What's driving nonprofit sector job growth in a down economy?

A recurring news story this year is the growth of nonprofit employment in a dire economy. Even as the private sector struggles to get back on its feet, independent sector jobs continue to boom. Every month, it seems, news reports tell of the recession-defying growth of nonprofit jobs. Do they tell the whole story?

Michigan’s nonprofit employment grew 2.7 percent – 11,500 jobs – between 2006 and 2009, reports Public Sector Consultants, a Michigan-based private consulting firm. Nonprofits in the Wolverine State also grew as a percentage of the state’s overall work force, from 9 percent in 2006 to 10.5 percent in 2009, according to a news story citing the report.

In Maryland nonprofit sector employment grew more than twice as fast as private sector employment between 1995 and 2005, according to a Johns Hopkins University study. “During that decade,” reported the JHU Gazette, “nonprofit employment statewide grew by 36 percent, compared with a 15.3 percent increase in the for-profit sector.”

North Carolina’s nonprofit sector is also standing tall in the face of the recession. A study by the North Carolina Center for Nonprofits (the study was actually conducted by the Johns Hopkins Center for Civil Society) also showed that “between 1995 and 2003, nonprofit employment in North Carolina grew by 35.4 percent and added 55,700 jobs to the state’s work force. This is an average growth rate of 4.4 percent per year, which was six times the growth rate achieved by the business sector during this period. The nonprofit sector accounted for 26 percent of the state’s job growth in these eight years.”

How do we account for this phenomenal growth in America’s nonprofit sector during our prolonged economic downturn, especially when private contributions to the sector are down for the second year running?

For Lester Salmon, author of the Maryland study and director of the Johns Hopkins Center for Civil Society Studies, “That nonprofit employment in Maryland continued to rise in the face of the most severe recession since the Great Depression is a testament to the resilience and determination of Maryland nonprofit leaders and those who support them in the public and private sectors” (see JHU Gazette article).

For Public Sector consultants of Michigan, the phenomenal growth in the sector “could be attributed to the continued professionalism of the nonprofit sector, the increase in educational opportunities focused on nonprofit management and sector-specific fields, and the necessity of higher wages to attract a qualified workforce.”

There is little question that the nation’s nonprofits are brimming with a resilient, determined, dedicated, and professional workforce. So is the private sector, but it has been shrinking.

Could nonprofit employment growth be explained, at least in part, by the government’s expanding role in funding America’s independent sector?  Private donations may be down, but government subsidies are certainly up. Does greater government support of the sector through Medicare and Medicaid payments, higher education subsidies, and federal stimulus money (government provides 48.6 percent of revenue for human service charities – see Nonprofit Sector in Brief, 2009) account for at least a portion of the growth? If so, what does this portend for America’s independent sector? Are we witnessing the transformation of American civil society from voluntarily supported intermediate associations to taxpayer-supported compulsory institutions?

It may be that the real story behind job growth in the nonprofit sector is about how America is losing its independent sector, how the role of civil society is shrinking as the government’s role expands.

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