Personal Services in the Post‐industrial Economy: Adding Nonprofits to the Welfare Mix

Abstract This article develops linkages between two separate fields of research, namely work on post‐industrial welfare states, and work on nonprofit organizations. It pays particular attention to the emphasis on personal services and the “cost disease” hypothesis found in the former, which places strong constraints on improving pay and job quality in the nonprofit sector. At the same time, it argues that the post‐industrial welfare states literature, despite its emphasis on personal services, has largely ignored the significant and growing role of nonprofits in delivering these services, and thus the potential of these organizations to shape their relevant labour markets. This poses the question about the relative weight of productivity‐related wage restraints in personal services versus the capacity for agency by nonprofits. The final section of the paper engages in a critique of the “cost disease” hypothesis to suggest that space exists to improve pay and job quality in nonprofit personal services, despite productivity‐related constraints.