Nonprofit earnings and sectoral employment in the United States since 1994

In this article, we present and analyze data on employment and sectoral employment shares for nonprofit, public, and for-profit wage and salary workers. We find that for-profit shares have changed little since 1994, whereas nonprofit shares have increased and public shares have declined. Compared with the for-profit sector, the nonprofit sector has a more educated and older workforce, which is heavily concentrated in the healthcare and education industries, as well as religious organizations. Although, on average, nonprofit workers earn higher wages than for-profit workers and lower wages than public sector workers, controlling for worker skills reveals that nonprofit workers earn less than for-profit or public sector workers. An earnings penalty in the nonprofit sector is consistent with implications of the “labor donation” theory, which assumes that, in some cases, workers may be willing to accept lower wages for the added utility of working at a firm with the objectives of a nonprofit.