September 6, 2011

Nonprofits Brighten Employment Picture: Johns Hopkins Research

Job growth bucked the trend during the recent recession

With President Barack Obama set to address a joint session of Congress on Thursday about the state of nation’s economy and the dismal employment picture, new data released Friday show that nonprofit employers actually added jobs during the worst part of the recent recession.

Researchers at the Johns Hopkins University Center for Civil Society Studies published an initial analysis of data from 21 states and found that nonprofit employment grew by an average of 2.5% per year between the second quarter of 2007 and the second quarter of 2009. By contrast, for-profit employment in these states fell by an average of 3.3% per year during this same period.

What’s more, nonprofit job growth during the recession was actually stronger than it had been from 2001 to 2007, growing by 2.5% per year versus 2.3% a year. During the earlier period, nonprofit job growth exceeded for-profit job growth, which increased at an annual average of only 0.2%.

However, the analysis showed that nonprofits in some fields and some states did worse than others. Whereas the average growth rate during the recession was 2.5% per year, it was only 1.8% per year in the nursing home field and 1.4% per year in social assistance.

And viewed by state, nonprofit job growth during the recession was also a much lower 0.7% in New Jersey, 1.3% in Michigan and Indiana, 1.4% in Ohio and 1.5% in Illinois.

In the key field of social assistance, which the researchers said is especially important during a recession, some places experienced nonprofit job losses during the recession, including District of Columbia (4.5%), Maine (1.5%), Indiana (0.9%) and Ohio (0.8%).

 “That nonprofit organizations have been able to increase employment in the face of the most severe recession since the Great Depression is a testament to the effectiveness of the federal stimulus program, which channeled assistance to many nonprofit organizations, and to the resilience and determination of nonprofit leaders and those who support them in the public and private sectors,” Lester Salamon, a study author, said in a statement. “But this accomplishment, impressive though it is, still leaves many needs unmet and many organizations and regions under severe strain.”

The data also provide evidence of the increasingly competitive environment in which nonprofits operate. While overall nonprofit job growth exceeded overall for-profit job growth, the data suggest that this is as much a product of the fields in which nonprofits are active as it is of the nature of nonprofit organizations. In many of these fields, for-profit job growth exceeded nonprofit job growth, at least prior to the current recession.

For example, over the 2001–2007 period, while nonprofit jobs in the field of social assistance grew by an average of 2.4% per year, for-profit jobs in this field grew by an average of 7% per year. Likewise in the nursing home field: For-profit jobs grew 2% per year compared with 1.4% for nonprofits.

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