Guest Post By: Ohio’s Online Master of Business School
Women and Minorities in Business Statistics
Although the national average earnings of women and minorities have markedly increased since the 1970s, positions in both the business and the financial industries still show wide gaps in earnings between males and females.
Women are essential to the business landscape. 30 percent of all U.S. enterprises in 2014 were firms owned by women. That translates to roughly 9.1 million female-owned businesses. These businesses generated over $1.4 trillion in revenue in 2014. This influx of ownership translates to a growth pattern of 150 percent between 1997 and 2014, when compared with the national average.
The fastest pockets of growth are spread throughout the United States. The states with the most rapid growth in the number, employment, and revenues of female-owned firms between 1997 and 2014 are Nevada, Wyoming, Utah, Arizona, North Dakota, Texas, Maryland, District of Columbia, Virginia, and Georgia.
From a metropolitan perspective, the New York metro area led the way for female-owned businesses in 2014, with around 665,700. The Los Angeles area is second with about 427,000, and Chicago checks in at third with roughly 308,700. The Miami and Washington, D.C. areas round out the top five of this list, with about 242,600 and 206,400 female-owned businesses, respectively.
The healthcare and social assistance industry had the highest percentage of female-owned firms in 2014, with 53 percent of businesses owned by women. Educational services followed at 45 percent, and administrative support and waste management services checked in at a 37 percent clip. On the flip side, the construction industry had the lowest percentage of female-owned firms in 2014 at just 7 percent. This was followed by the transportation and warehousing industry, which saw 11 percent of businesses being female-owned. The wholesale trade industry featured only 19 percent of firms owned by females, a tick higher than finance and insurance, which only had 20 percent of industry business listed as female-owned.
Female Minority-Owned Enterprises
In 1997, there were 929,445 American businesses owned by minority-owned females. This represented 17 percent of female business ownership. This percentage shot up to around 33% by 2014. African-American women were the largest female minority group, as they owned roughly 14% of all women-owned firms nationally. Latina women was second on the list with an estimated ownership of 11 percent, and Asian-American women owned approximately 7 percent of all women-owned firms. Native American and Alaska Native women owned about 1 percent of all female-owned firms, while Native Hawaiian and Pacific Islander women owned less than 1%. It should be noted that in the case of Asian-American women, the percentage of firm ownership was higher in Hawaii (55 percent), California (18 percent), New Jersey (11 percent), and New York (10 percent).
These minority women-owned business generated substantial revenue. The 1,237,900 firms owned by African-American women generated $49.5 billion in revenue in 2014. Latina women owned fewer firms in 2014 (1,033,100) but generated more revenue ($71.1 billion). The biggest firm-to revenue ratio was found in the Asian-American women demographic, as 675,900 firms collectively generated $115 billion in revenue. Native American, Alaska Native, Native Hawaiian, and Pacific Islander women-owned firms combined to generate $11.9 billion in revenue spread across over 139,900 firms.
Despite the business acumen demonstrated through revenue generation, the pay gap between men and women has yet to close. According to the Bureau of Labor Statistics (BLS), women’s earnings did not measure up to male full-time wages when compared as a percentage. This percentage has fluctuated over the years. For instance, in 1979, women earned 62 percent of what men earned. This increased to 83 percent in 2004, but then tumbled to 76 percent in 2015. This discrepancy looms large in business specialist occupations, where women only earn 66 percent of what men earn.
The Glass Ceiling
Roughly 85 percent of corporate executives and board members are white men, a metric that creates a very real and very imposing glass ceiling. However, the financial benefits that stem from a racially diverse workforce should be relevant to the interests of white, male business executives and hiring managers. One of the key ways that corporations can remove the glass ceiling is by demonstrating behaviors that value diversity. This can be accomplished in three steps. The first step is to respect cultural, religious, gender, and racial differences. Step number two is to manage and work with individuals from different racial or cultural backgrounds. The final step is to promote overall demographic balance within an organization; one that relates to the demographic makeup of a company’s broader geographic area.
Being a diverse company has several tangible benefits. Ethnically diverse companies are 35 percent more likely to outperform non-ethnically diverse companies, and gender diverse companies are 15 percent more likely to outperform their non-gender diverse counterparts. Studies also indicate that a company’s earnings rise 0.8 percent for every 10 percent increase in racial and ethnic diversity they deploy.
Setting up a corporate platform of diversity is not without its obstacles. Companies may have to deal with harsh public criticism for advocating diversity. They may also experience lower ratings for competencies and performances. Additionally, they’re typically not rewarded by others for engaging in diversity-valuing behavior. Companies striving to break the glass ceiling can deploy several tactics to promote transparency in hiring and retaining women and minority employees. Large public companies including Facebook, Microsoft, and Google have led the way in this promotion by revealing internal data concerning the racial makeup of their workforce.