Are Women and Men's Pay Increase Trajectories Different between the Nonprofit and for-Profit Human Service Organizations?

Background: Are women and men’s pay increase trajectories different between the nonprofit (i.e., NP) and for-profit (i.e., FP) human service organizations? Despite the broadly-cited claim that the nonprofit sector provides better career opportunities for women based on several studies (e.g., Preston, 1990), no known empirical study has examined women and men’s pay increase trajectories in the two sectors. Most importantly, few studies have examined the nonprofit/for-profit difference in pay issues specifically within human services. With the continued privatization of the U.S. human services, for-profit service providers have been fast entering the human service fields and nonprofit organizations face growth competition from for-profits for skilled workers. Answering this question will further the collective understanding of the human service labor force and inform management practices.

Methods: Data: Survey of Income and Program Participation 2008 Panel data from the U.S. Census Bureau is used to answer this question. The panel contains 16 waves of data for 5 years from 2008 through 2013. SIPP’s labor force section collects rich information about an individual’s work history from the beginning of the reference year through the interview months. It also collects business characteristics of the respondent’s job and employer, including industry, occupation, union status, size of the employer, and incorporation status. These are all key determinants of worker’s salary and pay increase trajectory.  

Analytical Method: Because the sample size of workers that move between the nonprofit and for-profit sectors over the panel year is too small, linear fixed effect model is not appropriate. The study then adopted OLS regression with robust standard errors to examine the difference of workers’ last-point hourly wage controlling the start-point wage. Last-point individual characteristics including full-time status, hours worked per week, occupation, industry, and education level as well as employer-side pay determinants such as union status, size of employer, and if the employer provided health insurance are controlled. The study also compares the characteristics and wage changes of four groups: NP stayers, FP stayers, NP-FP Movers, and FP-NP Movers.

Results: Descriptive statistics show that, compared to that of for-profits, workers of nonprofit human service organizations tend to have higher levels of education, more years of experiences, and work full-time, and nonprofit human services employed less women and racial minorities. In addition, a larger proportion of nonprofit workers worked in organizations with over 100 employees and are provided health insurance. NP-FP Movers were paid lower than NP Stayers and were less likely to hold managerial positions, so they moved to seek better payment, while FP-NP Movers were paid higher than FP Movers and were more likely to be in managerial positions, and they moved to seek even higher compensation. Regression analysis shows that nonprofit men gained the highest wage increase among all workers and the wage change between NP women and FP women is about the same.

Conclusions: This study shows that although the U.S. human services have a female-dominated workforce, men are much more likely to be in managerial positions and have the steepest pay increase trajectories.