The Role of Women Business Ownership in the U.S. Economy A Presentation to OWBO Conference Ying Lowrey, Ph.D. Ying.Lowrey@gmail.com September 19, 2011.
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The Role of Women Business The Role of Women Business Ownership in the U.S. EconomyOwnership in the U.S. Economy
A Presentation to OWBO ConferenceA Presentation to OWBO Conference
Ying Lowrey, Ph.D.Ying Lowrey, Ph.D.Ying.Lowrey@gmail.comYing.Lowrey@gmail.com
September 19, 2011 at the Washington Plaza HotelSeptember 19, 2011 at the Washington Plaza Hotel
OutlineOutline
• Supporting small business including women-owned business was mandated by Congress
• Pervasiveness of business ownership is the key to improving people’s economic wellbeing
• Business creation is job creation• Economic growth did not increase the median
household income• Income disparity between large vs. small businesses
is the reason for the erosion of business ownership
Small Business ActSmall Business Act
• Promulgated in July 1953 • “The essence of the American economic system of
private enterprise is free competition.”• “The preservation and expansion of such competition
is basic not only to the economic well-being but to the security of this Nation.”
• “Such security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed.”
Women's Business Ownership ActWomen's Business Ownership Act
• Established in 1988• “Women owned business has become a major contributor to the
American economy by providing goods and services, revenues, and jobs.”
• “Over the past two decades there have been substantial gains in the social and economic status of women as they have sought economic equality and independence.”
• “Despite such progress, women, as a group, are subjected to discrimination in entrepreneurial endeavors due to their gender.”
• “It is in the national interest to expeditiously remove discriminatory barriers to the creation and development of small business concerns owned and controlled by women.”
Owning a Business Doubles (or 8 Times) the Owning a Business Doubles (or 8 Times) the Probability of Being High Income (or High Probability of Being High Income (or High
Net Wealth) HouseholdNet Wealth) Household
1998 2007
Characteristics N High Income
High Wealth N High
IncomeHigh
Wealth
All respondents 4,305 0.263 0.033 4,418 0.310 0.060
No business ownership 3,028 0.230 0.017 3,001 0.263 0.030
Any business ownership 1,277 0.486 0.144 1,417 0.605 0.254
Small business 1,098 0.476 0.134 1,183 0.589 0.237
Single business only 682 0.471 0.093 721 0.550 0.167
Multiple businesses 416 0.497 0.301 462 0.763 0.550
Business Density (Business Number per Business Density (Business Number per 1,000 People) and Median Household 1,000 People) and Median Household
Income, by Race/EthnicityIncome, by Race/Ethnicity
Race/Race/EthnicityEthnicity
2002 2007
Business Business DensityDensity
Median Median Household Household
IncomeIncome
Business Business DensityDensity
Median Median Household Household
IncomeIncome
All PeopleAll People 8080 $43,527$43,527 9090 $52,163$52,163 Non-Hispanic WhiteNon-Hispanic White 8686 $47,957$47,957 101101 $57,030$57,030
African AmericanAfrican American 3333 $29,987$29,987 5252 $35,219$35,219
HispanicHispanic 4040 $33,913$33,913 5050 $40,165$40,165 AsianAsian 9595 $55,089$55,089 118118 $68,643$68,643
US-2007
AL
AK
AZ
AR
CA
CO
CT
DE
DC
FL
GA
HI
ID
IL
IN
IA
KS
KY
LA
ME
MD
MA
MI
MN
MS
MO
MT
NE
NV
NH
NJ
NM
NY
NC
NDOH
OK
ORPA
RI
SCSD
TN
TX
UT
VT
VA
WA
WV
WI
WY
us-2002
al
ak
az
ar
caco
ct
de
dc
fl
ga
hi
id
ilin ia
ks
ky
la
me
md
ma
mi
mn
ms
mo
mt
nenv
nhnj
nm
ny
ncnd
oh
ok
orpa
ri
scsd
tn
tx
ut
vt
va
wa
wv
wi
wy
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
70,000
15 17 19 21 23 25 27 29 31 33 35
Median household income
Women business density
Trendline: states with higher women business density tend to have higher median household income. Also, there is an upward movement of both women business density and the median household income in each state from
This chart consists of 102 data points of 50 United States and
District of Columbia. Lower cases represent 2002 data and capital
cases represent 2007 data.
WBD has stronger explanatory power for WBD has stronger explanatory power for median household income, 1997, 2002, and 2007median household income, 1997, 2002, and 2007
Y = 269x + 20327R² = 0.16
25
30
35
40
45
50
55
60
65
70
60 70 80 90 100 110 120 130
Thousands BD & HHICM
Y = 1295x + 13831R² = 0.35
25
30
35
40
45
50
55
60
65
70
13 18 23 28 33
Thousands WBD & HHICM
Business Creation is Job CreationBusiness Creation is Job CreationNearly 6 million jobs created by new startups in 2007; over 34% created by women-owned firms; 10% were
employment jobs and 90% were entrepreneurial jobs.
Numbers from 2007 SBO Data
Nonemployer Firms
Employer Firms
2007 Total Job Creation
Total Firms 21,357,346 5,735,562 5,879,260Startup Firms 2,776,455 189,274 586,551Startup Entrepreneurs 3,859,272 433,436 4,292,709Women-Owned Firms 6,882,603 910,761 2,012,276Women Startup Firms 1,073,686 38,252 45,121Women Startup Entrepreneurs 1,814,529 152,625 1,967,155
Business Business Density Has Density Has Expanded Expanded Since 1997 Since 1997
for All for All Businesses Businesses
and and Women-Women-Owned Owned
BusinessesBusinesses Year BD WBDYear BD WBD
1997 76 201997 76 202002 80 232002 80 232007 90 262007 90 26
4
9
14
19
24
29
34US
1-CT 1-MA1-ME
1-NH1-RI
1-VT
2-NJ
2-NY
3-DC
3-DE
3-MD
3-PA
3-VA
3-WV
4-AL
4-FL
4-GA
4-KY
4-MS
4-NC4-SC
4-TN5-IL
5-IN5-MI5-MN
5-OH5-WI6-AR
6-LA6-NM
6-OK
6-TX
7-IA
7-KS
7-MO
7-NE
8-CO
8-MT
8-ND
8-SD
8-UT
8-WY
9-AZ
9-CA
9-HI9-NV
10-AK10-ID
10-OR10-WA
2007 WBD 2002 WBD 1997 WBD
Ten States had Negative Growth Rate of Real Ten States had Negative Growth Rate of Real Median Household Income for 1997-2007 Median Household Income for 1997-2007
Despite High GSP GrowthDespite High GSP Growth
Code of region-state
State nameGrowth rate of real
HH-income (1997-2007)
Growth rate of real GSP
(1997-2007)
Poverty rate in 2007
(%)
Publicly held BD (2002)
U.S. National Average 5.4 20.2 13.3 17.25-MI Michigan -1.1 22.8 13.7 18.05-IL Illinois -1.3 18.3 12.1 19.93-DE Delaware -1.5 25.7 10.6 54.72-NJ New Jersey -2.2 17.3 8.7 21.97-MO Missouri -2.3 25.1 13.4 21.38-UT Utah -2.8 28.4 10.3 25.86-LA Louisiana -3.6 19.5 19.3 19.05-IN Indiana -5.3 27.9 12.5 18.24-NC North Carolina -5.7 38.4 14.8 18.64-KY Kentucky -8.4 12.8 17.1 18.0
Both number and receipts of publicly-held firms Both number and receipts of publicly-held firms consistently increased since 1997; the receipt of consistently increased since 1997; the receipt of
privately-owned firms consistently decreasedprivately-owned firms consistently decreased
1.8%
2.2%
3.0%
54.8%
61.1%
63.6%
17.5%
11.7%
17.0%
5.1%
3.2%
4.2%
54.6%
57.4%
51.3%
35.8%
31.2%
28.2%
26.0%
28.2%
28.7%
4.4%
4.2%
3.9%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1997
2002
2007
1997
2002
2007
Firm
s num
ber
Rece
ipts
val
ue
Publicly held** Equally-owned* Male-owned Female-owned
Number of U.S. firms and business receipts, 2007: Number of U.S. firms and business receipts, 2007: 3% of total firms were publicly-held but had 64% 3% of total firms were publicly-held but had 64%
of total U.S. business receiptsof total U.S. business receipts
28.7%
51.3%
17.0%
3.0%
2007 Firms number
Female-owned Male-ownedEqually-owned* Publicly held**
3.9%28.2%
4.2%
63.6%
2007 Receipts ($1,000)
Female-owned Male-ownedEqually-owned* Publicly held**
Some of My Reports on GenderSome of My Reports on Gender
• September 2011 – Gender Issues: Privately Owned and Publicly Held U.S. Firms
• August 2010 – Gender and Establishment Dynamics, 2002-2006
• August 2006 – Women in Business: A Demographic Review of Women’s Business Ownership
• September 2005 – U.S. Sole Proprietorships: A Gender Comparison, 1985-2000
ConclusionsConclusions
• Owning a business doubles the probability of being high income household (or 8 times high net wealth household)
• States with high business density tend to have higher household income and lower poverty rate
• Women Business Density has stronger explanatory power than total BD for medium household income
• In 2007, women-owned startups created 34% of total 6 million new jobs, of which, 10% were employment jobs and 90% were entrepreneurial jobs
• Ten states had negative growth rate of real median household income for 1997-2007 despite high GSP growth
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