Panel Paper: Holding the Fort: Nonprofit Employment During a Decade of Turmoil

Thursday, November 8, 2012 : 10:15 AM
Baltimore Theatre (Radisson Plaza Lord Baltimore Hotel)

*Names in bold indicate Presenter

Stephanie Lessans Geller, Lester Salamon and Wojciech Sokolowski, Johns Hopkins University, Institute for Policy Studies, Center for Civil Society Studies

This paper relies on new, national employment data to demonstrate that the nonprofit sector is a major economic force and job generator.  More specifically, the paper analyzes both nonprofit and for-profit job growth across the United States between 2000 and 2010.  The data were drawn from the Quarterly Census of Employment and Wages (QCEW), a data collection program carried out regularly by state governments throughout the country in cooperation with the U.S. Bureau of Labor Statistics (BLS) as part of the U.S. Unemployment Insurance Program. 

Through analyzing this dataset, this paper offers new insights into nonprofit employment trends by both region and sub-fields over the past decade.  In particular, it provides the latest insights into the following:  the size of the nonprofit workforce and how its size compares to other major U.S. industries; the distribution of nonprofit employment across the country;  the sub-fields that account for the most nonprofit jobs; key changes in nonprofit employment over the past decade, and in particular, during the recent economic downturn;   the effect of for-profit competition in key nonprofit fields; the factors that help explain these employment trends; and the policy implications of these trends.

Two major findings emerge from this inquiry.  First, the nonprofit sector is a major, and growing, economic force:  at 10.7 million workers as of 2010, nonprofit organizations employ the third largest workforce among U.S. industries.  Moreover, despite two recessions, the nonprofit sector posted a remarkable 10-year record of job growth, achieving an average annual growth rate of 2.1 percent from 2000 to 2010, while for-profit jobs declined by an average of minus 0.6 percent per year.

Second, although overall nonprofit employment grew faster than overall business employment during the 2000-2010 decade, in several key fields that traditionally have been dominated by nonprofits, for-profit employment growth significantly outpaced nonprofit employment growth.  Several factors are likely behind this trend including the for-profit sector’s ability to access capital more easily than the nonprofit sector and the preferences for for-profit providers on the part of some state and local governments, which have increasingly been outsourcing traditional government functions to private entities, particularly in the area of social assistance.

The findings have several implications for public policy research and practice.  First, they demonstrate the job creation potential of the nonprofit sector, especially during recessions, and therefore highlight the need to keep this sector’s potentials in view as efforts to boost job growth are developed.  Among other things, these findings demonstrate why job promotion efforts that operate exclusively through the income tax mechanism are insufficient because they discriminate against this set of job-creators for which income tax incentives have little effect.  Beyond this, these findings suggest the need to address the unequal playing field on which nonprofits are forced to compete against a growing number of for-profit providers.  The paper concludes with a discussion of these implications and questions about the future of the nonprofit sector as a job generator in light of current realities.