Nonprofits and the City’s Political Economy: A Case Study

Nonprofits and the City’s Political Economy: A Case Study

Marxist analysis of attempts by executives of nonprofits to halt labor organizing in the NGO industry.


On Tuesday, January 31st, Chicago’s City Council held a joint committee subject-matter hearing on what’s known as a labor peace ordinance (LPO). Labor peace ordinances such as this one usually require organizations contracting with the City to either have a collective bargaining agreement (union contract) in place, or to not interfere if and when their workers begin to unionize. It also includes a prohibition against retaliation by these contractors against their employees who are organizing. 

The ordinance would apply to organizations (both for-profit and nonprofit) that contract with the City to provide “social services” or “human services” and that report total annual revenue of $1 million or higher. The labor peace and collective bargaining provisions mentioned above apply. The ordinance is, in my opinion, weaker than it could have been, but attorneys tend to be conservative when writing these things out of fear that the law will be struck down by a court (in this case the drafters were likely concerned about a specific case from 2005 called Metro Milwaukee Ass’n of Commerce v. Milwaukee County). 

So if a nonprofit (or other company) has a contract with the city to provide public health services, even if they do a lot of other work unrelated to the City, this ordinance would apply to them. It’s a good, common sense law. 

Still, the Council hearing and the short history of the ordinance itself is a perfect distillation of a number of things that are important for socialists to understand: the political economy of cities, the nature of privatized social services, the realities of the nonprofit (“NGO”) industry, and the practical connection between organizing, politics and policy. 

As you can guess, many of the nonprofits this ordinance would apply to are outwardly organizations that provide very important, urgent human and health services to underserved and marginalized people. As you can also guess, these are services that at one time were either provided by public agencies, or that should otherwise be provided by public agencies but were subcontracted to nonprofits as a theoretical cost-saving measure. As you can triple also guess, many of these workers are not unionized, and tend to be overworked and underpaid, at least in comparison to comparable workers at for-profit companies and especially the public sector (government workers).

Because these workers work for the nonprofit on a City contract and not for the City itself, they fall under the National Labor Relations Act, which is the federal labor law that applies to private-sector workers. If they were city employees, they would be covered under state labor law, under which it is easier to organize. 

The ordinance was introduced in 2019 (O2019-9497) and has been on the backburner given the COVID-19 backlog. Finally called for a hearing this week, a number of nonprofit executives, including executive directors, chief operating officers, founders and board members showed up to testify against it. 

These nonprofits exist in a political climate (Chicago) that is at least nominally pro-union. But more importantly, as social service nonprofits, they also are situated in a precarious set of social relations, where outward progressive politics is important. Unlike for-profit companies, they can less afford to be nakedly anti-union, to make the kinds of arguments union-busters typically make, out loud. It would undercut their relationships with progressive politicians, relationships they depend on for city budget funding decisions, assistance with city bureaucracies, legitimacy and connections to funders and foundations. It would damage their reputation as an employer among progressive-minded workers, who take these jobs, often knowing they’ll be underpaid, out of a sense of wanting to do good and serve a “mission” of equity and justice. It would harm their internal board politics, since the board members of these nonprofits are often visible or high-profile people who consider themselves or hold themselves out to be progressive, and who do not want to be the target of organizing drives or become known as union-busters. 

So on Tuesday, these people found themselves with a problem. Because while they all insisted they are pro-union and support union organizing (I counted at least 5 instances of them mentioning that they voted for the Workers’ Rights Amendment in November), and likely genuinely do, they knew something they couldn’t admit. That their workers organizing a union — thus taking power to bargain for, and guarantee, better wages, conditions, and job protections — could irreparably harm their operations.


Because social service nonprofits are just privatized public services, and that privatization is justified on the basis that nonprofits can do it more cheaply, either by paying less, working people more, firing people whenever they need to, or a combination of all of these things.

Those tools — unilaterally setting pay and working conditions, and laying off or firing workers as needed — are critical for nonprofits to stay competitive in receiving grants and contracts that require a certain degree of work be accomplished for the amount paid. It may well be that these nonprofit leaders genuinely want to pay better, to avoid layoffs, to work their employees less. In fact I believe they typically do. But in their bones they know they can’t lose their power over these decisions without exposing their business model for what it is: cold privatization based on lower working standards.

That is the reality they knew but couldn’t say. What compounded this problem for them is that this reality was not just something they knew — it was something a number of the aldermen present also knew, because they themselves had worked at nonprofits. At least four of the aldermen supporting the bill in committee, among them DSA alderpeople Rossana Rodriguez Sanchez (33rd) (the ordinance’s chief co-sponsor), Carlos Ramirez Rosa (35th), and Jeanette Taylor (20th) had all experienced the exploitative working conditions in this industry, and spoke on those facts during the hearing. So when the nonprofit leadership insisted that they do their best to take care of their workers, these electeds couldn’t hear that as an abstraction. It bumped up against their actual experience and so fell flat. “If you treat your workers right,” Ald. Taylor said, “you have nothing to worry about.”

The video is online and I encourage everyone to watch it: watch as these befuddled nonprofit executives struggle to balance their sincerely held, but abstract ideals — “I’m pro-union, I believe in worker power” — with their material understanding of the reality of operating a social and human services nonprofit. When pushed on why, for example, neutrality in union organizing drives was a problem for them if they don’t believe unions are harmful, one executive, a former state Senator, eventually ended up admitting that it would make it difficult for “them” (presumably management) to deal “directly” with their “team.” This is a classic anti-union trope: the union is a “third party” that stands between management and workers. 

The chief executive of Heartland Alliance, which already has a partially unionized workforce, somewhat shockingly said that her concern was really for the impact of the ordinance on “her sector.” And when Alderman Daniel La Spata (another DSA elected) pushed her to specify what specific provision represented a harm not to Heartland specifically but to the entire nonprofit human services industry in Chicago, all she could muster was: “I’ll have to get back to you.” 

How could that be? Why show up to a hearing, urge a no vote, testify, put your name on the record, if you can’t articulate what part of the law is so dangerous? There can only be one answer: because unionization itself is dangerous for a sector that relies on what they would euphemistically call, “labor flexibility,” but is in fact hyper-exploited labor (particularly of Black and brown workers and women, who are over-represented in so-called “care work”). 

The hearing laid bare the truth that Marxists understand, that the nonprofit industry is, indeed, an industry, and so subject to the same capitalist pressures as other industries: to reduce the cost of variable capital — labor power. That the machine of capitalist labor relations is blind to best intentions, even of the bosses.

Naturally, even some of the ordinance’s proponents would not necessarily want to admit that the nonprofit human services sector is potentially threatened by unionization. That too is instructive: the nonprofit services sector enjoys an outward support based on its “mission” and the genuinely good work it does helping those that the profit motive skips past. Few politicians want to go on record as the one who harmed the nice clinic up the block. These points speak to a big, loud, Marxist point: exploitation and hyper-exploitation aren’t the result of bad intentions. It’s not because these executives aren’t nice people. Exploitation just necessarily results from capitalist social relations. Just about every nonprofit represented at that hearing does good work — in some cases not just good work, but life-saving, critically important work. Every executive and manager who showed up to the hearing most certainly cares deeply about serving their constituencies, providing good services and being a force for good in their community. 

But those should be public services, with unionized workforces and subject to the direct political pressure of the organized working class. That is the inescapable conclusion.

Finally, though, beyond arguments and analysis is something quite practical. Since one of the stated purposes of the ordinance is to prevent labor strife that can disrupt essential services, these nonprofit executives insisted that strikes and layoffs were not a real problem. Alderman Andre Vasquez (40th) very sensibly raised the point that just over the last month, workers at Howard Brown Health Centers, the largest and most important provider of health and social services to working class LGBTQ+ Chicagoans, went out on strike after a prolonged period of management interference in their organizing drive, “interference” which included mass layoffs announced with hardly any notice right before Christmas

The fact of the workers’ struggle at Howard Brown enlightened (or plagued, depending on your point of view) the remainder of the discussion. Management could no longer hide behind their rose-colored characterization of labor relations in their “sector.” So here was an example of how workers’ struggle, real on-the-ground organizing, exposes the reality behind public relations; how it robs industries, or politicians of the insidious power of euphemism. There was no turning away from a stark fact put on display by workers organizing with one another for power in the workplace. 

Arguments are arguments, but in the end the street is undeniable. The organizing feeds the politics and the policy, which, in turn, will feed the organizing. The virtuous circle.