Black Women Are Starting Businesses Six Times More Often Than the National Average

Black Women Are Starting Businesses Six Times More Often Than the National Average

Reported by April V. Taylor

The face of American diversity is continuing to evolve as the number of minorities continues to grow.  One way this is having a major impact is by changing what the face of entrepreneurship looks like.  The number of female-owned firms in the United States grew by 59 percent between 1997 and 2013, and women of color are playing a huge role in this growth.  During the same time period, African-American female-owned businesses grew by 258 percent, and African-American women are starting businesses at six times more often than the national average.  These businesses generate $226.8 billion in annual revenue and employ nearly 1.4 million people.

A recent article on alternet.org points out that nearly one-third of all firms owned by women are majority owned by women of color.  Despite better access to business capital in the form of microenterprises, venture-capital funded firms, and crowdfunding, women of color still face significant obstacles when starting their own businesses.  Many have wondered why, despite these obstacles, women of color still choose to pursue entrepreneurship.

One of the biggest contributing factors driving women of color to pursue entrepreneurship is the structure of the traditional workforce.  Structural obstacles, such as limited access to mentors, exclusion from elite networks, and the gender wage gap, often limit the ability women of color to pursue their own innovative desires and advance in the workplace.

Many women of color pursue entrepreneurship in an effort to be compensated for what they are worth.  The traditional workplace pays Black and Latina women less than any other racial group.  A 2012 American Association of University Women study found that while white and Asian women made around 80 percent of what their male peers were paid, African American women earned only 64 percent, while Latina women earned even less at just 53 percent.  Also, the median weekly earnings for African American women was just $606 for 2013, compared to $912 for white men.  This means that successful entrepreneurship is a more effective way to lift minority women out of poverty than the traditional workplace.  This is integral considering the poverty rate for women of color is nearly double that of white women.  A book published by the Center for American Progress and PolicyLink points out that closing the racial income gap has the potential to lift 13 million people out of poverty.

This boom in entrepreneurship by women also benefits the national economy through job creation, provision of goods and services, and economic stimulation driven by increased output.  A 2009 study by the Center for Women’s Business Research found that businesses owned by women had a total economic impact of around $3 million.  Supporting minority entrepreneurs creates a ripple effect of positive outcomes for the entire country, so reducing barriers and providing support to women of color to pursue their business interests is vital to supporting economic recovery for everyone.



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