Payroll and Budget Changes for 2024

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Payroll and Budget Changes for 2024

Payroll and Budget Changes for 2024

While churches continue to face pressure to raise wages and spend more on staffing in general, results from our 2023 State of Church Compensation survey indicate that the job market is beginning to calm down and stabilize. For example, even though 8 in 10 congregations anticipate they will spend more on salaries and overall payroll in the coming year, the number of churches looking to increase their staff size continues to grow.

The data from this year’s State of Church Compensation Survey is divided into two sections: 2023 changes and anticipated 2024 changes.

2023 Changes

In last year’s survey, we reported that “around 40% of churches appear to be targeting an increase of 4-5% in their 2023 budget for salaries, benefits, total payroll, and a cost-of-living-adjustment (COLA). Another 20% of congregations are planning for a slightly higher increase in the 5-7% range.”

As the chart below visualizes, our prediction was very accurate. The only signficant difference was that churches increased spending on salaries by about 0.8% more than predicted, which led to a corresponding increase in total payroll spending. If you dig into the data, this overall increase in spending was driven both by churches making fewer cuts than they anticipated and by some churches spending slightly more than they anticipated.

Overall, 8 out of 10 churches made changes to their payroll (either negative or positive) in 2023. Of these churches, 82% increased wages, 32% increased benefits, and 74% increased overall payroll spending. While responses varied between churches, the overall median increase for salaries, benefits, and overall payroll was 4.875%, 4%, and 5% respectively.

In 2023, only 16% of churches reported decreasing their staff on purpose and only 11% reported decreasing their overall payroll spending. The vast majority of churches (74-77%) surveyed indicated that they increased the amount of money they spent on salaries/wages and overall payroll. Comparing these percentages to last year’s predictions, it is clear that churches simply made fewer cuts to staff and salaries than they predicted. We believe this is because they simply couldn’t afford to lose staff (replacing personnel right now is far more expensive than retaining them).

Slightly fewer churches offered bonuses or gift cards in 2023 (63%) than in 2022 (66%), and of those that offered bonuses fewer still offered them in lieu of permanent salary/wage increases (18% in 2023 versus 22% in 2022).

Data gathered on hiring over the course of the pandemic lines up perfectly with figures gathered last year through our surveys on the State of Church Compensation and The Impact of COVID-19 on the American Church.

As the pandemic officially ended and churches found their “new normal,” the number of churches hiring has increased from 22% to 37.3%. At the same time, the number of churches looking to decrease or maintain their staff size has shrunk from 22% to 16.4% and from 56% to 46.2% respectively. In short, more churches are looking to hire and fewer are planning on letting staff go

One way that churches offset some of the salary/wage increases in light of inflation in 2022, was by cutting or decreasing staff hours. This year’s survey indicates that around 75% of churches decreased the total number of hours worked by staff between 2022 and 2023.

The prevailing reasons that churches cited for cuts included decreasing giving/income (53%), often as a result of decreased attendance (22%), a purposeful or natural decrease in the size of their staff (26%), changes to benefits and/or ministry spending (5-7%), and pressure from increased facility or utilities costs (2%). Many churches noted the decrease in staff hours or paid staff was the result of voluntary attrition—staff left for other better paying jobs, retired, stepped down, or cut back their own hours becase they took on a second job (became bivocational).

This trend in 2023 mirrors feedback in last year’s survey that much of the decrease in staffing expenses was due to voluntary changes (turnover, positions left unfilled, and/or an increase in bivocational work).

Of the 35% of churches that increased the amount they spent on benefits between 2022 and 2023, 28% spent more on retirement matching and 54% spent more on health/dental insurance for staff. Less than 6% of churches were able to decrease the amount of money they spent on benefits in their 2023 budget.

2024 Changes

As churches look to 2024, 72% of churches anticipate they will increase spending on salaries/wages, 35% anticipate they will spend more on benefits, and 70% anticipate they will spend more overall on payroll. At the same time, 74% of churches plan on keeping staff hours the same, while 60% plan to maintain the same number of employees.

If true, this would indicates a course correction may be occuring in terms of hiring and staff expansion. Many of the churches that sought to hire and re-hire staff that left, resigned, or retired during the height of the pandemic are not filling those positions. As these positions continue to be filled, we hope that the job market will stabilize even further.

In 2023, churches are much more aligned on a cost of living adjustment of around 3%. Slightly less than half (44%) of churches plan on applying a COLA of between 3 and 3.5% for their 2024 budgets. Around 20% are targeting a lower COLA of between 1.5 and 2.5%, while 19% are considering a higher COLA of between 3.5 and 4.5%.

The median anticipated increase among the 385 churches that responded is 3.5% for salaries, 4% for benefits, and 4% for total payroll. The average projected increases are slightly higher at 3.9% for salaries, 4.58% for benefits, and 4.5% total payroll.

Based on this data, and armed with the knowledge that not every church was able to increase salaries last year due to inflation, we anticipate a 3.75% increase in spending on salaries, a 4.25% increase in benefit spending, and an overall 4.25% increase in total payroll.

Watch this year’s State of Church Compensation webinar to learn more about anticipated changes and pressures for churches as we prepare to move from 2023 to 2024.

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