HHS Data: Nonprofit Jobs Picture Mixed, Faster Job Growth than in For-Profit Sector, Small Nonprofits Hit Hard by Recession

October 05, 2011
Rick Cohen
The Non-Profit Quarterly

Based on an analysis of four years of federal government data on tens of thousands of nonprofit, for-profit, and government employers, there are some important and startling findings about employment trends in the nonprofit sector that should interest most nonprofit agency leaders and staff:

• Overall, the nonprofit sector is generating jobs at a faster rate than the private sector. The resilience of the nonprofit sector—and of charitable donors—during a recession is noteworthy, especially as nonprofits perform critical functions in providing a safety net for the poor and disadvantaged during a recession.
• Nonprofit-sector job creation, however, has been largely concentrated in large nonprofit employers with 1,000 employees or more. We would guess that these nonprofits are likely to be hospitals and universities.
• There is a reasonably logical correlation of the growth in nonprofit sector employment with the arrival of federal stimulus dollars starting in 2009 and extending through 2010. We know that a significant portion of the stimulus funds were directed to programs run by nonprofit organizations. It is possible, however, that with the end of stimulus spending, the employment gains of the nonprofit sector in recent years could be reversed.
• Despite the increase in overall nonprofit employment and an increase in the number of establishments associated with large nonprofit employers, there appears to have been a contraction in the number of small nonprofit employers. Perhaps small nonprofits have adjusted to the recession by shifting from paid personnel to volunteer staffing. If the recession ends up double-dipping, more small nonprofits are likely to disappear or be taken over by larger organizations.

Is this data from the Census Bureau? The Bureau of Labor Statistics? The Internal Revenue Service? No, these potential findings are drawn from annual studies conducted by the Agency for Healthcare Research and Quality (AHRQ), a little-known agency associated with the Department of Health and Human Services (HHS).

No one collects undeniably accurate and reliable data on nonprofit employment, no one. Counts of employment by the Bureau of Labor Statistics, for example, are really estimates based on samples, often stratified samples of employers or employees to make sure that information is collected for specific types and classes of employers and for specific geographic regions.

So it is a boon to researchers of the nonprofit sector that a unit of the Department of Health and Human Services also conducts an annual survey of employers—like others, based on a stratified sample—in order to collect health-insurance-related information. Every year since 1996 (with the exception of 2007), AHRQ has surveyed employers to identify and assess the “number and types of private health insurance plans offered, benefits associated with these plans, premiums, contributions by employers and employees, eligibility requirements, and employer characteristics.”

This data series, known as the Medicare Expenditure Panel Study (MEPS), includes an “Insurance/Employer Component” that gathers health expenditure and benefit information from a national sample of tens of thousands of public- and private-sector employers—including nonprofit employers. For researchers interested in the nonprofit sector, there is a side benefit: the data include estimated counts of nonprofit employers and employees by size of employer and by full-time or part-time status of the employees. When examined over a period of years, these data reveal lots of hidden nuggets of insight into changes in nonprofit employment and nonprofit employers.

AHRQ researchers interview a large number of employers via a detailed telephone and written survey, typically sampling some 38,000 to 40,000 private sector establishments drawn from the Census Bureau’s most recent business register. The MEPS response rate for the 2006, 2008, 2009, and 2010 interview periods has typically hovered between 78 and 86 percent. That high response rate is due to several rounds of outreach, including an initial survey mailing, a second mailing if there is no response to the first, and a telephone follow-up if neither mailing secures a response.

Multiple years of data from these carefully constructed national samples reveal often-surprising trends concerning rates of nonprofit job creation, changes in full-time versus part-time employment, and the number and types of nonprofit firms and establishments.

Job Creation

Like many other data sources, the AHRQ surveys suggest that the nonprofit sector is outpacing the private sector in job creation:

Table I: Nonprofit Employment by Firm Size

YEAR	Total nonprofit employment	Less than 10 employees	10-24 employees	25-99 employees	100-999 employees	1000 or more employees
2006	15,218,123	953,578	853,258	2,256,273	4,380,927	6,774,086
2008	15,365,566	1,015,502	890,012	2,092,262	4,617,822	6,749,967
2009	14,429,714	968,522	782,180	1,888,633	4,334,549	6,455,830
2010	15,703,701	931,685	810,196	2,010,090	4,417,686	7,534,044

The MEPS statistics suggest that nonprofit employment plummeted in 2009 as the national recession ravaged the sector but then increased dramatically in 2010. Why? The obvious answer is the American Recovery and Reinvestment Act of 2009—a.k.a. ARRA or “the stimulus”—which funneled money to nonprofits such as Community Action agencies, Head Start groups, health clinics, and hospitals, allowing them to retain and hire staff. Who knows how many people’s livelihoods during the darkest days of 2009 and 2010 were maintained by ARRA dollars (funding that has more or less come to an end now)?

In 2010, ARRA-funded weatherization employment increased from 10,666 full-time jobs in the first quarter to 15,415 in the fourth as weatherization programs ramped up their activity. ARRA-funded employment in the Health Center Integrated Services Development Initiative increased from 7,068 to 8,267 over the same period, ARRA-funded Community Services Block Grant jobs grew from 7,966 in Q1 to 18,431 in Q3 (the Q4 statistic for this particular program is missing), jobs in the homelessness prevention and rehousing program grew from 3,481 to 4,252, and so on. In addition to these ARRA jobs, accelerated medical reimbursements from Medicaid and Medicare created even more nonprofit employment.

Overall, total nonprofit-sector employment grew by 8.8 percent from 2009 to 2010 according to the MEPS survey. Breaking down the data in terms of nonprofit size reveals a lot of variation, however. Employment among nonprofit employers with 10 to 24 employees was up 3.6 percent. For organizations with 25 to 99 employees it was up 6.4 percent. Between 100 and 999 employees: up 1.9 percent. More than 1,000 employees: up an astounding 16.7 percent. But at nonprofits with fewer than 10 employees employment actually dropped 3.8 percent.

Part-time vs. Full-time

Another revealing way to break down the data is to look at full-time versus part-time jobs. Part-time employment in the nonprofit sector increased 5.3 percent between 2009 and 2010, as compared with a 2.2-percent increase for all private sector employers. Part-time employment in nonprofit organizations with 1,000 or more employees increased a whopping 31.1 percent.

Table II: Part-time Nonprofit Employment by Firm Size

YEAR	Total (part-time nonprofit)	Less than 10 employees	10-24 employees	25-99 employees	100-999 employees	1000 or more employees
2006	3,820,580 (100%)	447,854 (11.7%)	322,816 (8.4%)	648,327 (17.0%)	967,568 (25.3%)	1,434,014 (37.5%)
2008	3,886,570 (100%)	486,015 (12.5%)	327,332 (8.4%)	559,350 (14.4%)	1,185,903 (30.5%)	1,327,970 (34.2%)
2009	3,694,472 (100%)	467,533  (12.7%)	298,540  (8.1%)	512,362 (13.9%)	1,316,193 (29.8%)	1,099,844 (35.6%)
2010	3,890,001 (100%)	474,726 (12.2%)	354,298  (9.1%)	631,212 (16.2%)	986,818 (25.4%)	1,442,947 (37.1%)

Nearly one out of four nonprofit employees were part-time workers in 2010, compared to slightly more than one out of five private-sector employees overall. (This kind of data is important to the AHRQ because part-time workers are less likely to qualify for employer-provided or employer-subsidized health insurance.)

Nonprofit Firms and Establishments

Although the data is presented by “firm” size, the survey is actually administered among “establishments.” An establishment is defined as “a specific workplace or business location,” while a “firm” is a “business entity consisting of one or more business establishments under common ownership or control.” Consequently, one firm could have several different establishments. Given that the survey sample is specifically constructed to make national estimates, the changes in the number of establishments in the survey do reveal something about the structure of both nonprofit and for-profit business entities in this recession.

Table III: Nonprofit Establishments by Firm Size

YEAR	Total number of nonprofit establishments	Less than 10 employees	10-24 employees	25-99 employees	100-999 employees	1000 or more employees
2006	488,663 (100%)	251,174 (51.4%)	63,429(13.0%)	61,720 (12.6%)	85,498 (17.5%)	26,843 (5.5%)
2008	534,554 (100%)	277,902 (52.0%)	70,378 (13.2%)	66,779 (12.5%)	87,262 (16.3%)	32,233 (6.0%)
2009	510,850 (100%)	257,460 (50.4%)	64,592 (12.6%)	62,590 (12.3%)	90,200 (17.7%)	36,007 (7.0%)
2010	517,245 (100%)	255,727 (49.4%)	64,102 (12.4%)	69,577 (13.5%)	89,398 (17.3%)	38,441 (7.4%)

Again, it appears that the stimulus was one factor leading to an increase in the number of nonprofit establishments between 2009 and 2010, but the number of nonprofit establishments is still down 3.2 percent as compared with 2008 (a much sharper decline than the 1-percent drop among all private-sector establishments). Particularly noteworthy is the shrinkage in the number of establishments controlled by nonprofit firms of fewer than 10 employees, as compared to the increasingly large share of establishments tied to nonprofit employers with 1,000 employees or more.

The Nonprofit Economic Engine

Everyone can argue methodology and whether the AHRQ’s MEPS studies are a better or worse indicator of changes in the nonprofit sector than other data series. For one thing, the MEPS studies focus on employers, not entities. As a result, among nonprofits—especially nonprofit corporations that are combined with other tax-exempt entities such as religious institutions—the MEPS analysis is missing the larger number of nonprofits that exist without any staff.  As a result, a contraction in the number of nonprofit establishments or firms in the MEPS studies does not necessarily mean that there was a corresponding reduction in the overall number of nonprofits for those years.

But the AHRQ’s MEPS studies should help nonprofits and policy-makers recognize the economic importance of the nonprofit sector writ large. It’s more than what the sector absorbs and spends in the form of charitable giving and governmental grants and contracts—which is a significant though not huge portion of the nation’s Gross Domestic Product. It’s also that the nonprofit sector provides employment to millions of people. When debates occur within the Washington beltway over whether employers can afford to provide health insurance or the best methods of generating jobs in the American economy, policy-makers might benefit from looking at the AHRQ data to better appreciate the nonprofit sector as a significant and resilient provider of jobs and incomes.

Related articles

• 2009 Salary Survey of Nonprofits Reveals Promising Results (prweb.com)
• The American Jobs Act and Nonprofits (whitehouse.gov)
• Opportunity Knocks Releases 2009 Most Demanded Nonprofit Positions Listing (prweb.com)
• US economy adds 103,000 new jobs (bbc.co.uk)
• WOW: The Jobs Report Just Smashed Expectations In Canada (businessinsider.com)
• Though U.S. Unemployment Remains at 9.1 Percent, Idealist.org Says Nonprofits are Hiring (altlawyerjobs.com)
• Giving the US nonprofit sector a seat at the federal table (Rep. Betty McCollum) (thehill.com)
• Nonprofits Should Be Represented in Jobs Bill (kynonprofits.wordpress.com)

Enterprising Economy: An Economy Based on Community Connection and Competence

by John McKnight, Peter Block on June 23, 2011

The community is the natural nest for hatching new enterprise — it is the birthplace and home of small business, which provides the largest growth in employment. Friends and family often provide the capital and sweat equity to start a business.

The culture of a local community is a key factor in nurturing entrepreneurial spirit. A community where local people feel they are a center of enterprise creates the vision and support. The culture encourages people to initiate enterprises, members use their buying power to support local enterprises, and they put their savings to work in community credit unions and banks. Their dollars circulate, providing the economic support that parallels and strengthens local social support. Some communities even have a local currency to incentivize support of local economy. A related economic power of a connected community is access to jobs. One quarter of job seekers get information from relatives, friends, and neighbors.

Without strong community connections the economy becomes
co-opted by systems.

Strong community connections spawn new enterprises, sustain them, and provide primary access to employment. Without these functions, the economy becomes a land of large-scale institutions unable to sustain a local workforce (and so large they’re destined to fail to serve any interests but their own).

In the consumer ecology, care is co-opted by systems: businesses, agencies and governments. Insurance agencies send letters to tell us they care about us. Charities ask us to give money to pay for the care of people. Government pays hospitals and medical professionals for their service. In each case, they are providing a paid service — not care. Systems offer services for pay.

Genuine care can’t be paid for — it is given, free of charge. You can pay for services for your mother in a nursing home, but she may lose the care of family, friends, neighbors, faith, and service groups. They become visitors to a service system; she becomes a client.

The place to look for care is in the dense relationships of neighbors and community groups. We have a competent community if we care about each other, and about the neighborhood. Together, our care manifests a vision, culture, and commitment that can uniquely assure our sense of well-being and happiness. This source of satisfaction is complete in and of itself — not dependent on the next purchase.

No business, agency, or government can fulfill basic community functions. If we don’t know our neighbors, aren’t active in local community life, pay others to raise our children and service our elders, and try to buy our way into a good life, we pay a big price. We produce a weak family, a careless community and a nation that tries hopelessly to revive itself from the top down. Reversing this situation is difficult because of the power of systems to make consumers out of citizens.

By seeing the consumer ecology for what it is, we can shift our thinking and become producers of our own future.

By seeing the consumer ecology for what it is, we can become citizens again. We can shift our thinking and decide who we take ourselves to be: producers of our own future, or purchasers of what others have in mind for us. Consumer society begins when what was once the province or function of the family and community migrates to the marketplace. It begins with the decision to purchase what might have been homemade or produced locally. This is how citizens yield their power to the lure of consumption.

Consumption is like an addictive drug. The market promises what it knows won’t be fulfilling. This defines its counterfeit nature — trying to make something appear to be gratifying or satisfying when it is not. The fact that dissatisfaction persists after achieving the good life means the good life is not satisfying. Unfunctional families and incompetent communities signal that we’ve reached the limits of consumer satisfaction.

For example, we talk of the child as a product of the School System, starting early the migration of the child from citizen to consumer, from family and community life into system life. We count on the School System to perform many family functions—to feed them, discipline them, and provide custodial care.

The same dependency goes for other family functions — like health, entertainment, nutrition, employment, mental well-being, elder care, and environmental stewardship — all have been outsourced to professionals. All are organized in systems designed to deliver these functions in efficient, low-cost, consistent ways.

We made the leap from being citizens to being consumers in a culture that sells the idea that a satisfied life is determined first by defining and promoting needs and then figuring out how to fulfill them. We create a larger market by determining that families and communities are filled with needs that are best serviced by systems and professions.

Consumerism offers purchased solutions to being human, providing a substitute for what could come naturally to families and communities.

This is the more profound cost of the consumer promise, the denuding of community capacity. The institutional counterfeit of compassion and support is a two-part package: first, the spin of optimism backed up by a purchase; and, second, the denial when it does not happen.

For example, in advertising we are promised immortality, eternal youth and happiness. This promise is elegant, moving, entertaining. At the end, ways the product could hurt us are described in small print or spoken rapidly — accentuate the positive, eliminate the negative. We call this “spin.” Responses of spin and denial are designed to keep organizations on course. Systems can’t allow sorrow to become personal. When systems lift the veil of denial and spin to apologize or express sorrow, it is either because they’re forced to by law, or it is long after any consequences.

The effort to find a fix for our humanity only forces us into counterfeit promises and unsatisfying results. Often we believe that if we do more of what does not work, it will finally work. This is the dilemma of the consumer economy: it leads to a place where when we reach a limit and still are unsatisfied, we think, if only we had more we would be successful or satisfied — more police, physicians, teachers, services, stuff.

This is not a solution — it’s an addiction. Consumerism is not simply an economic system — it can be considered an ecology. It impacts how we relate to each other; it shapes our relationship with food, work, music, ritual, religion — all elements of culture.

And for this ecological system to work, we have to participate in the effort to purchase what matters and persist at it, despite the lack of results. This consumptive ecological system produces hollowness in our lives, even for those who are winning at the game.

Related articles

• Can Entrepreneurs Rescue the U.S. Economy? (blogs.wsj.com)
• Can We Build Our Own Economy From the Ground Up? (zerohedge.com)

Raising Owner-Entrepreneurs Would Solve Youth Unemployment, Spur Growth, and Rescue Low-Income Communities

Image by ifmuth via Flickr

Steve Mariotti
Founder, Network for Teaching Entrepreneurship
Posted: 9/9/11 08:37 AM ET

Speaking forcefully and with great determination, President Obama mentioned small business at least five times in his American Jobs Act speech Thursday night, telling Congress: “Everyone here knows that small business is where jobs begin.” The president admitted that large corporations “have come roaring back” from the recession, but “small businesses haven’t. And he described tax cuts and hiring incentives in his jobs bill especially designed to stimulate and support small business, which he has often referred to as “the engine of our economy.”

I have just one question: If entrepreneurship is this vital to the American economy, why aren’t we teaching every high school student in this country how to start and operate a small business?

I’m not just picking on the president; I didn’t hear entrepreneurship education mentioned during the GOP debate on September 7 either.

Yet, if you think the current 9.1% unemployment rate in this country is frightening, take a look at youth unemployment. On September 2, the Department of Labor reported a teen unemployment rate of 25.4 percent. The rate among African-Americans teens is almost 49 percent, more than four times the national average. The rate for Hispanic youth jumped up nine percent this summer to 35 percent. The number of teens living in poverty in the United States has reached almost 19 million — with the majority in African-American and Hispanic communities.

I don’t believe our teenagers lack initiative or don’t want to work. I believe many do not know how to create opportunities for themselves because they have not been exposed to the tools necessary to create ownership of assets within the free enterprise system. As an educator of at-risk youth for thirty years and the founder of the Network for Teaching Entrepreneurship (NFTE), I have seen firsthand the powerful effect that learning to start and operate a small business has on young people.

The time is now for an unprecedented initiative in owner-entrepreneurship education to reduce these catastrophic youth unemployment rates — before we see London-style riots in the streets of our own cities. Without such an initiative, we risk losing this generation to a permanent depression and long-term structural unemployment.

Let me share with you the story of two at-risk youth who were saved by owner-entrepreneurship education. Jabious and Anthony Williams were living crammed in with their mom and eight other family members into their aunt’s two-bedroom apartment in Anacostia, a violent South East Washington, D.C. neighborhood. Every day the boys walked miles to the nearest Exxon station to pump gas for tips. “Typically, we would earn about thirty to fifty dollars a day to help support my mom,” says Jabious Williams.

Luckily, the Williams brothers met Mena Lofland, a caring NFTE-certified business teacher at Suitland High School in Maryland. She got the boys in to a NFTE’s owner-entrepreneurship class. NFTE currently reaches over 60,000 students a year in the United States, as well as in ten countries. There are 400,000 NFTE graduates globally.

Like many of our low-income students, Jabious and Anthony displayed an aptitude for entrepreneurship, born of tough childhoods that encourage independence, toughness, salesmanship and hard-won street smarts. I’ve seen this repeatedly: Our at-risk youth are uniquely equipped to handle the risk and uncertainty inherent in entrepreneurship. They also have valuable insights into their local markets.

The Williams brothers started their own hip-hop clothing line, for example, with support from Lofland, and two local mentors — Phil McNeil, managing partner of Farrgut Capital Partners, and Patty Alper, a dedicated volunteer, philanthropist and former entrepreneur.

Now 24, Jabious is a scholarship graduate student at Southeastern University and operates Jabious Bam Williams Art & Photography Company. Anthony heads a youth-mentorship program. They recently gave their mom $5,000 as down payment on a house. “If it weren’t for the NFTE classes and the support of our teachers and mentors, we would have been likely to drop out of school,” Jabious notes.

The story of the Williams brothers is just one of countless examples from NFTE’s files that beg the question: If owner-entrepreneurship education can create jobs, prevent students from dropping out, and provide economic rescue for people in our low-income communities, what’s it going to take to open a conversation about making owner-entrepreneurship education standard in every high school in America?

Professor Andrew Hahn of Brandeis University points out the social consequences for an entire generation brought up in poverty that has never set foot in a workplace — and the potential benefits of owner-entrepreneurship education. Hahn notes: “Research studies show the scarring effects of early unemployment. The lack of work experience among minority teens contributes to a host of more serious challenges in their early 20’s. Studies demonstrate that NFTE’s entrepreneurship programs create jobs and are among the few strategies that work during these periods of massive youth joblessness.”

I’ve seen firsthand that owner-entrepreneurship education gets disaffected teens excited about school again, and about their futures. It teaches them that they can participate in our economy and make money. They quickly realize that to do so, they must to learn to read, write and do math. I’ve also seen how owning even the simplest small business fills a teen with pride.

Entrepreneurship education is a great way to teach basic subjects to children who are failing to learn through traditional academic approaches, because it provides concrete incentives. Owner-entrepreneurship education teaches young people that they can create jobs for themselves and do not have to be victims of this economic downturn but rather view it as an opportunity to start a business. It also makes them more employable because by running their own small businesses, they learn how business works and what makes an employee valuable. This shift in viewpoint can immeasurably benefit the psyche of an unemployed teenager, and also benefits companies that hire them.

Currently, our national strategy to combat poverty among low-income youth is built around improving K-12 education. That’s a good choice, yet we’re not teaching entrepreneurship, even though most Americans would probably agree with President Obama that small business is the driving engine of our economy.

Instead, most of our national education efforts seek to teach low-income youth to become better workers. Given the widening gap between rich and poor in this country, however, I’d like to raise one critical point: Why aren’t we also teaching them how to own? If entrepreneurship is the engine of the American economy, why aren’t we raising more creative owner-entrepreneurs like the Williams brothers?

On an income statement, workers are located on the “wages” line. Professional business owners, venture capitalists, and private equity firms have a distinct advantage in the creation of wealth because they can sell the profits generated by workers for a multiple of a business’s earnings. One dollar of profit can become $3, $10, or even $50.

This is how fortunes (and jobs) are created — an entrepreneur starts a business, sells some or all of its ownership, and uses the resulting capital to start and build other businesses that he or she can sell in the future, creating more capital. Workers, on the other hand, spend their lives selling only their time for hourly wages, or perhaps a salary.

Disadvantaged youth are seldom let in on this secret to wealth creation. I once asked a leading venture capitalist and philanthropist, who has donated millions to helping low-income children attend private schools, “What about teaching kids the ownership skills that made your fortune, so they can become financially independent?” He responded, only half-jokingly, “But then who would do the work?”

His comment illuminates a core issue in our society: If only the wealthiest people own the increased profits resulting from the better education of our low-income youth, how much has really been accomplished in helping our most impoverished citizens achieve the American dream?

This is why NFTE teaches owner-entrepreneurship education. We teach not only entrepreneurial skills like record keeping, sales, finance, negotiation, opportunity recognition, and marketing, but also the power of ownership. Our students learn how to properly value and sell a business, and how to build wealth utilizing franchising, licensing and other advantages of ownership.

Teaching business skills without also teaching the power of ownership potentially creates wealth for an owner down the line, not necessarily for the entrepreneur who created a business. Even well-educated entrepreneurs can find themselves at a disadvantage when dealing with professional owners who are experts in valuation and procuring a high rate of return in exchange for investing in a business.

We seek to demystify wealth creation for our low-income students, so they will have the same knowledge that a child of wealthy parents might pick up at the dinner table. Owner-entrepreneurship education empowers young people to make well-informed decisions about their future, whether they choose to become entrepreneurs or not. They become aware of five assets that every individual has: time, talent, attitude, energy and unique knowledge of their communities. They learn to use these assets strategically as they move along in their careers — which may include creating businesses and jobs, and building wealth in their communities.

Owner-entrepreneurship education reveals that anyone can start a business and use it to create wealth. This awareness can be a matter of life or death for at-risk young people like the Williams brothers. Through owner-entrepreneurship education, they discovered the value of their assets and created a business out of a comparative advantage – in this, case their unique knowledge of hip hop culture and what kind of clothes would appeal to other kids in their community. As a result, they became motivated to stay in high school, went on to college and helped their mother become a homeowner.

As the Williams brothers learned, owner- entrepreneurship education can help solve the youth unemployment crisis, rescue our low-income communities by increasing home ownership and employment, and even bring about a fairer distribution of wealth. We need a national debate on owner-entrepreneurship education, particularly for low-income youth. We must raise the consciousness of those who have been left out of our economic system, so that they comprehend the joys and responsibilities of ownership.

As Jabious Williams says, “Because I own my business, I know I have a future.”

Related articles

• White House Announces Startup America Partnership to Foster Innovative, High-Growth Firms in United States (kauffman.org)
• Entrepreneurship Concepts for Students (steveandcarolineseshipblog.wordpress.com)
• Why New Graduates Should Consider Entrepreneurship (money.usnews.com)
• What is youth entrepreneurship (wiki.answers.com)
• Documentary of Inspiring Teen Entrepreneurs to Receive Worldwide Screenings During Global Entrepreneurship Week (kauffman.org)