More Texas women are owning and operating businesses
If you’ve paid attention to the economy over the past few years, there’s one term you’ve probably heard every once in a while: “she-cession.”
It’s an informal term used to describe the way the coronavirus has disproportionately impacted women. One of these areas was self-employment.
Emily Ryder Perlmeter is a senior advisor with the Dallas Federal Reserve, and she has some new research out about how female entrepreneurs are faring in the economy. Listen to the story above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: Your research is largely about women who own and operate their own companies. What types of businesses are we talking about?
So women tend to start their own businesses in industries that are also similar to industries where women make up a large part of the labor force. So those would be industries such as the health care sector, such as education and even retail and leisure and hospitality. They’re a little bit less likely to own businesses in the financial sector or insurance than men.
And let’s put this into context here. You found that in March of 2020, there were around 3 million women running their own businesses – the types of things we just talked about. But just a month later, in April of 2020, that dropped from 3 million to 2 million. Can you talk a little bit about how the pandemic affected female entrepreneurship?
Absolutely. So we saw the number of self-employed women drop by more than a third. And during that same time, the number of self-employed men fell less than a quarter. So we do see a pretty large disparity in terms of the ability of women who own their own business to continue operating. And we think a lot of this has to do with a few different things.
So for one would be child care. So when schools and daycares were closing and shutting down, mothers – more than fathers – take on a disproportionate amount of that care. So they may have been just less likely to continue their business during those early months when the kids were home. We also see that if women are concentrated in industries that were more affected by the pandemic, it could also be a big part of that big drop off. And then finally, we do see that there are some financial challenges that are more likely to impact women-owned firms.
So we are now three full years out from the start of the pandemic. Where are we? Have things gotten better for women running businesses or are they still falling behind?
So for women, we actually do see that they not only are operating their own businesses back to where they used to be, but they’ve actually surpassed the numbers that we saw back in January before COVID hit. So we do actually see a lot of important growth in self-employment. And this is true for women, and it’s especially true for mothers. So we can note that women with children are also more likely to be working for their own company than before the pandemic hit.
Now, what about in Texas in particular? You note that right now 39% of all self-employed people – business owners – are women. That’s clearly less than half. But are things trending in the right direction for female business owners here?
Absolutely. So we actually see a lot of growth for women who are self-employed as compared to men. They are more likely to be starting their own businesses, growing at a faster rate. And women of color in particular are starting their own business at a much higher rate than they were in the past. So we do see that as a promising sign, although they are businesses that are more likely to be smaller. And that’s both in terms of having employees and also in revenue size.
Do you think that the flexibility that the pandemic sort of revealed in the ability to do more work from home has contributed to the growth we’re now seeing?
I do think that that is a factor. I think that what we saw in 2020 was that there was this uptick after those initial months in people creating their own businesses. Now, there was more growth in people who reported that they did so because of necessity rather than just having a great business idea. So because of that, we think that is fueling a good portion of this growth because women are perhaps more able to balance some of their domestic responsibilities and childcare and working remotely and being their own boss might lend itself naturally a little bit more to that. And we also know that women are more likely than men to be working part time. And so some of these businesses may be what we might refer to as a “side hustle.” So they might not be their full time job, but it could be something that they’re growing while they are either, you know, raising their children or whether they are working at another job.
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