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Can more women-owned businesses shrink the gender pay gap?

Paths to progress

The number of women-owned businesses in the United States grew 26.8 percent between 2007 and 2012, outpacing the growth of businesses owned by any other group. 

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    Self employed people attend a meeting for 'soloists' at District Hall in Boston, Massachusetts (September 10, 2015). The event, 'Solo City 2015 - Designing the new world of work,' was directed towards people who work alone or in small groups to get a sense of their needs. The soloists said they were concerned about health insurance, business loans, work planning and networking.
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When it comes to financial success, the disadvantages of US women are well-documented: Women face lower pay than men for doing the same jobs, a lack of paid time off for having children, and longer odds of getting hired again after losing a job. But there's a silver lining in one area: the number of businesses owned by women is taking off. 

According to data released Wednesday by the Census Bureau,  the number women-owned business in the United States increased by 26.8 percent between 2007 to 2012. Those businesses are also bringing in more sales; female-owned firms brought in a total of $1.4 trillion in receipts in 2012, compared with $1.2 trillion in 2007.

That growth in revenues far outpaces that of US businesses overall, but there's still a long way to go. While $1.4 trillion in annual revenues is impressive, that constitutes just 4.23 percent of all US revenue.

Recommended: Why so few women in tech? Seven challenges and potential solutions.

“The obstacles to growth facing women business owners are dramatically impacting their business revenues and profits,” said Margot Dorfman, CEO of the US Women’s Chamber of Commerce, in a press release.     

Men still own the majority of US firms : 14.8 million compared with 9.9 million owned by women. Yet women own the majority of businesses among certain racial and ethnic groups.

Women headed up 58.9 percent of  the nation's 1.5 million African-American owned businesses. Women also owned the majority of Vietnamese and Filipino firms: 158,958 out of 310,864 Vietnamese-owned businesses were run by women, as were 98,849 out of 193,336 Filipino-owned businesses.

The accelerated growth of such establishments comes at a time when the conversation surrounding the gender pay gap has reached a national fever pitch. White women are paid 78 percent of what white men earn, and that gap increases for women of color. Black women are paid just 63 percent of what white men earn, and Hispanic and Latina women earn just 54 percent. 

Although women are becoming more educated and now make up 47 percent of the workforce, gender biases can prevent women from both entering fields traditionally dominated by men and advancing once they move into those jobs. According to research published Wednesday by Glassdoor, a job search site, it is this sorting into jobs that are traditionally thought of as male or female that serves as the biggest obstacle to addressing the gender pay gap.

Once women enter a male-dominated field, the situation becomes even more tenuous. According to a recent study by Cornell University researchers, even when women are performing the same jobs as men, their pay is unlikely to be the same, primarily due to gender bias.

It is true that women make up the majority of workers in fields like healthcare and education, respectively owning 62.5 and 54.2 percent of businesses in these fields, according to Wednesday’s Census Bureau report. But researchers found that when women move into jobs traditionally dominated by men, their pay declines, while the opposite occurs when men move into jobs dominated by women.

There is still a pay gap among male and female business owners, too. Women-owned businesses earn only about 25 cents for every dollar that male-owned businesses do, according to 2015 data from the Economic Policy Institute. But as Gillian B. White reports for The Atlantic, the more that women break into traditionally male-dominated industries, the more we may be able to see the economic tide shift. Legislation such as The Small Business Jobs Act of 2010 and the Women’s Equity in Contracting Act have both helped women gain access to the capital and certifications they need to start their own business.  

"The growing prevalence of female entrepreneurs of all races didn’t happen by accident. Instead, it may be proof that legislation targeted at women and minority small-business owners are having an effect," she writes. "But such policies can’t, and haven't, solved all the challenges inherent to being a female business owner. Women business owners still face a significant wage gap and continually have smaller amounts of start-up capital than their male peers."

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