Nonprofits Workers Paid $670.22 Billion

Nonprofit employment continues to be a force within the U.S. labor market. As of 2017, the latest data available, the nonprofit sector employed nearly 12.5 million people, slightly ahead of the 12.4 million employed by manufacturing and trailing only retail trade (15.8 million) and accommodation and food services (13.6 million), according to the Johns Hopkins Center for Civil Society Studies’ 2020 Nonprofit Employment Report.

The report compares nonprofit employment with that of manufacturing, which is often viewed as a bellwether for economic vitality. In 28 American states and territories, the nonprofit sector employs more workers than manufacturing, according to the report.

Within the United States, nonprofits tend to concentrate in specific sectors. Among the nation’s private education employers, nonprofits accounted for 71 percent of jobs. Six in 10 workers in religious, civic and professional organizations are employed by nonprofits, and more than 43 percent of workers in health services, along with 41 percent of those employed in social assistance (such as child day care and individual and family services) work for nonprofits.

Total nonprofit wages rank third among industries. At $670.22 billion, they represent higher total employee payments than finance and insurance employees ($623.23 billion) and retail trade employers ($492.83 billion). The nonprofit sector trails only the manufacturing ($828.98 billion) and professional and technical services ($821.05 billion) sectors in terms of overall payments to workers.

Nonprofit wages are on par with the for-profit sector, with a weekly average wage of $1,032. However, nonprofit employees earn 97 percent of their for-profit counterparts. In some industries, however, nonprofits actually pay more:

  • Nonprofit individual and family service organizations pay 70 percent above what their for-profit counterparts pay;
  • Nonprofit social assistance organizations pay 56 percent more than their for-profit analogs;
  • Nonprofit educational institutions pay 50 percent more; and,
  • Nonprofit ambulatory health care organizations pay 26 percent more.

The three fields in which for-profit companies pay more than their nonprofit counterparts include professional and technical services, management and arts and recreation, which includes salaries given to professional athletes.

Nonprofit employment saw significant growth during the recessionary years 2007-2008, and the period immediately following it (through 2012), when staffing increased by 8.5 percent, compared with a total staffing loss of 4.1 percent among for-profit businesses. During the next five years, however, staffing increases within nonprofits lagged those of commercial organizations. Nonprofits boosted their ranks by 9.3 percent, while for-profit companies increased them by 10.8 percent.

Part of these staffing increases have come as for-profit organizations have moved into spaces traditionally dominated by nonprofits. According to the report, increased government support for certain sectors made them more attractive to for-profit companies, In turn, these offered lower wages to their workers, allowing them to charge lower costs to the governments that supported them. They made up any profit shortfalls through sophisticated marketing campaigns that brought in additional clients, boosting their overall profits. Specifically, between 2007 and 2017:

  • Nonprofit employment in nursing and residential care grew by 2.6 percent, but for-profit nursing and residential care employment shot up by almost 20 percent;
  • Within hospitals, nonprofit employment levels rose by 10.4 percent, while for-profit hospital employment jumped by 24.3 percent; and,
  • Social assistance nonprofit employment jumped by 18 percent, while for-profit social assistance employment skyrocketed by 124 percent.

The Covid-19 epidemic has thrown off current employment statistics, according to the report. Between furloughs, confusion between job restoration and job gains and actual job losses, the report offers at best a baseline estimate of employment level changes within the nonprofit sector during the March-May 2020 period.

The nonprofit sector lost roughly 1.6 million jobs during those three months, according to the report. Education nonprofits fared worst: Of an estimated 455,600 total education jobs lost, positions in nonprofits made up nearly 71 percent of those, or 323,201 jobs.

The entire healthcare sector saw more than 1.3 million jobs vanish. Of those, 574,530, or 43.4 percent, were from healthcare nonprofits. And social assistance employers, which cut 630,150 positions from their payrolls, also lost a significant amount of jobs within nonprofit organization – 41.1 percent, or 259,007 jobs.

The report’s authors bemoan the uneven playing field nonprofits face when competing with for-profit companies for employee talent and clients. It stresses the need for nonprofits to tout their ability to innovate for the audiences they serve, provide their services for a wider range of disadvantaged clients and maintain their service levels during economic downturns.