D.C. is behind the rest of metropolitan area in business ownership rates for women

October 30, 2019
  • Kathryn Zickuhr
  • Yesim Sayin
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Photo/WOCinTech Chat. CC BY 2.0 (Source)

October is National Women’s Small Business Month.

Only 8 percent of business establishments in the District of Columbia with five or more employees are owned by women, as we wrote in the 2019 State of Business report. D.C. has lower shares of businesses owned by women than almost any other jurisdiction in the metropolitan area, with rates similar to those of Arlington County and Manassas Park City. D.C. also has the lowest business ownership rates for women when measured by share of gross receipts (only 4 percent of sales are to businesses owned by women), similar to Arlington (5 percent). The same is true when looking at women-owned businesses by their share of employment (4 percent of workers in D.C. work for businesses owned by women), alongside Arlington (4 percent), Manassas (5 percent), and Alexandria (5 percent).

Share of establishments, employment, and gross receipts in each jurisdiction that are owned by women, among businesses with 5 or more employees.

Across the Washington metropolitan area, the highest rates of business ownership for are in Falls Church City, and Prince George’s County, as 12 percent of establishments. In Falls Church City, 12 percent of workers work at business establishments owned by women. In Fairfax County, 11 percent of all businesses with five or more employees are owned by women, and these businesses account for 8 percent of employment and 7 percent of gross receipts.

In terms of overall numbers, women-owned businesses in the District employ around 21,887 workers across 1,235 establishments, with annual sales of $2.1 billion.

Until 1988, women could not secure a business loan without a male relative as a co-signer in many states. The Women’s Business Ownership Act eliminated this discriminatory practice, but many other barriers and structural forces remained. For instance, a research article published in 1991 found that while women did not lack in “entrepreneurial traits,” or differ from men in their motivations for beginning a small business, a variety of factors—from less prior financial and managerial experience to the lack of family support men with wives often receive—converged to limit their success. Furthermore, the researchers found that among sole proprietorships in the 1980s, “woman-owned businesses [were] concentrated within traditionally female-typed fields with lower average business receipts than male-typed fields,” such as personal services; meanwhile, women were far less likely to own businesses in industries like construction. Even within broad categories like retail, businesses owned by men were more likely to have higher sales, and women were more likely to be a part of direct sales organizations (such as Mary Kay) with very low individual revenues. Once established, women entrepreneurs continued to lack access to financial capital and the social capital necessary to access government contracts.

Many, if not all, of these forces continue today. Nationally, women-owned businesses are still significantly smaller than those owned by men, on average, in terms of both employment and average sales. Part of this gap now, as in the 1980s, has to do with the settings under which women start businesses, including push and pull factors that often differ from men (such as being pushed into self-employment through lack of other options after a child is born instead of being pulled by attractive entrepreneurship opportunities). As they establish their businesses, women entrepreneurs are more likely to be denied bank loans or receive lower levels of credit. And as guest contributor Shelly Bell wrote in her recent essay on access to social and financial capital, the gaps are even larger for Black women:

Among all businesses nationally, those owned by Black women have average sales per business of $28,000, compared to $768,000 for those owned by white men. And businesses owned by Black women have an average of 8.2 employees and average sales of $557,000, compared to 13.1 employees and $2,866,000 in average sales for those owned by white men.

These present inequities stem from the systematic denial of access to financial and social capital (among other factors) for women and people of color. The inclusion of social capital here may seem surprising at first; after all, we’re used to hearing, “It’s not personal, it’s business.” But personal relationships are vital to any business’s success, especially the success of new ventures. From getting an idea off the ground to connecting with customers, social capital is just as important as financial capital to a new business’s success. And for Black businesses in particular, especially those founded by Black women, many of the same barriers that have prevented equitable access to financial capital are at play in limiting access to social capital, resulting in a broken ecosystem.

Continue reading: Building the ecosystem for Black women entrepreneurs in D.C.

About the data

The data in the charts and tables in this report are from the National Establishment Time-Series (NETS) Database for 1990-2015 from Dun and Bradstreet (D&B). This analysis focuses on businesses with five or more employees, and excludes those in public administration, K-12 education, and universities. For more information, see the 2019 State of Business report.

Authors

Kathryn Zickuhr

Former Director of Policy
D.C. Policy Center

Kathryn Zickuhr served on the D.C. Policy Center staff as the Director of Policy from its founding until May 2020.

Prior to joining the Center in January 2017, Kathryn was a research analyst at the Pew Research Center’s Internet & Technology Project, where she studied topics such as the changing role of public libraries in American communities and the digital divide. Kathryn holds a Master of Public Policy degree from Georgetown University’s McCourt School of Public Policy and a Bachelor of Arts in history and Russian from the University of Kansas.

Yesim Sayin

Executive Director
D.C. Policy Center

Yesim Sayin is the founding Executive Director of the D.C. Policy Center.

With over twenty years of public policy experience in the District of Columbia, Dr. Sayin is recognized by policymakers, advocates and the media as a source of reliable, balanced analyses on the District’s economy and demography.  Yesim’s research interests include economic and fiscal policy, urban economic development, housing, and education. She is especially focused on how COVID-19 pandemic is changing regional and interregional economic interdependencies and what this means for urban policy. Her work is frequently covered in the media, including the Washington Post, the Washington Business Journal, the New York Times, the Wall Street Journal, WAMU, and the Washington City Paper, among others.

Before joining the D.C. Policy Center, Dr. Sayin worked at the District of Columbia Office of the Chief Financial Officer leading the team that scored the fiscal impact of all legislation the District considered. She frequently testified on high profile legislation and worked closely with the executive and Council staff to ensure that policymakers fully understand the fiscal implications of their proposed legislation. Yesim also has worked in the private sector, and consulted with international organization on a large portfolio of public finance topics.

Yesim holds a Ph.D. in economics from George Mason University in Fairfax, Virginia, and a bachelor’s degree in Political Science and International Relations from Bogazici University, located in Istanbul, Turkey.