The Role of Women Business Ownership in the U.S. Economy

1. 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 at the Washington Plaza Hotel

2. Outline • 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

3. Small 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.”

4. Women'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.”

5. Owning a Business Doubles (or 8 Times) the Probability of Being High Income (or High Net Wealth) Household

6. Business Density (Business Number per 1,000 People) and Median Household Income, by Race/Ethnicity

8. WBD has stronger explanatory power for median household income, 1997, 2002, and 2007

9. Business 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.

10. Business Density Has Expanded Since 1997 for All Businesses and Women-Owned BusinessesYear BD WBD1997 76 202002 80 232007 90 26

11. Ten States had Negative Growth Rate of Real Median Household Income for 1997-2007 Despite High GSP Growth

12. Both number and receipts of publicly-held firms consistently increased since 1997; the receipt of privately-owned firms consistently decreased

13. Number of U.S. firms and business receipts, 2007: 3% of total firms were publicly-held but had 64% of total U.S. business receipts

14. Some 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

15. Conclusions • 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