One of the scary parts of dedicating your life fully to the ministry is the financial burden that “usually” comes along with it. When you enter church service you should be there as a servant of Christ, not your next paycheck.
In most circumstances in the United States, an ordained Pastor is ineligible to receive any type of unemployment from State or Federal sources.
Why Pastors can not receive unemployment
Most churches elect to not pay the Federal Unemployment Tax Act (FUTA) tax. Because of this, any Minister who has not elected to voluntarily pay into unemployment is ineligible to receive a payout from the fund according to the IRS.
“Churches and religious organizations are not liable for FUTA tax.”
IRS.gov
How can a Pastor be eligible for unemployment
Generally, there are two ways for a Pastor to be eligible:
- The church has paid into the unemployment tax.
If your church has elected to pay the tax, then you are set. You can file your paperwork and collect your pay. *As a side note, instead of paying into unemployment, consider paying into a severance fund or matching Pastoral 401(k) contributions with the money.
- The Pastor has worked enough outside of the church to be eligible.
If you have worked enough throughout the year to establish a taxable income, you may be able to file for unemployment based solely on that income. Each state has specific requirements to meet to be eligible, but most have decent resources to help you determine your unemployment based on your taxed income.
You can find your specific state’s requirements pretty easily but here is a link to California’s EDD website for a quick example, this is the chart used to determine payouts. I think that is a fairly horrific chart to try and follow so here is a quick comparison table as an example of unemployment payouts.
You can find California’s Unemployment Calculator here. You can put in your own numbers to see what your ACTUAL payout should be.
| Previous Monthly Income | Weekly Unemployment Payout |
| $600 | $69 |
| $2,00 | $231 |
| $6,000 | $450 |
Are any church staff members eligible for unemployment
There can be some exceptions made on the local or state level for non-ordained church staff to be eligible for unemployment. This could include an Associate Pastor or Church Administrator in some cases.
For example in New York (Section 563(2) of the New York State Unemployment Insurance Law) “no-religious” staff may be eligible to receive unemployment benefits if the church has the appropriate job description/requirements and has filed the appropriate paperwork/taxes.
Why it doesn’t matter if you receive unemployment
There are a few reasons it doesn’t truly matter is you can’t collect unemployment.
- God’s work
- Savings
- Severance
- Charity
God’s work should be the primary reason for your initial entrance into the ministry. Hopefully, Pastors aren’t shepherding God’s flock for the 401(k) or Health Benefits.
I tried my best to not be too heavy-handed but consider the fate of the Apostles; burned, beaten, fed to beasts, and crucified. This was all done for the glory of God and for the dissemination of the Gospel. In light of the sacrifices made by those throughout history, a few weeks of dipping into saving should seem like a gift.
8 The silver is mine, and the gold is mine, declares the Lord of hosts.
Haggai 2:8
*All of our money, resources, and time ultimately belong to Christ. Our very existence is for His glory and by His grace. With this in mind, don’t lose sight of the bigger picture problems and priorites.
Saving should be a huge part of your monthly budget. Most pastors do not have to pay into Employment taxes or Medicare taxes. This means that a large portion of your monthly take-home could still be planned to be paid into a “tax”. The tax of your future. You just start a second bank account and pay yourself that untaxed income of 20-30% into your future personal ‘needs fund”. This personal emergency fund or self-severance could quickly be funded up to a point where find a new position would be easier to handle. Recommendations for 3-12 months of expenses are pretty standard for an emergency fund.
Severance is something many churches have budgeted for at some point in their history. The nice thing is that if the funds are never needed they can sit “just in case” for the life of the church. Once the funds have been allotted, hopefully, when there is a surplus, the staff of the church can rest a bit easier knowing they have a personal “Alamo” behind them if needed.
What are some alternatives “normal” unemployment
Some of these may seem obvious, but often the separation from a position can lead to some confusion on what to do next.
First and probably the best plan is to get another job at another church. Throughout your time in the church, you have gotten to know who and where you would want to work next. Now it is that opportunity! This new role will probably not be to take over the reins of a church out of the blue, but there are roles for an experienced pastor or church administrator to fulfill.
- Sermon research and preparation for the Preaching Pastor. While we would never recommend delivering a sermon prepared by someone else, some of the verse correlation, quote aggregation, and historical narrative cultivation could increase the efficiency for the preacher to conduct their own sermon prep.
- Administrative and Legal obligations take up a large portion of the Pastoral schedule. Policies, procedures, and budget concerns can be handled in the place of the Senior Pastor in many cases.
- Counseling is another sizable portion of time most Pastors must allot in their schedules. By handling some of the initial meetings, or non-critical counseling, you can free up the Pastoral Staff for other priorities.
The second would be to get another job outside of the church. A great option is to go and teach. Most high schools only require substitutes to have some type of Bachelor’s degree. Most Pastors have at least a Bachelor’s degree. The standard schooling in the United States is to attain a Master’s of Divinity (MDiv). Leveraging this Master’s most Pastors are qualified to teach humanities at the college level.
Despite the rumors going around, teachers can make some very high hourly wages. Six-figure incomes without tenure are standard at most junior colleges and universities. In an adjunct faculty role, you can still participate in the ministry while keeping your mortgage paid.
The third option is to hit the road! Missionary positions across the globe would be ecstatic to have a seasoned Pastor come aboard. This can be in a formal pastoral role, or in a more traditional missionary role. Your experience and the needs of your mission will dictate a lot.
By partnering with a large denominational based missions organization you will have access to any needed training, travel assistance, or funding needs. You can also reach out directly to a local missionary group or partnership in a specific country, this will not afford the same financial or logistical benefits but you can do some great work for the Gospel. In these two cases, you can begin your journey sooner than average missionary.
How to prepare yourself to never need unemployment
Be sure to read our post about how to actually make a living as a Pastor. In there we cover different options available to you today to prevent the NEED for unemployment in the future
Conclusion
With the lack of unemployment payments in your possible future, please take some action. If nothing else, consider this lack of potential unemployment as something to place on the next budget agenda. You should also discuss this in your next salary discussion or potential separation agreement/severance should the need arise.
*If you are able to institute any of the ideas in this blog, please do not hesitate to contact us directly with any questions or if you are in need of some assistance.
**There are a lot of subtleties and nuances when it comes to tax laws, insurance, and finances in general, so please contact a local CPA to make sure you have the most accurate and up to date info for your specific situation.
