Editors’ Note: John Miles Branch discusses his article on the history of debates regarding the union exemption for nonprofits, recently published in Modern American History.

“They want to change the world. They would also like a raise,” announced a New York Times headline in April 2023. Unions organizing nonprofit workers, like the Office and Professional Workers Union (OPEIU) and Nonprofit Professional Employees Union (NPEU), were growing their ranks at a rapid pace. In the process, nonprofit workers were highlighting longstanding double standards in the nonprofit workplace, where employees are often asked to sacrifice their own well-being for the sake of a mission.

Often, these efforts have been contentious. In some well-publicized cases, employers have argued that unionizing workers’ demands, or the act of unionization itself, compromises their organizations’ missions. Employees have countered that such missions cannot rest on exploitative working conditions. Some prominent outside commentators have criticized actions by unions at progressive nonprofits, in particular, as part of a broader interrogation of those organizations’ strategic decisions and political impact.

Those tensions have a complex history—one that I highlight in an article out earlier this year at Modern American History. From 1951 to 1976, the National Labor Relations Board (NLRB) categorically declined to assert jurisdiction over organizations with a charitable purpose, limiting their workers’ abilities to engage in collective bargaining. Charitable activities, the NLRB argued, were outside the commercial economy that it was tasked with regulating. I call this policy union exemption. Like tax exemption, it helped to establish the political, economic, and cultural boundaries of the midcentury nonprofit sector. Its reversal signified a sea change in how regulators and nonprofit leaders thought about those boundaries—yet as evidenced today, cultural and political ambiguities remain.

The Origins of Union Exemption

When the National Labor Relations Act (NLRA) first became law in 1936, its regulation of union recognition and activity was intended to maintain the stability of the country’s “free flow of commerce,” and the NLRB was created to carry the law out. The law’s original text did not include an exemption for charitable organizations (like it did for certain sectors like domestic work and agriculture), nor did the board infer that one existed. As a 1938 NLRB ruling ordering a union election at a hospital put it, “employees of hospitals, like employees of automobile manufacturers, must live upon their wages.”

Still, union organizing at nonprofit organizations was relatively rare. When it did happen, the response from management was often bewilderment. In 1947, representatives of organizations like the American Hospital Association and the American National Red Cross urged Congress to include an exemption for nonprofit organizations in the Taft-Hartley Act, a sprawling set of management-friendly amendments to the NLRA. They argued that the work of nonprofits was crucial—too crucial, in fact, to be put in short-run jeopardy by a strike, and in long-run jeopardy by the financial pressures collective bargaining would impose. Pro-labor legislators expressed skepticism, but the final version of the law included a limited exemption for nonprofit hospitals. Beginning with a case involving library workers at Columbia University in 1951, the NLRB used its administrative authority to extend the exemption to all organizations that focused on “charitable purposes and educational activities.”

The result was a new zone of exception from the postwar political-economic order. As a senator who advocated for the exemption put it, charities were “beyond the scope of labor-management relations in which a profit is involved.” The legal exemption may have been new, but the logic had a longer history—one that points to the gendered dimensions of nonprofit work. The culture of American capitalism has often placed such work on a moral pedestal while positioning it outside the mainstream of economic life, from the cultural “pastoralization” of women’s work in the household during the rise of the industrial economy in the nineteenth century to the exclusion of domestic work from the NLRA and other New Deal legislation.[1] Many of the most common occupations in the nonprofit sector, like social work and nursing, consisted of reproductive labor in which women predominated. Through the logic of union exemption, the nonprofit sector as a whole was conceptualized as a driver of social reproduction.

NLRB policy alone didn’t prevent all nonprofit employees from forming unions. If an organization was based in one state and its budget fell beneath a certain level, the board wouldn’t assert jurisdiction. Employees could also try to get their employers to recognize a union voluntarily, or they could try to force recognition outside the bounds of the NLRB by going on a recognition strike. NLRB policy, however, had a significant impact. From 1951 to 1976, the board cited it 25 times as a reason to dismiss union petitions from workers including orchestra musicians, blind employees of sheltered workshops, and a host of employees in the healthcare and education industries—to say nothing of the unionization efforts that never got off the ground due to organizers’ knowledge of the policy.

Rethinking the Nonprofit Economy

Regardless, during the postwar era, nonprofit employment was growing rapidly. By one estimate, the number of people working for nonprofits nearly tripled from 1950 to the early 1970s, from 1.8 million to 5 million—doubling the proportion of American workers employed at nonprofits.[2] Much of this growth was in the field of healthcare, where high-profile labor struggles erupted, regardless of union exemption laws, beginning in the late 1950s. Local 1199, an independent healthcare union based in New York City, was at the cutting edge of these efforts, and began critiquing low wages and a lack of union representation for charitable employees as a form of coerced “involuntary philanthropy” to the institutions for which they worked.  

The critique caught on in the labor-friendly press, and eventually at other workplaces too, where organizers tailored the message to specific subgroups of nonprofit workers at hand. In Detroit a few years later, for example, social workers with the American Federation of State, County and Municipal Employees (AFSCME) organized their peers by appealing to their sense of professionalism. One flier they circulated compared compensation in social work to other professions that required an equivalent degree, concluding, “You are not getting what you are worth!!” The campaign was successful, and soon afterward, the director of an agency that had unionized lamented that “concepts of ‘charity,’ ‘dedication,’ and ‘sacrifice’” had become “obsolete” in his workplace.[3] Through their organizing efforts, workers emphasized that their economic interests could not be wished away in the name of a higher purpose.

This unspooled the premises of union exemption from one direction; new theories of how the nonprofit sector related to the macroeconomy did so from another. In the late 1960s and early 1970s, many within and outside the nonprofit world sought to define its role in American society in new, more explicit ways. (Such efforts took on a particular urgency, in the minds of the philanthropic establishment, after the Tax Reform Act of 1969.) The Commission on Private Philanthropy and Public Needs—commonly known as the Filer Commission—spent two years and $2.5 million on a research enterprise that produced dozens of papers documenting the size, shape, and priorities of the nonprofit sector. Many of these studies illustrated the embeddedness of nonprofit organizations within national and global economic systems.

The commission rarely addressed nonprofit unionization—but the context in which it did was telling. The commission devoted a chapter of its final report to the sector’s “hard economics.” Here, it borrowed a framework from economists William Baumol and William Bowen, who had recently posited the theory of “cost disease” as an explanation for the economic difficulties of nonprofits. In labor-intensive sectors of the economy like the nonprofit sector, they noted, few productivity gains were possible—yet as they happened elsewhere in the economy, the resulting growth would still result in these organizations’ labor costs increasing. Capital-intensive industries could skimp on labor costs by automating work; labor-intensive ones, not so much. Historically, the commission noted, nonprofits had been able to mitigate cost disease by paying lower wages—but that gap had narrowed in recent years due to “unionization, an increased minimum wage, and other factors.”[4]

The End of Union Exemption

Unionizing nonprofit workers made their priorities clear: they saw themselves as workers and economic actors like any other, and they wanted the law to treat them as much. The Filer Commission believed that nonprofits were unique and needed protection—but one of its central messages was that nonprofits were institutions inextricably tied to the commercial economy, albeit ones with unique vulnerabilities in the marketplace.

At the same time as the commission was undertaking its research, the NLRB was beginning to rethink union exemption. In 1970, it began tightening the boundaries of union exemption when it ruled that large private universities were, in fact, under its jurisdiction. Regardless of their educational purpose, these institutions were simply too big and economically consequential to be treated as exceptional. In the years that followed, the board made similar reversals about other nonprofit institutions like art museums, nursing homes, and day care centers.

Congress, meanwhile, reached a similar conclusion about nonprofit hospitals, holding hearings on a reversal to their exemption from the NLRA in the early 1970s as well. In these hearings, members of Congress marveled at the economic size and significance of healthcare systems. While some hospital representatives reprised the calls for exemption they had made in the 1940s, others took a new approach. A representative of a trade association for hospital administrators in New York, for instance, spoke out in favor of the “orderly representation election machine for resolving disputes concerning union recognition peacefully” that NLRB jurisdiction offered. Some hospital administrators, it seemed, concluded that fighting unions was inevitable, and NLRB mediation was better than none.

In 1974, the bill passed. After some back-and-forth decisions, the NLRB finally ended its own policy of union exemption in a contentious decision in 1976. Despite ongoing disagreement among its members and dissenting opinions that lasted into the following decade, the board never again cited an organization’s charitable purpose as a ground for union exemption.

Conclusion

The reversal of union exemption was a tangible change, providing an easier legal path to union recognition for many nonprofit employees. Yet its timing limited the tangible impact of that legal change. By 1976, the political energies that had empowered workers outside organized labor’s traditional domain in industry, like those in the public sector, was waning. The nascent neoliberal era brought difficult times for the labor movement generally, and many nonprofit workers missed the boat. The organizing resurgence in nonprofit in recent years has occurred in a context of little recent precedent and institutional memory for many nonprofit observers.

The subfields of labor history and nonprofit history have often worked on separate tracks in their efforts to examine the history of American political economy in the twentieth century. In tracing the history of union exemption, I hope to shed some new light on the complex, contradictory position that nonprofit labor continues to hold in American culture and politics.

-John Miles Branch

John Miles Branch is a PhD candidate in US history at Northwestern University. His research is focused on nonprofits and philanthropy, and his dissertation analyzes the growing prominence of the nonprofit sector in the American economy during the second half of the 20th century.

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[1] The framework of “pastoralization” comes from Jeanne Boydston, Home and Work: Housework, Wages, and the Ideology of Labor in the Early Republic (Oxford University Press, 1994).

[2] Dale L. Hiestand, “Recent Trends in the Not-For-Profit Sector,” in Research Papers Volume I: History, Trends, and Current Magnitudes, eds. U.S. Department of the Treasury and Commission on Private Philanthropyand Public Needs (Washington, D.C., 1977), 336, Filer Commission Publications, Philanthropy eArchives, Indiana University Indianapolis Philanthropy Studies Archives, hdl.handle.net/2450/807.

[3] Howard Hush, “Collective Bargaining in Voluntary Agencies” (Reprint from Social Casework, Apr. 1969), Journal of Nursing Administration 1, no. 6 (Nov.-Dec. 1971), 56.

[4] Commission on Private Philanthropy and Public Needs, Giving in America: Toward a Stronger Voluntary Sector (1975), 83.