Report: Nonprofit Sector Employment Shows Resilience to Economic Trends

While the for-profit economic sector saw significant declines during the recession, only to bounce back after the economy recovered, a recent study found that nonprofit employment growth stayed strong throughout the past decade.

The economy is fairly buoyant these days, but back when it wasn’t, one of the brightest spots from an employment standpoint was the nonprofit sector.

That’s a key point underlined in a recent report from the Johns Hopkins Center for Civil Society Studies, which covers both the recession period between 2007 and 2012, and the recovery period between 2012 and 2016, leaning most significantly on the latter.

The 2019 Nonprofit Employment Report, based on data from the U.S. Bureau of Labor Statistics’ Quarterly Census of Employment and Wages, noted that the scope of nonprofit workers, while inconsistent from state to state, was significant.

“The nonprofit sector has held this third-highest position among U.S. industries for well over a decade, though this is the first year in which it came very close to edging out manufacturing,” the report [PDF] said.

But unlike many other industries, it remained strong during the 2007–2012 recession, which negatively affected economic output. During that period, for-profit employment fell by 4.1 percent—a loss of more than 4 million jobs—but nonprofit employment actually grew by 8.5 percent. And while for-profit employment outpaced nonprofit employment between 2012 and 2016—growing 9.1 percent compared to 7.6 percent for nonprofits—the result of the continued nonprofit employment growth during a fallow period means that job growth for nonprofits between 2007 and 2016 was 16.7 percent, nearly four times that of for-profit employment (4.6 percent).

Why was the nonprofit sector so reliable as a source of employment during this period? The answer, the report suggests, might be found in the fact that the largest nonprofit employers are often in the medical field—with hospitals taking up the lion’s share of nonprofit employment (34 percent) in 2016. A certain high-profile 2010 law may have proved a boon to the sector’s growth.

“This likely reflects the combination of the counter-cyclical programs already on the federal government’s books and the passage of the Affordable Care Act, which pumped additional support into the healthcare arena, where nonprofits are especially active,” the report states.

So, where does that put associations? Well, in 2016, associations—which included organizations of a professional, religious, grant-making, or civic nature—represented 7 percent of all nonprofit employment. And while many nonprofits are facing increased competition from for-profit competitors—the social-assistance field, for example, saw its share of nonprofit positions fall from 56.9 percent to 42.3 percent between 2007 and 2016—associations were one of the few sectors that actually saw its share of nonprofit employment increase during the period, from 55.8 percent in 2007 to 59 percent in 2016.

“In short, while the data demonstrate the resilience of the nonprofit sector in the face of tough economic circumstances, they also demonstrate the increasingly competitive environment in which nonprofits are having to operate,” the report adds.

One other point of note: The report mentioned that Puerto Rico, which struggled to recover from a 2017 hurricane, may have suffered more significantly due to a relatively small nonprofit sector, which only represents 6.8 percent of private employment in the region, a level below all but eight states. Resilience has been a major focus of the territory’s recovery efforts.

(busracavus/iStock/Getty Images Plus)

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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