A recent White House report described the aging US workforce, in which people near retirement age comprise an increasing chunk of the population, and proposed policies to get more people working.
According to the annual Economic Report of the President, cited in The Wall Street Journal, one such policy involves facilitating women’s participation in the labor force, specifically by making childcare more affordable. Per the report, the high cost of childcare can make it difficult for women to work outside the home.
As it stands, women tend to bear the brunt of child-rearing responsibilities. The White House report cites a study that found 60% of working-age women who aren’t employed full-time and have a child under 6 years old say childcare factored into their work-related decisions.
One potential result of this trend is that more women are turning to entrepreneurship.
You could herald these developments as signs that the world of American entrepreneurship is finally becoming more open to women. But the statistics obscure a more troubling trend.
For many women business owners, starting a company is a way to escape the often-unmeetable demands of corporate life. More women becoming business owners isn’t necessarily good for the economy — or for the women themselves.
Women often start businesses out of necessity
A 2017 report from the National Women’s Business Council uses the term “necessity entrepreneurship” to explain what’s happening among women business owners.
Typically, that term describes people who start businesses out of economic need — but the NWBC proposes expanding the definition to include non-economic factors as well. Based on interviews with women business owners, the report highlights workplace discrimination and the fact that child-rearing and household management typically fall to women.
The American workplace may be especially inhospitable to women. Consider a 2014 PayPal survey of women business owners in the US, China, France, and Mexico: In France and Mexico, 61% and 66% of women said they wanted to be entrepreneurs to have pride in themselves. In the United States, 55% said they wanted better work-life balance.
Having more autonomy is a key motivator
Morra Aarons-Mele has researched the reasons women start their own businesses, and has found that women frequently say they did so to gain more control over their time. In fact, that was part of the reason why she started her own companies: Women Online and The Mission List.
It wasn’t so much the desire to be the next Elon Musk that motivated her — “I just wanted to make a living,” she told me, and “I just never wanted to go to an office again for 10 hours a day.”
Yet in a 2014 Harvard Business Review article, Aarons-Mele writes that “the economic impact of most women’s small businesses may not be what’s best for women, their families or the economy in the long run.” She adds that “women-owned businesses are disproportionately in industries where the median receipts are less than $225,000 (and businesses with receipts less than $100,000 are more likely to fail).”
On the individual level, most women have a hard time replacing the salary they were earning in the corporate world, Aarons-Mele writes.
That’s why Aarons-Mele suspects that many women would in fact prefer to stay in companies — provided they earned more money, had more autonomy, and saw greater leadership opportunities.
Disappointingly, and perhaps surprisingly, gender discrimination may be a problem in the entrepreneurial world as well. As Business Insider France’s Elisabeth Hu reported, enterprises founded or co-founded by women receive about $935,000 in investments on average, while those founded by men receive an average of about $2.1 million.
However, Hu reported, for every dollar of funding, startups founded by women generate 78 cents, compared to 31 cents for startups founded by men.