Darryl L. DePriest is the seventh presidentially appointed and Senate-confirmed Chief Counsel for the Office of Advocacy.
Prior to joining the Small Business Administration Office of...
United States Small Business Administration
Office of Advocacy
Business Ownership as an Employment Opportunity for Women
by Steven Lustgarten
1995. 76p. Steven Lustgarten, 40 Parkway West, Mt. Vernon, NY 10552, under contract no. SBA8035OA93
Despite the rapid increase in the number of businesses owned by women, there has been little research on the financial success of women business owners. The Office of Advocacy, as part of its continuing efforts to understand the role of women business owners, sponsored this project to examine the financial success of women business owners, relative to men.
That women as employees earn less than equally qualified men has been well established by numerous studies. One source of these lower earnings for women is discrimination against women by employers. (Discrimination is taken to be any earnings differential that remains after all other "explanatory" determinants of income are statistically controlled.) Women who are business owners would not suffer labor market discrimination, and therefore, business ownership should offer women a more equal opportunity compared with employment. However, there may be discrimination against women in product or credit markets that could reduce the earnings of women business owners. This could make business ownership a less equal opportunity for women.
Scope and Methodology
The study focused on the earnings of 76,959 women who reported that they were selfemployed in their own incorporated or unincorporated businesses. Data came from the Public Use Microdata Samples (PUMS) of the 1990 Population Census. The study compares their earnings with those of selfemployed men for the 1990 census year. Earnings differences between selfemployed men and women were then compared with earnings differences between men and women who were employees.
The researchers examined differences in characteristics that affect earnings, such as age, education, occupation, marital status and the presence of children. Other determinants of earnings from business ownership could not be accounted for because they are not recorded in the Census. Among the unmeasurable variables were the age and size of the business from which selfemployment earnings were derived, the quality and type of education, and the extent of interruptions in the owner's work history. Gender earnings differences that should be attributed to the excluded factors can be mistakenly attributed to discrimination; therefore, the impact of discrimination reported in this study may be overstated.
The results show that the women in these small businesses earn less than a similar sample of men business owners, and that the gender gap for women who are selfemployed is larger than the gender gap for women employees. The larger gap for selfemployed women was consistent across many subgroups of women including married and unmarried, college educated and high school educated, those who have never had children and those who have had children.
The complete report is available from:
National Technical Information Service
U.S. Department of Commerce
5285 Port Royal Road
Springfield, VA 22161
(703) 487-4639 (TDD)
Order Number: PB95187365
Cost: A04; A01 Microf.
*Last Modified 6-11-01