For nearly 20 years, Dr. Lester Salamon of the Center for Civil Society Studies at Johns Hopkins University has been tracking the growth of the nonprofit sector. Last year’s study, for example, based on 2016 data, found that nonprofit employment had grown to tie manufacturing employment at 12.29 million. According to the 2017 figures contained in the latest report, nonprofit employment has passed manufacturing, having risen in 2017 to 12.49 million (versus 12.4 million for manufacturing). Had the report been published, as it was last year, in February, that might have been the headline.
The report finds a continuation of 2016’s trends in 2017. Nonprofit wages in 2017 totaled $670 billion. Nonprofit wages were 97 percent of private sector wages but generally exceeded private sector wages where nonprofits are prevalent. Intriguingly, nonprofits may soon be the nation’s second-largest employment sector. (The holder of that spot in 2017, accommodations and food services, has contracted severely under COVID-19.)
But of course, the report was not published in the winter—and, as the scope of the pandemic became clear, Salamon and his team decided to push the publication back, allowing the report to not just discuss 2017 data, but to look at the field in 2020—and, for the same reasons they decided to do so, that is NPQ’s focus here as well.
As Salamon and coauthor Chelsea Newhouse write:
As the pandemic reached the United States, it became clear that efforts to slow its spread would have profound impacts on all aspects of our lives, and not least of all on the nonprofit sector. But as is too often the case, these effects seemed especially likely to be ignored in the rush of attention to the other sectors impacted by the pandemic. This not only made this year’s report especially important in order to establish the most recent baseline of information possible against which to chart the virus’s impact, but also, it induced us to go beyond our normal practice of reporting only on past developments by seeking information that would allow us to make meaningful estimates of the impact of current developments, and current policy responses, on this crucial sector in something approaching real time.
It seems clear that Salamon and Newhouse made the right call, even though it required working with lower quality data. As they write, “We were reduced to estimating the nonprofit job losses during the critical first three months of the active impact of the coronavirus—March, April, and May 2020. To do so, we took the conservative approach of assuming that nonprofit job losses were roughly proportional to the share of nonprofit jobs in the various fields in which nonprofits were active as of the latest date for which such data are available, i.e., 2017.”
Salamon and Newhouse also decided to assume that, due to widely reported problems with May unemployment figures from the Bureau of Labor Statistics (with millions misclassified as employed), that for their study, only half of the job additions that had been reported in May would actually be counted as job restorations.
The results of the analysis, however, are stunning.
Bottom line: more than one in eight people employed by a nonprofit in February (13 percent) was not employed as of the end of May. In sum, 1.64 million nonprofit workers lost their jobs in three months.
All told, an estimated 8.8 percent of all jobs that have been lost economy-wide have been lost in the nonprofit sector Because nonprofit employment constitutes 10.2 percent of private sector jobs, this ironically means that nonprofit employment as a percentage of private sector employment has gone up. But the effect is nonetheless devastating. Salamon and Newhouse detail some of the lowlights:
Nonprofit Job Loss, March through May 2020, by Sector
Professional, scientific and technical: 14,689
Health care: 574,530
Social assistance (not including childcare): 161,439
Other services (civic, advocacy, religious, etc.): 218,167
Miscellaneous other: 47,570
Additionally, Salamon and Newhouse note that while 8.8 percent of all private sector job losses were of nonprofit workers, in the fields in which nonprofits are active, the losses of nonprofit jobs were, not surprisingly, a far larger percentage. Nonprofit job losses include 71 percent of private sector educational workers, rising to 84 percent for those working in elementary and secondary schools; 43 percent of private sector healthcare worker job loss, including 35 percent of nursing care workers, 45 percent of outpatient care workers, and 84 percent of hospital workers; 35 percent of private sector job losses in social assistance, including 91 percent of those in community food and housing services and 86 percent of those in vocational rehabilitation services; 57 percent of job losses in private sector performing arts companies and 87 percent of those in private sector museums and similar facilities; and 60 percent of job losses in private sector religious, civic, and professional organizations.
Salamon and Newhouse also examine the impact of the Paycheck Protection Program (PPP) on the nonprofit sector, which provides a window into the shape of the nonprofit sector as a whole. As readers may recall, any nonprofit with 500 employees or less was eligible for PPP:
Nonprofits with less than 500 workers
Employees in nonprofits with less than 500 workers
Wages in nonprofit firms with less than 500 workers
If the maximum amount of PPP forgivable loans is a little under one-fifth of the annual wage bill (10 weeks’ wages), this suggests these nonprofits were eligible for approximately $35 billion in federal support through PPP, or about five percent of total program funds.
These numbers are estimates and future data will be required to confirm these numbers. The great unknown question, note Salamon and Newhouse, is “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.”
In the conclusion to their report, Salamon and Newhouse restate a common theme of their work—namely, that the US nonprofit sector is “a far more sizable and robust economic force in the American economy than is widely recognized. In addition to its crucial programmatic contributions to the country’s health, education, social service, and cultural activities, nonprofits constitute the country’s third largest workforce and generate its third largest payroll of any national industry, and hence make important contributions to the tax revenue of the country’s national, state, and local governments.”
They underscore, however, the devastating impacts of the pandemic. The crisis, they note, has not only resulted in the loss of more than 1.6 million nonprofit jobs, but it has put “significant pressure on the crucial services that these organizations have historically provided.”