Arkansas nonprofit sector sees 17% growth in past decade, has nearly 92,000 workers

New data from the U.S. Bureau of Labor Statistics (BLS) shows that Arkansas’ share of nonprofit jobs in the private sector has seen more than 17% post-recession growth over the past decade with nearly 92,000 Arkansans working for charities or tax-exempt 501(c)3 organizations.

The updated BLS research data covers U.S. employment and wages for the nonprofit sector through the end of 2016. It was made possible through the support of the Johns Hopkins University and its Center for Civil Society Studies with grant funding from the Charles Stewart Mott Foundation, said BLS officials.

Chelsea Newhouse, communications associate at John Hopkins University’s nonprofit research group, said the BLS report shows that in the years following the 2008 economic crisis, nonprofit employment in Arkansas grew 17.4% from 2007 to 2016, while for-profit employment grew by only 0.5%. Nationally, there were nearly 12.3 million jobs in nonprofit organizations in 2016, which represents 10.2% of total U.S. private sector employment.

The District of Columbia had the highest percentage of nonprofit employment at 26%, followed by the East Coast states of Vermont, Maine, Massachusetts, New York and Rhode Island with nonprofit employment growth ranging between 15.5% and 18%. Nevada had the lowest share of nonprofit employment at 2.7%. Texas, Alabama and South Carolina also had less than 6% of private employment in nonprofit sector at the end of 2016.

In Arkansas, there were 3,195 nonprofits that employed 91,175 workers. Those charities produced total annual wages of nearly $3.9 billion, which averages out to $40,566 in annual salaries per employee, or about $780 on a weekly basis. Newhouse noted that the industry’s growth reflected new jobs created.

“(This) an issue of some importance in the nonprofit sector,” said Newhouse. “This rate of growth reflects new jobs created, so it truly is growth.”

Information culled from the BLS data by the John Hopkins’ research center also shows that nonprofit wages across the U.S. exceeded those generated by manufacturing employers in nearly half of the U.S. states. For example, Florida nonprofit workers were paid 120.4% of total manufacturing wages. In Arkansas, however, pay for workers in the nonprofit sector as a total share of manufacturing wages was only 52.7%, which Newhouse partly attributed to the overall small size of the nonprofit sector in Arkansas compared to other states.

“In looking at the more comprehensive analysis we are preparing, what we find is that Arkansas’ nonprofit sector is relatively small — only representing 9.2% of total private employment vs. 10.2% for the national average, which places it at 30th in terms of state nonprofit sectors,” said Newhouse. “That said, Arkansas’ nonprofit sector is actually relatively large for the region, behind only Kentucky (9.6%) and West Virginia (14%) if you count that as a Southern state.”

Lester Salamon, director of the Johns Hopkins Center for Civil Society Studies, said shifts in national policy have disadvantaged charities in many pivotal fields. Those wage gaps begin showing up vividly in the 2016 data that reveals declines in the nonprofit share of employment over the past five years in several key sectors, including social assistance, hospital care, and nursing and residential care.

“Unfortunately, policymakers both nationally and locally have been slow to recognize the special contribution nonprofits make to America’s economy and human service delivery system,” said Salamon. “Hopefully, these data will help change this.”

In response to a Talk Business & Politics query concerning the lack of growth in nonprofit wages, Newhouse said the 91,175 nonprofit jobs in Arkansas fell well short of the 154,774 jobs in the state’s manufacturing sector in 2016. That booming blue-collar sector has added nearly 7,000 new jobs, according to the state’s July employment report that saw the state’s jobless rate dip to 3.7%.

“So the nonprofit percent of manufacturing jobs was 59% — a relatively small difference from the 53% of wages,” she said. “For comparison, in one of the states with the largest relative nonprofit sector, New York, nonprofit share of manufacturing employment was 309% vs. 257% of wages. So yes, nonprofits tend to pay less than manufacturing because a lot of nonprofit jobs are in relatively low-wage fields, but that is not the whole story.”

Overall, BLS data shows that healthcare and social assistance had the largest share of nonprofit employees at 72,492. Hospital and social care had the second and third largest group of workers at 30,014 and 22,337, respectively. Ambulatory health care, nursing and residential care, and administrative services rounded were also among the top not-for-profit businesses.

Compared to the rest of the U.S., Arkansas’ job growth rate was slightly better than the national growth rate of 16.7% for U.S. charities between 2007 and 2016, which was nearly four times greater than for-profit business growth at 4.6%. John Hopkins officials said this development builds on the nation’s existing, substantial nonprofit workforce, which is the largest private labor pool for all U.S. industries behind only retail trade and manufacturing.

“(Our) study shows that the nonprofit sector continued its steady record of significant job growth through 2016, the latest date for which data are available, outpacing the rate of for-profit job growth by over 3 to 1,” Newhouse said in a statement last week from the John Hopkin’s Nonprofit Economic Data project after the BLS data was released. “This pattern was quite widespread, moreover, with the nonprofit employment growth rate over the recent decade exceeding that of for-profit firms in 49 of our country’s 50 states, as well as in (Washington) D.C. and Puerto Rico. The only exception was North Dakota, where the two sectors were tied.”

BLS officials said the 2016 nonprofit data was expanded, with help of John Hopkins and the Charles Stewart Mott Foundation, to include finer geographic and industrial detail. In addition to the elements included in prior years’ data, the 2016 data includes annual average establishments and employment, and total annual wages at the county level for the educational services, health care, social assistance and “other” sectors.

This year’s project was limited to measuring the number of private sector establishments, employment and wages for on 501(c)(3) groups. Over the last few election cycles, the nonprofit sector has seen a tremendous growth of 501(c)(4) nonprofits often tied to political lobbying and Political Action Committees (PACs). BLS officials said they worked with state partners to remove 501(c)(4) establishments from its data sources, which were collected from 900 and 990-EZ tax statements filed annually with the IRS.

Newhouse said Johns Hopkins’ research group will soon release “fuller analyses” of the BLS’s 2016 nonprofit data. She said the new data will be added to the university’s Nonprofit Works interactive database that allow direct comparison between states, counties and over the period from 1991 through 2016.

“We are aiming to have these data live by the end of September,” said the John Hopkins spokeswoman. “The report release is a bit up in the air as we are finding some interesting points that we would like to elaborate on further, but likely within the next month.”