Michigan’s Saw its Lowest Share of Private Employment in the Nonprofit Sector in 2022

Source: Quarterly Census of Employment and Wages and Business Employment Dynamics, U.S. Bureau of Labor Statistics

Nonprofits in Michigan accounted for approximately 3.0 percent of national private nonprofit jobs, ninth highest among other states. Midwestern states such as Illinois (4.5 percent) and Ohio (4.4 percent) were the only states in the region to account for larger shares. More populous states such as New York (10.6 percent) and California (9.4 percent) unsurprisingly made up a large portion of U.S. nonprofit employment.

Michigan’s nonprofits were overwhelmingly concentrated within the Healthcare and social assistance industry, which accounted for 76.0 percent of all employment, 81.6 percent of wages, and 32.3 percent of all establishments. Educational services accounted for the second highest percentage of employment at 9.3 percent, followed by Arts, entertainment, and recreation (1.9 percent); Professional, scientific, and technical services (1.7 percent); and Administrative and support and waste management and remediation services (1.4 percent).

Source: Quarterly Census of Employment and Wages and Business Employment Dynamics, U.S. Bureau of Labor Statistics

Among all major industries in the state, Educational Services had the highest proportion of its private employment in the nonprofit sector, accounting for 56.6 percent. Healthcare and social assistance was second with 51.0 percent, followed by Arts, entertainment, and recreation (14.9 percent), and Information (3.1 percent). Michigan’s major sectors followed closely with national trends where Educational services (69.8 percent) and Healthcare and social assistance (41.6 percent) similarly occupied the top spots. The dominance of nonprofit employment in both the Healthcare and social assistance and Educational services can be attributed to private colleges and universities as well as large hospitals in the state and nation. Other examples of nonprofits within top industries include museums and historical sites in the Arts, entertainment, and recreation industry, public libraries in the Information industry, volunteer recycling centers in the Administrative and support and waste management and remediation industry, and nonprofit research organizations in the Professional, scientific, and technical services industry.

Most Nonprofit Employees were Paid Less Than Their Private Sector Counterparts

The nonprofit wage ratio is the ratio of nonprofit wages relative to wages for all other private sectors. In 2022, Michigan registered a total nonprofit wage ratio of 0.98, which was 35th among other states and above the national ratio (0.97). This translated to a total nonprofit sector annual wage per employee of $62,595 compared to a private sector annual wage per employee of $63,985. Nationally, these numbers were $70,346 and $68,394, respectively. States such as South Dakota (1.19), West Virginia (1.17), and Kentucky (1.15) recorded high ratios which indicated that wages in their nonprofit sectors outpaced their total private sector earnings. Others such as Massachusetts (0.85), Wyoming (0.84), and New York (0.76) saw annual wages that were significantly less in the nonprofit sector compared to the total private sector. In terms of annual wage per employee, Michigan’s nonprofit annual wage of $62,595 in 2022 ranked 30th among states, with Ohio being the only other Midwestern state to register a lower annual wage ($61,392).

Looking at wage ratios by sector in Michigan, Healthcare and social assistance recorded the highest (1.24), followed by Administrative and support and waste management and remediation services (1.08), and Educational services (1.03). Conversely, sectors such as Retail trade (0.60), Transportation and warehousing (0.54), and Wholesale trade (0.40) paid employees in the nonprofit sector significantly less than their private sector counterparts. Nationally, Educational services had the highest wage ratio in 2022 (1.42) while the Information sector recorded the lowest (0.45).

Only three Michigan industries paid a higher nonprofit wage compared to all other private sector wages in 2022.

Source: Quarterly Census of Employment and Wages and Business Employment Dynamics, U.S. Bureau of Labor Statistics

Reviewing just the annual wage per nonprofit employee in 2022, the Management of companies and enterprises sector boasted the highest wage of all industries at $88,414. Professional, scientific, and technical services had the second highest ($84,634); followed by Finance and insurance ($71,933); Healthcare and social assistance ($67,238); and Information ($63,045). Accommodation and food services recorded the lowest annual wage per nonprofit employee of all sectors at $21,446, despite having one of the highest wage ratios.

Two Major Industry Sectors Were Projected to Grow in the Next Decade

Ten-year industry projections for 2022-2032 produced by the Michigan Center for Data and Analytics show a favorable outlook for the top two sectors which accounted for a majority of Michigan’s nonprofit sector. It is important to note that these projections reflect both for-profit and nonprofit employment. However, given that the majority of employment in both the Educational Services and Healthcare and social assistance sectors are concentrated in nonprofits, the projected trends for these overall industries may also reflect future nonprofit employment trends.

Healthcare and social assistance is projected to increase by 7.5 percent through 2032, with employment reaching 666,220. Though comparatively more negligible growth, the Educational services sector is expected to add 3,380 by 2032, bringing the employment levels to 367,950 (+0.9 percent).

Conclusion

This data series, created through the efforts of BED and QCEW staff, has allowed for a deeper understanding of the private nonprofit sector, which accounted for over a tenth of Michigan’s total private sector employment and wages. The composition of Michigan’s nonprofit sector in 2022 was similar to national averages. This was true in both the breakdown of the industry sectors which accounted for the majority of employment as well as in the wages paid on average to those within this classification. Michigan’s nonprofit sector, like other states, primarily consisted of jobs in Healthcare and social assistance, followed closely by the Educational services industry sector. Given the impact that the nonprofit sector has on these industries, access to meaningful data can aid in better understanding the dynamics of these industries and how they affect Michigan’s economy.