzing pay, telling you the truth, and giving you the tools to make the best decision for your church and your employees. Every church is different. Your church has a unique compensation philosophy. We want to honor your uniqueness and to give you solid statistics based on deep knowledge and wisdom.
We’d rather show you the patterns and show our work than pretending that everything is simpler than it really is.