Oregon study reveals significant wage gaps in nonprofit sector prompting urgent policy discussions

Multnomah County is taking significant steps to address wage disparities in the nonprofit sector, as highlighted during a recent board briefing on October 29, 2024. The meeting featured a presentation from the Nonprofit Association of Oregon (NAO) and Echo Northwest, which revealed alarming findings about wage suppression and high turnover rates among nonprofit workers.

The study presented by Jim White, NAO's Executive Director, and economist Dr. Kevin Cahill, focused on comparing wages and working conditions in social service nonprofits with those in the public and private sectors. The research found that nonprofit workers earn, on average, $4.33 less per hour than their public sector counterparts, translating to an annual wage gap of approximately $9,000. This discrepancy is particularly concerning given that nearly half of nonprofit workers are engaged in community and social services, which are essential for public welfare.

One of the most striking findings was the high turnover rate in the nonprofit sector, with about one-third of workers leaving within 18 months. In contrast, turnover rates in the private and public sectors are significantly lower, at 5% and 11.5%, respectively. The data suggests that many nonprofit employees transition to the private sector, drawn by higher wages, which exacerbates staffing challenges in critical service areas.

To combat these issues, the study proposed several policy solutions, with the most impactful being the introduction of cost-of-living adjustments to government contracts and grants for nonprofits. This measure aims to ensure that funding keeps pace with inflation and adequately supports nonprofit workers, thereby improving retention rates and service delivery.

The discussions at the briefing underscored the urgent need for systemic changes to support the nonprofit sector, which plays a vital role in delivering public good. As Multnomah County moves forward, the focus will be on implementing these recommendations to foster a more equitable and sustainable workforce in the nonprofit sector.