Indiana’s nonprofits protected more jobs than for-profit firms during the 2020 COVID-19 recession but trailed on payroll.
The arrival of COVID-19 in early 2020 and the subsequent rapid spread of serious infections and deaths directly impacted Indiana health care institutions faced with a sudden avalanche of highly contagious, serious illnesses and deaths. Closely related efforts to contain and limit infections had ripple effects across all industries and disrupted the production and delivery of goods and services of all types.
A new report, The Impact of COVID-19 on Nonprofit and For-profit Employment in Indiana: Selected Industries, 2020, examines whether nonprofit and for-profit institutions in key support industries responded differently to the early impact of pandemic.
This is the first time since 1995—and the first of the three recessions during those 25 years—that the number of nonprofit jobs declined. For-profits lost jobs in each of the prior recessions. During prior recessions, nonprofits (NPs) overall performed better than for-profits (FPs) in protecting jobs and payroll. That was still true in 2020, but the nonprofit advantage was notably smaller.
The study uses comprehensive quarterly employment and wage data to track Indiana employment by quarter in 2020, focusing primarily on health care, social assistance, and education, but also arts, entertainment, and recreation (AER), and membership associations. Jointly, these five industries account for 92 percent of paid nonprofit workers in Indiana and 11 percent of for-profit workers.
The study finds broad consistency in quarterly trends for nonprofit and for-profit employment and payroll during 2020. If nonprofit employment or payroll increased or decreased in most industries, so did for-profit jobs and payroll. In the arts, entertainment, and recreation (AER) industry, both nonprofits and for-profits lost jobs during 2020, but only nonprofits also experienced a decline in total payroll. As a result, the average annual payroll per nonprofit employees in AER dropped from 84 cents on the dollar to 61 cents compared to their for-profit counterparts between the first and last quarter of 2020.
In general, nonprofits did better than for-profits in avoiding job losses from one quarter to the next in most of the key industries but consistently did worse in maintaining or growing payroll.
“But there were notable differences in how closely nonprofits and for-profits followed the same trend in key industries,” notes Kirsten Grønbjerg, Director of the Indiana Nonprofits Project and Distinguished Professor at Indiana University. “The divergence between nonprofit and for-profit quarterly trends was particularly large in health care, social assistance, and AER.”
However, except for AER, nonprofit employees maintained their pay advantage over their for-profit counterparts throughout 2020, although their advantage declined some in health care and education.
The researchers paid special attention to the health care industry, which bore the brunt of the direct health impact of the pandemic. Thus, general medical and surgical hospitals had to deal with the sudden influx of very ill COVID-19 patients.
“Our findings suggest that nonprofit hospitals did a much better job of maintaining their services than their for-profit counterparts,” Grønbjerg notes. “In Indiana, nonprofit general medical and surgical hospitals are much larger than their for-profit counterparts and pay higher average annuals wages, perhaps making it easier for them to provide the scope of services needed to respond to the public health emergency and compete effectively for the dramatic increase in demand for highly trained medical personnel caused by the pandemic.”
About the briefing
This briefing is the eighteenth in a series of reports from Indiana Nonprofit Employment, produced by the Indiana Nonprofit Sector: Scope and Community Dimensions project, designed to inform local community leaders and policymakers. The analysis is a joint effort of the O’Neill School of Public and Environmental Affairs, the Lilly Family School of Philanthropy and the Indiana Business Research Center, all part of Indiana University. The briefing’s co-authors are the director of the project, Kirsten Grønbjerg, and research assistant and IU MPA graduate student, Leslie Kutsenkow.
About the O’Neill School of Public and Environmental Affairs
The O’Neill School is a world leader in public and environmental affairs and is the largest school of public administration and public policy in the United States. In the 2021, “Best Graduate Public Affairs Programs” by U.S. News & World Report, the O’Neill School ranks first in the country. Four of its specialty programs are ranked in the top-five listings, including nonprofit management, ranked first.
About the Lilly Family School of Philanthropy
The Indiana University Lilly Family School of Philanthropy is dedicated to improving philanthropy to improve the world by training and empowering students and professionals to be innovators and leaders who create positive and lasting change. The school offers a comprehensive approach to philanthropy through its undergraduate, graduate, certificate and professional development programs, its research and international programs and through The Fund Raising School, Lake Institute on Faith & Giving, the Mays Family Institute on Diverse Philanthropy and the Women’s Philanthropy Institute.
About the Indiana Business Research Center
The Indiana Business Research Center, established in 1925, is an integral unit in the Kelley School of Business at Indiana University. Established in 1925, the IBRC provides and interprets the economic information needed by the state’s business, government, and nonprofit organizations, as well as users of such information throughout the nation. The IBRC powers its own research and that of others with its vast databases on numerous topics including income, employment, taxes, and a host of other economic indicators for the nation, the state and local areas. In addition, the Center conducts original research to generate needed information when existing data are not available or sufficient.
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