NPOs Consistently Better Than For-Profits on Jobs

Nonprofit employment bested for-profits during the COVID-19 pandemic. From 2019 to 2020, when the COVID-19 pandemic began, employment declined 6.9 percent in for-profit businesses, outpacing the over-the-year decline of 4.5 percent in nonprofits. The steepest employment decline occurred in accommodation and food services, a sector largely made up of for-profit businesses.

It was the second crisis where nonprofits beat for-profits on jobs.

Nonprofit employment jumped 5.5% while employment in private-sector for-profit businesses declined 8.1 percent from 2007 through 2010 — which includes the December 2007–June 2009 recession. 

Job losses during the recession were most pronounced in industries with relatively few nonprofits, such as construction and manufacturing. Job gains occurred in health care and social assistance, industries that have a large share of nonprofits, according to new data from the U.S. Bureau of Labor Statistics.

Between 2020 and 2022, employment rose more slowly among nonprofits than for-profits. In 2022, nonprofit employment was 1.4 percent less than in 2019, as nonprofit-heavy industries such as other services recovered slowly from the March 2020–April 2020 recession. For-profit employment was 2.2 percent higher in 2022 than in 2019, reflecting strong job gains in transportation and warehousing; professional, scientific, and technical services; and other industries with relatively small shares of nonprofits.

These data are from the Quarterly Census of Employment and Wages and Business Employment Dynamics program. For more information about employment in nonprofit organizations, see Research Data on the Nonprofit Sector. Recession dates were determined by the National Bureau of Economic Research.

Highlights of the 2018-2022 data on the nonprofit sector include:

• In 2022, over 300,000 nonprofits accounted for 12.8 million jobs, or 9.9 percent of all private-sector jobs.
• Although nonprofits are involved in all industry sectors, nearly two of every three nonprofit jobs in 2022 were in the health care and social assistance sector (66.3 percent). Other sectors with high shares of nonprofit employment included educational services (16.4 percent); other services (6.3 percent); and arts, entertainment, and recreation (2.6 percent).
• In the nonprofit sector, industry shares of employment showed little change from 2007 to 2022.
• In 2022, Washington D.C. had the largest rate of nonprofit employment as a share of total employment, with 25 percent, followed by Vermont (20 percent) and Massachusetts (18 percent).

To create these nonprofit estimates, BLS matched data from two datasets. First, the Quarterly Census of Employment and Wages (QCEW), which is primarily based on unemployment insurance reports that nearly all employers are required to file, contains information about businesses’ employment, wages, geographic location, and industry. Second, the Internal Revenue Service Exempt Organization Business Master File is a publicly available list of organizations with tax-exempt status and includes those classified as nonprofits, or 501(c)(3)s.