The voices of Urban Institute's researchers and staff
June 25, 2017

When it comes to saving US jobs, what about nonprofits?

June 26, 2017

If there is a consistent theme that has run through Donald Trump’s candidacy and the early parts of his presidency, it is an economic populism that places a heavy emphasis on protecting American jobs.

We are going to defend our workers, protect our jobs, and finally put America first,” Trump declared at a tool-making factory in Kenosha, Wisconsin, in April, standing in front of a giant American flag made of wrenches.

The “well-being of America and the American worker is my north star,” the president announced at a recent White House event.

Trump has repeatedly defended his rollback of environmental regulations established by the Obama administration and his decision to pull the United States out of the Paris climate accords as necessary to save imperiled jobs, with a particular focus on safeguarding those within the coal industry.

Yet a certain sphere of job creation does not get much respect from the administration: the nonprofit sector. And yet, according to Urban Institute’s Nonprofit Almanac, nonprofits employ around 10 percent of the labor force (to say nothing of the volunteers they engage), more than 14.4 million people in all: doctors, teachers, home health care and child care providers, artists, administrators and executives, and many more.

In fact, in recent years, job growth in the nonprofit sector has outpaced growth in the total US workforce. Per the Almanac, from 2000 to 2013, the number of nonprofit employees increased 22.6 percent while the government sector increased just over 5 percent and the business sector grew less than 1 percent.

If these numbers are surprising, it’s in part because of how infrequently nonprofits are treated as employers—not merely as providers of goods and services—in political discourse. This discrepancy can be striking, especially considering the economic sectors that attract disproportionate political attention.

For comparison, according to the Census Bureau’s County Business Patterns program, the coal industry employed 76,572 people in 2014 (or, as the Washington Post pointed out, fewer than Arby’s restaurants). According to the Nonprofit Almanac, that’s also roughly the same estimated number of people employed by nonprofit museums in 2013 (77,837).

And according to the Bureau of Labor Statistics, the coal industry has shrunk in the last three years to 50,300 employees, less than the number of people employed in blood and organ banks (53,008).

In those nonprofit subsectors and many others, the Trump administration’s budget cuts, if implemented, would likely lead to significant job loss. Approximately one-third of public charities’ revenue comes from government sources (grants and fees for goods and services), with human service charities claiming the highest proportion, at 47 percent, followed by the health subsector, at 37.4 percent. (My employer, the nonprofit Urban Institute, receives government funding as well, with 43.6 percent of its 2015 revenue coming from federal government sources.) Although regulatory agencies compile and code employment data in different ways, we know that a roughly comparable category of nonprofits—health care and social assistance institutions—is responsible for 54.8 percent of nonprofit-sector jobs.

We also know that past reduction of nonprofit revenue has led to cuts in workforce. In 2010, 38 percent of surveyed human service nonprofits receiving government funding reported laying off employees in the face of reduced revenue from governmental agencies and then dealing with the Great Recession’s fiscal consequences.

The cuts to nonprofit revenue that Trump’s proposed budget would impose would likely be equally severe and force nonprofits to make similar employment decisions. (It would eliminate the $3 billion Community Development Block Grant program and the $1.3 billion Social Services Block Grant program, for instance, both of which fund a wide array of nonprofits). Even if they are not as geographically concentrated as coal industry jobs, these job losses will involve a measure of dislocation and disruption that will create substantial social costs.

This is not to engage in sector-wide protectionism and to insist that nonprofit employment be maintained at all costs. There might be some occasions in which jobs lost at nonprofits are ultimately transferred to for-profit or government institutions that supply similar goods and services more effectively. Calls to maintain nonprofit employment should not be excuses for nonprofits to avoid demonstrating their distinctive social value, or ensuring the jobs themselves are fairly compensated and adequately resourced.

But nonprofits’ roles as job creators and employment sustainers should not be ignored. The downsized day care center or job training facility might not preside as vividly in the political imagination as the abandoned coal mine or the shuttered factory, but they deserve to be taken as seriously.

Wellesley senior Marion Johnson, middle, searches for job openings at the Non-Profit Job Fair on campus at Wellesley College on Friday, February 20, 2009. Photo by Ann Hermes/The Christian Science Monitor/Getty Images.

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