Does Our Economy Work for Women?
Undervalued, unappreciated, and overworked. Something’s not adding up for women.
Shana is a single mom with a four-year-old son. She works as a financial advisor for a mid-size wealth management company. Despite an impressive client roster, her sales have been steadily declining over the past few years. “I can’t make it work,” she tells me. “I can’t swing the 7 a.m. breakfast meetings or the 5 p.m. happy hours. It’s the best time for my clients but there is no way I can tack on that extra care in the mornings or after work. It’s too expensive, and I’d never see my kid.”
Marie is an entrepreneur with a law degree. When she had kids, she left her firm to strike out on her own. “I wanted more flexibility. Instead, I gave myself two full-time jobs: lawyer and business owner. I feel like I am not doing either as well as I should. And my pipe dream of more time with my family has completely evaporated.”
Angela is a college student who also works as a server at a popular restaurant. Her mother has Parkinson’s Disease and it falls to Angela to help with her care. She’s a first-generation college student but can’t imagine graduating. “For me, it’s about taking care of my family and making money. School seems like a luxury and not something that works for me right now.”
Each of these stories represents thousands of women and as I listen to them — all unique but startlingly similar — I can feel the patterns emerge like mountain-size braille. The obligations of family and care work. The desire to find a better, more manageable path. The moment of realization when it becomes clear any route circles back to discontentment, exasperation, or failure.
Does the Economy Work for Women?
Anyone familiar with a few alarmingly standard statistics — 54% of women have experienced unwanted sexual advances at work, per national averages women make anywhere from 53–77% of men’s earnings depending on their race/ethnicity, women hold only 6.6% of Fortune 500 CEO roles — would have to answer no.
And that “no” is represented in the ongoing difficulties to recruit and retain women in the workforce. Women leave their traditional jobs with a company for a variety of reasons: more flexibility, the freedom to charge a wage in line with women’s value, greater opportunity for advancement, and brighter professional prospects; each one of these reasons betraying a deeper dissatisfaction with how the current economic and labor system serves women. Entrepreneurship — “going off on one’s own” — seems like an excellent alternative, yet as women ditch one system for another, they too often find neither is designed for their success.
The Entrepreneurial Alternative
Women have been leaving traditional jobs for entrepreneurship at breakneck speeds. In the past 9 years, the growth of women-owned businesses has been 9 times faster than the national average. Women are now majority owners of 42% of the nation’s businesses. In 2019, women launched over 1,800 new businesses per day. While these figures seem like something to celebrate, they also tell only part of the story. Morran Aarons-Mele, founder of Women Online suggests “Perhaps instead of unquestioningly cheering women starting businesses, we need to more critically examine why so many women are leaving [bigger companies] and how we might get them to stay. Entrepreneurship has been marketed as a great alternative to the strictures of a traditional job — but that vision is often a fantasy.”
Out of the Frying Pan and Into the Fire: The Real Story of Women’s Entrepreneurship
Despite impressive growth rates, women-owned businesses tend to be smaller, in both revenue and number of employees. Nationally, 88% of all women-owned businesses generate less than $100,000 in revenue per year; in contrast, only 1.7% of women-owned businesses make over $1 million. And while women-owned businesses make up 42% of businesses, they represent only 4.3% of all business revenue. According to the SBA, for every dollar in revenue a woman-owned business generates, a male-owned firm earns $2.30.
Women-owned businesses also hold a smaller share of employment. The typical woman-owned business employs 0.7 people. While these “microbusinesses” — businesses with five or less employees including the owner — are an economic force in and of themselves, they are more at risk for failure and their limited resources create challenges for scaling a business and fostering growth. If we envision entrepreneurship as a continuum with, at one end, informal “survival-oriented income generation” and “formal, growth-oriented enterprise” at the other, we see the majority of women exist at the end of survival-oriented income generation. And what does a business require in order to grow and transcend survival? Yeah, you know it.
It’s About Access to Capital
Access to capital is one of the most challenging issues women entrepreneurs and small-business owners face, not only at the onset of their entrepreneurial journey but throughout their businesses’ life spans. Women-owned businesses generally receive only 4.4% of all dollars lent to small businesses each year. Further, women are often penalized with higher interest rates, paying, on average, 6.4 percentage points higher on personal loans and 5.4 percentage points higher on short-term loans than male entrepreneurs pay.
As greater numbers of women fall into the microbusiness category, their business revenue tends to be lower. On average, women-owned businesses make 30% less annual revenue. Because annual revenue is a factor in credit eligibility, “women-owned businesses, with poorer access to credit, may be stuck in a cycle of more difficult growth.” Finally, women also face a dearth of venture capital funding. In 2018, women founders received 2.2% of all VC dollars.
So, what’s a girl with dollar signs in her eyes supposed to do? If traditional roles in corporate America aren’t serving women, and neither is entrepreneurship, how can we, as women, win in this system?
Here’s a bombshell for you: I’m not sure we can. And an even bigger one: maybe we should stop trying.
Our current economic system was not designed for women’s success. In many ways, it’s been built on the backs of women, especially women of color, for centuries. Women have historically performed free and invisible care work. In the private sphere. And in so doing created space for the theoretical, practical, and creative activities of men. When women did have the opportunities and the sheer force of will to make overt contributions recognized within the traditional economy, those contributions were often claimed by men.
The reoccurring message for women “trying to make it” either in the corporate world or as entrepreneurs and business owners is to adopt the extra work of learning how to play catch up in order to assimilate. To be successful, women should network, hone assertive communication skills, get on the finance committee, practice asking for a salary raise, or take on more responsibility and risk. Sitting in on workshops designed to help democratize women’s access to capital, for example, is the equivalent of a college drinking game. Every time you hear the phrase “women should”, drink!
This emphasis on personal responsibility is easier for everyone. It’s easier for men who are therefore not required to examine how they benefit from a system disallowing women to succeed. And it’s easier for women to simply believe if they can just learn one more skill or attend one more conference they truly have a shot at the spoils. Finally, it’s easier for all of us to tell women to buck up and buckle down than it is to buck the system.
Changing our economy? That is hard work. But it is necessary. Not only for women to be successful, but for all of us to realize our full economic potential. According to the Institute for Women’s Policy Research, pay equity for women would amount to an increase in women’s earnings 16 times what the federal and state governments spent in fiscal year 2015 on Temporary Assistance to Needy Families. Paying women an equal wage would cut the poverty rate for all women in half and add $512.6 billion annually to the U.S. economy.
We need to change our economic system to support women.
Women are slowly waking to the realization that any success they achieve is in spite of systems not designed for them. Imagine what we could do if we designed systems that facilitated our success?
We need to spend a little more time imagining. Engage in out of the box thinking. Challenge each other not simply to figure out how to work within our existing system in a smarter way, but to envision and create new systems wherein all people have the opportunity to flourish.