As in all sectors of the economy, nonprofits face challenging times as a result of the on-going COVID-19 pandemic, with job losses of over 1.6 million between March and May even though demand for their services was growing. Challenges facing nonprofits in accessing government support funds compounded these losses, accelerating for-profit gains in market share in many traditionally nonprofit fields.
Job Loss Estimates from the new John Hopkins Study.
While there is no way to know yet whether these estimates reflect the actual situation, we hope that they will provide a baseline against which future data can be compared. In particular, understanding the projected effects will allow us to see whether nonprofits’ historical resiliency holds up under this unique economic pressure—as it did during the more traditional recessionary period following the 2008 economic downturn where the resilience of the nonprofit sector was proven as they added 8.5% to their workforce while for-profits lost 4.1%.
This new report from the Johns Hopkins Center for Civil Society Studies finds that US nonprofits maintained their position as the third largest employer in the US economy—overtaking manufacturing by nearly 100,000 workers nation-wide in 2017. The only industries employing more workers than the nonprofit sector in 2017 were retail trade and restaurants and hotels.
These are just some of the major conclusions emerging from the 2020 Nonprofit Employment Report. Among the findings:
- Between 2007 and 2017, the number of jobs created by US nonprofits grew by 18.6%—three times faster than the country’s for-profit businesses over the same period.
- Nonprofits also generated the third largest payroll income of any U.S. industry in 2017, behind only manufacturing and professional services.
- Contrary to popular belief, nonprofit average weekly wages per employee are nearly equal to those paid by for-profits overall—and are actually much higher than for-profit wages in many of the key nonprofit fields.
- Nonprofit successes—and government policies—have attracted for-profit firms into nonprofit fields, leading to increasing declines in nonprofit market shares in fields as diverse as social assistance, nursing homes, and hospital care.
Although the nonprofit sector is not itself an “industry,” but rather a distinctive set of institutions that operates in various different industries—such as health, education, and social services—it is nevertheless instructive to compare the scale of its workforce to that of the country’s five largest industries. As of 2017, the most recent year on which data are available, US nonprofits employed the third largest workforce of any US industry, behind only retail trade and accommodation and food service, but well ahead of all branches of manufacturing. With 12.5 million paid workers, nonprofits thus employed:
- More than twice as many workers as the nation’s finance and insurance industry.
- 81% more workers than the nation’s construction industry.
- Nearly 100,000 more workers than the nation’s manufacturing industry.
2020 Johns Hopkins Nonprofit Employment Report is innovative and important because the US Bureau of Labor Statistics from the Quarterly Census of Employment and Wages does not routinely separate data on nonprofit organizations from data on private business enterprises but rather merges such data with data on for-profit enterprises. Therefore, the scale of the nation’s nonprofit workforce and how it is distributed across the country or among the numerous activity areas has been historically obscured. The Johns Hopkins Center for Civil Society Studies has developed techniques to make this data visible.
This report is making it possible to get a clear view of the economic impact of nonprofit organizations locally and nationally, and to compare them to other industries in a systematic and reliable way. The resulting body of data has been crucial for nonprofit leaders nationally and locally to represent this important sector in policy discussion, in the media, and to the public at large, making clear not just the social impact of this sector, but also its economic impact in towns and communities throughout the nation.
Economists regularly consider any industry or economic sector that employs 5% of a country’s workforce to be a “major” industry or sector. It is therefore notable that the 12.3 million paid workers employed by U.S. nonprofit establishments as of 2017 accounted for a substantial 10.2% of the total U.S. private workforce. In over half of the states and territories, moreover, nonprofits exceed the national average, and in 12 states they account for ~15% or more, including states as diverse as West Virginia, South Dakota, Connecticut, and Alaska.
Nonprofit share of employment in the 1,638 counties for which county-level data are available.