September 2, 2004 | Read Time: 3 minutes
The number of employees at nonprofit groups has barely grown in the past year, rising 0.5 percent since July 2003,
and wages for charity employees have declined to their lowest level in six years, according to a report by OMB Watch, a Washington group that monitors government spending.
The report, based on Bureau of Labor Statistics monthly data for the past 15 years, also says that the weekly earnings of nonprofit employees and their average hours worked dropped significantly near the start of 2003.
“When you look at employment numbers, the nonprofit sector really has ground to a halt over the last year and a half,” says John Irons, an economist at OMB Watch who was a co-author of the report. “That was surprising and really jumped out at us.”
Mr. Irons adds, by way of contrast, that charities as a group weathered the 2001 recession well, outperforming the economy as a whole in employment growth during that downturn.
The report, “Recent Trends in Nonprofit Employment and Earnings: 1990-2004,” says that growth in employment at nonprofit organizations has averaged 2.4 percent since 1990, and as recently as 2002 hit a high point, at 6.5 percent.
The federal data cover all “membership associations and organizations,” as categorized by the Bureau of Labor Statistics, but do not include such institutions as private colleges or nonprofit hospitals, for example.
At the same time that fewer people are being hired into the nonprofit work force, those already there are putting in fewer hours a week, the report says. From 1990 to 2002, nonprofit employees worked an average of 31.2 hours a week, a figure that fluctuated little during that period. Since 2002, average hours worked has dropped by 4 percent, and as of last month stood at 29.8 hours a week, the lowest figure since the government began tracking this data in 1990.
Nonprofit worker compensation is also on the decline. The downward trend was most pronounced from December 2002 to December 2003, when average weekly earnings fell 6 percent. In the year ending June 2004, hourly earnings fell by nearly 4 percent, while weekly earnings fell 5.2 percent.
Mr. Irons calls the earnings figures “a significant break from recent trends,” adding “there is something else going on here beyond the normal ebb and flow of the sector.”
Economy’s Impact
The report offers a number of possible explanations for the weakening numbers. Wages are possibly being driven down as a result of the immediate increase in nonprofit employment following the terrorist attacks in 2001.
Another theory is that nonprofit employment might only now be responding to the recession. Employment, the report suggests, can be a “lag indicator,” meaning it tends to react slowly to general economic downturns. And an increase in the number of part-time nonprofit workers might explain the drop in the hours worked.
“There is also evidence to support the hypothesis that nonprofits are being asked to do a lot more with fewer resources,” Mr. Irons says, suggesting that a weak overall economy and reductions in government services might be at fault.
“The idea that we can ask private charities and religious institutions to pick up the slack right now might not work in the long run,” Mr. Irons says. “They are struggling more and more and they are not going to be able to take over the government role in doing things that need to be done. This might be one of the messages from this report.”
Paul C. Light, a professor of public service at New York University, says he finds the wage trend particularly troubling, since it could make it hard for nonprofit groups to attract strong leaders. “Nonprofit employers continue to rely on the willingness of workers to accept poor wage growth, and as baby boomers exit the work force in the coming decade, we have the recipe for a very serious human crisis,” he says.
Mr. Light adds: “I’m not hearing too many people, including funders, talking about this. But it’s a serious problem. And the question is, what is the sector going to do about it?”
The report is available free online at http://ombwatch.org.
