Behind a Surge in Firms Owned by Women

By David R. Francis writer of The Christian Science Monitor | The Christian Science Monitor, September 9, 2002 | Go to article overview

Behind a Surge in Firms Owned by Women


David R. Francis writer of The Christian Science Monitor, The Christian Science Monitor


The average working woman in the United States makes about 72 cents for every dollar made by her male colleagues.

That's up from about 60 cents two decades ago. The remaining gap, some analysts suspect, may be one reason women are launching their own businesses in grand style. Between 1997 and 2002, the number of women-owned private firms increased to 6.2 million, a gain of 14 percent. This is twice the growth rate for all firms.

But when asked, the new female proprietors or owners don't complain about the salary in their former corporate jobs, says Sharon Hadary, executive director of the Center for Women's Business Research (CWBR) in Washington.

"They see the excitement of an entrepreneurial idea," she says. And they note that other women have started successful businesses. They have role models.

These women-owned firms employ 9.2 million people, a CWBR study finds.

To some extent, the rush into starting their own firms is a catch- up phenomenon. In 1996, 7.1 percent of females in the labor force were self-employed, compared with 11.9 percent for males.

Many new women entrepreneurs do decry a lack of flexibility in their old corporate roles. They hope that with their own businesses, they can take a morning off to go to a child's performance in a school play, and finish work later.

Also, the new bosses welcome the prospect of being in charge of their firms' direction. In their former companies, they often saw themselves as not being part of the leadership.

Dr. Hadary, a trained psychologist, doesn't see much "conscious discrimination" by male executives against women in big companies. On the contrary, most corporations make an effort to level the playing field for women and minorities through their personnel policies - as the law requires.

Nonetheless, she says, there is a natural tendency for people to prefer to do business with those who resemble themselves - white men with white men, and, for that matter, women with women.

"The old-boy network" remains in place, says Judith Hellerstein, an economist at the University of Maryland, College Park.

She's one of four authors of a soon-to-be published academic study indicating that as much as half of the 32 percent female-male wage gap in 1990 could be attributable to gender discrimination. The rest is accounted for by the segregation of women into lower-paying occupations, industries, firms, and occupations within such establishments.

Another expert, Francine Blau at Cornell University in Ithaca, N.Y., estimates 12 to 20 percentage points of the wage gap could be due to gender discrimination. She finds the gender gap did not close much in the 1990s. …

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