Nonprofit Employment Trends

Bob Cryer

Bob Cryer

The recently published John Hopkins Nonprofit Employment Bulletin #38 gives perspectives on how the nonprofit sector has changed over the last decade.

In 2010, nonprofits employed 10.7 million people, or 10.1% of total national employment in the private sectors. Nonprofits are the third largest sector behind retailing (14.5% of all private employees) and manufacturing (11.5% of all private employees). 57% of nonprofit jobs are in health services, 15% are in educational services and 13% are in social services.

From 2000 to 2010, nonprofit employment grew by an average of 2.1% per year compared to a 0.6% average employment decline in the for profit sectors. More impressively, nonprofits showed an employment growth in every in of those years, including the recession years of 2007-09.

87% of nonprofit employment is in the services sector compared to for-profits having only 9% of their employees in services sectors. Nationwide, employment in services sectors grew by an average of 2.7% per year from 2000 to 2010, whereas all other sectors declined by an average of 0.8% per year.

Because nonprofit employment growth (2.1%) is less that the total growth in services employment (2.7%), nonprofits share of the business in their respective sectors is falling. In health services, their share fell from 45% to 43%. In educational services, nonprofit share dropped from 69% in 2000 to 64% in 2010. And in social services, nonprofit’s share of employees fell from 62% in 2000 to 54% in 2010.

The report mentions several causes for this decline. One was for-profits relative ease of accessing capital to respond to new demands. For example, when Medicare made home health care eligible for reimbursement, for profits raised the capital needed to move into that niche quickly and now dominate this niche that was originally pioneered by nonprofits.

Another competitive advantage of for-profits is their stronger relations with government officials through campaign contributions and lobbying. For-profits also seem more willing to offer their employees lower wages and fewer benefits than nonprofits, enabling them to under-cut nonprofit costs.

In addition to these factors, public funding is under siege and private donation sources are strained. For the first time in decades, nonprofit employment growth seems very uncertain.

Author:  Bob Cryer,  Executive Coaches of Orange County,