Boosting Women-Owned Businesses Will Boost the Economy
Women-owned businesses can be found in all industries and sizes, but many of them are hidden in plain sight in home-based enterprises. These small businesses are making a difference in local economies - even those run from the family dining room table.
Take Gisele as an example. She started off making tamales in her kitchen, then began selling at the weekly farmers market, and finally moved to La Cocina’s kitchen incubator in San Francisco. Now, she runs a full-service catering business, creating opportunities for others in the process.
Or take Melanie, whose 12 employees research and write environmental reports for the Forest Service out of her home in Mount Shasta, California - a lot of jobs for a rural area.
Small business ownership is a key tool for creating wealth and addressing the widening income gap in this country. Just ask Federal Reserve Board Chairman Janet Yellen:
For many people, the opportunity to build a business has long been an important part of the American dream. In addition to housing and financial assets, the Survey of Consumer Finances shows that ownership of private businesses is a significant source of wealth and can be a vital source of opportunity for many households to improve their economic circumstances and position in the wealth distribution.
Households with a woman microbusiness owner earn an average of $13,000 more than households with only wage earners. That can be the difference between sending your kid to college and buying a home. So what can we do to ensure that more women-owned businesses succeed?
ASBC has identified diverse and inclusive business ownership as essential to building a vibrant and sustainable economy. It makes economic sense to invest in women business ownership in this country to boost household income and shore up the middle class. And there’s a way the federal government can do it - and not for too much money.
Currently, 8.6 million women own businesses in the United States, accounting for 7.8 million jobs and $1.3 trillion in revenues. Women have been starting businesses at 1.5 times the national average; women of color have at three times the rate. Women make up more than 50% of self-employed workers - a sector that has grown by 2 million, a 12.5% increase, since 2011, compared to overall labor force growth of 1.1%.
Imagine the impact on women’s financial security and economic mobility if we helped them succeed as business owners. According to the Aspen Institute’s FIELD program, when business owners receive technical assistance, they are 80% likely to remain in business in five years, and more likely to hire an additional two employees.
So consider what would happen if the Small Business Administration (SBA) tripled funding for Women Business Centers (WBC) from $14 million to $42 million. For an amount that’s barely a rounding error in the Federal budget, WBCs would be able to provide 200,000 more women with business advising, planning and mentoring services to help start and grow their businesses.
That would mean more jobs created by women entrepreneurs, an increased likelihood of success for these businesses, and strong contributions to local economies.
Here’s the math:
|WBCs currently serve:||134,000|
Number of women increase will affect
|200,000 (conservative estimate)|
|Total number of women served with tripled budget:||334,000|
50% starting a business:
|334,000 X 50% = 167,000|
|80% of those businesses will still exist in five years:||167,000 X 80% = 133,600 Women Owned Businesses|
|And will have hired two more people:||133,600 X 2 =267,200 New Jobs|
|Cost per job created:||$42,000,000/267,200 = $157|
$157 per job is ridiculously cheap, and it’s good for the economy. If we truly start supporting women’s microbusiness development, we could help close the wealth gap, create jobs and boost local economies.
Read more about ASBC’s commitment to better financial markets.
Claudia Viek is CEO of the California Association of Micro Enterprise Opportunity, and co-chair of ASBC’s Working Group for Women.