Nonprofit Almanac

Facts and Findings

Employment in the Nonprofit Sector

The nonprofit sector in America employs a steadily increasing segment of the country’s working population.
According to the latest measures, the average annual growth rate in employment for nonprofits (2.5%) was
significantly higher than for business (1.8%) or government (1.6%). The number of Americans employed in
the nonprofit sector has doubled in the last 25 years. Nonprofit employment represents 9.5 percent of total
employment in the United States, with total employees numbering 12.5 million.

In the “independent sector” [i.e., 501(c)(3), 501(c)(4), and religious organizations], total employment is
11.7 million, or 9 percent of total employment.

Number
Number of Employees:
Employees: Nonprofit, Business, and Government
Government Sectors
1977-2001
1977 - 2001

Sector 1977 1982 1987 1992 1997 2001

Total All Sectors (millions) 82.4 89.4 102.3 108.6 122.6 131.8
(In millions, 82.4= 82,400,000 )
Nonprofit 6.0 7.0 8.0 9.7 11.3 12.5
Independent sector 5.5 6.5 7.4 9.1 10.6 11.7
Other nonprofit 0.5 0.5 0.6 0.6 0.7 0.8

Business (for-profit) 61.3 66.6 77.3 80.2 91.7 98.4

Goods 24.3 23.8 24.8 23.2 24.9 24.9
Services 37.0 42.8 52.5 57.0 66.8 73.5

Government 15.1 15.8 17.0 18.7 19.6 20.9

Federal (civilian) 2.7 2.7 2.9 3.0 2.7 2.6
State 3.4 3.6 4.0 4.4 4.6 4.9
Local 9.0 9.5 10.1 11.3 12.3 13.4

Please note: This report focuses on nonfarm employment Employment Growth Rates
and reflects figures from 2001, the latest available from the 1997-2001
U.S. Bureau of Labor Statistics.
2.5
2.5%

2.0

1.8%
Percentage

1.5 1.6%
INDEPENDENT SECTOR
1200 Eighteenth Street, NW 1.0
Suite 200
Washington, DC 20036 0.5
202-467-6100 phone | 202-467-6101 fax
www.IndependentSector.org 0.0
Nonprofits Business Government
 Where Americans Work:
Employment
Where Americans Distribution
Work: Employment by Major Sector
Distribution by Major Sector
Percent
80
70
60
50
40
30
20
10
0
1977 1982
Private, nonprofit 7.3 7.9
Business (for-profit) 74.4 74.4
Government 18.3 17.7
Figures denote percentage of workers employed by major sector.
■ In 2001, overall employment in the United States
fell from the previous year—the American
economy entered into a recession in March 2001,
which was further aggravated by the aftermath of
the September 11 terrorist attacks. The
unemployment rate in 2001 was 5.8 percent, with
8 million people unemployed. According to the
Bureau of Labor Statistics, nonfarm employment
(particularly in manufacturing) fell by 0.6 percent.
In contrast, hiring increased in health services and
private higher education, both areas highly
identified with the nonprofit sector.
■ In the independent sector, 42 percent of all
workers are employed in health services,
specifically in nonprofit hospitals. Education is
second, employing 22 percent of all workers in the
sector. Health services and education combined
employ 64 percent of all workers in the sector.
■ The largest percentage increase in employment
between 1997 and 2001 among the major
nonprofit industries was recorded in social
services, with a growth rate of over 17 percent.
The residential care component of social services
grew the most, with an employment gain of nearly
19 percent.
■ A study published in the October 2001 Monthly
Labor Review1 noted that while recessions have
been shown to create job slowdowns in the
business sector, some industries closely associated
with the nonprofit sector are “slightly
countercyclical, gaining jobs faster during
Business
Government
Nonprofit
1987 1992 1997 2001
7.8 9.0 9.3 9.5
75.6 73.8 74.8 74.6
16.6 17.2 15.9 15.9
recessions than in normal times.” The healthcare
industry, for one, “shows countercyclicality with
statistical significance.” The American Hospital
Association reports that in 2001, 66 percent of
hospital employees worked in nonprofit hospitals.
■ The study also shows that between the 3rd quarter
of 2000 and the 2nd quarter of 2001 (the recession
began in March 2001), two major groups
identified with the nonprofit sector—health
services and social services—“gained jobs
impressively.” Legal services and education also
made moderate job gains. In contrast, business
services and engineering and management services
experienced considerable job losses.
■ The occupational outlook for health and social
services, as reported by the Bureau of Labor
Statistics,2 is also positive. Between 2000 and
2010, the health services industry is estimated to
add 2.8 million jobs. Social and human services
will add another 1.2 million jobs, particularly
among nursing, hospital, and residential care
services.
1
Goodman, William C. “Employment in service industries
affected by recessions and expansions.” Monthly Labor
Review, October 2001.
2
U.S. Bureau of Labor Statistics website:
http://www.bls.data
Data sources: U.S. Bureau of the Census, Economic
Census, 1997; U.S. Department of Labor, Employment and
Earnings, various years; INDEPENDENT SECTOR, The New
Nonprofit Almanac & Desk Reference.
 Employment
Employmentin the
in Independent Sector and
the Independent Its Subsectors
Sector and Its Subsectors
1977 - 2001
1977-2001
1977 1987 1997 2001
Number Percent Number Percent Number Percent Number Percent
Total for the independent sector (thousands) 5,520 100.0 7,390 100.0 10,619 100.0 11,721 100.0

By subsector and components

Health services 2,459 44.5 3,367 45.6 4,618 43.5 4,911 41.9
Nursing and personal care facilities 206 3.7 348 4.7 571 5.4 601 5.1
Hospitals 2,121 38.4 2,665 36.1 3,304 31.1 3,483 29.7
Other health services 131 2.4 354 4.8 546 5.1 612 5.2
Clinics of doctors of medicine and dentists --- --- --- --- 196 1.8 215 1.8
Clinics of M.D.s, dentists, other health services --- --- 354 4.8 743 7.0 827 7.1

Education/research 1,280 23.2 1,666 22.5 2,295 21.6 2,570 21.9

Private colleges and universities 703 12.7 908 12.3 1,226 11.5 1,351 11.5
Private elementary and secondary schools 428 7.7 566 7.7 828 7.8 946 8.1
Selected educational services 49 0.9 68 0.9 82 0.8 108 0.9
Noncommercial, research 100 1.8 125 1.7 160 1.5 165 1.4

Social and legal services 715 13.0 1,196 16.2 1,825 17.2 2,140 18.3
Legal services 12 0.2 15 0.2 22 0.2 25 0.2
Social services 703 12.7 1,182 16.0 1,803 17.0 2,115 18.0
Individual and family services,
social services 290 5.3 514 7.0 788 7.4 985 8.4
Job training and related services 130 2.3 213 2.9 353 3.3 353 3.0
Child daycare services 141 2.6 201 2.7 239 2.2 274 2.3
Residential care 142 2.6 254 3.4 424 4.0 504 4.3

Religious organizations 679 12.3 650 8.8 1,207 11.4 1,379 11.8

Civic, social, and fraternal organizations 305 5.5 366 5.0 443 4.2 463 3.9

Arts and culture 66 1.2 122 1.6 199 1.9 223 1.9
Radio and TV broadcasting 10 0.2 19 0.3 20 0.2 21 0.2
Producers, orchestras, entertainers 27 0.5 54 0.7 94 0.9 100 0.8
Museums, botanical and zoological gardens 29 0.5 48 0.7 85 0.8 103 0.9

Foundations 16 0.3 22 0.3 32 0.3 35 0.3

Nonprofit Employment by Subsector

Education/
Research
21.9%
Social and
Legal Services
18.3%
Health Religious
Services Organizations
41.9% 11.8%

Civic, Social, and Fraternal

Organizations: 3.9%
Arts and Culture: 1.9%
Foundations: 0.3%