The number of female business owners in the US has grown an impressive 16% over the last five years, doubling the growth rate of male-owned businesses at just 8%. According to recent data from Brookings, there has been a rise in Black and Hispanic families with ownership in employer businesses, which is outpacing White families in the same subset. However, we also know there are numerous disparities at play, impacting the ability for minority business owners to access funding and other resources.
When it comes to the rates of women business owners, and especially women of color, these disparities become even more apparent, despite the exponential rate of growth of women in the small business sector, most notably.
The average earnings for female-owned businesses has also increased 21% over the same time period, while male business owners have seen a more modest 16% growth in earnings. Despite this, males who own their own business still outearn female business owners by $35,000 a year, or 41%.
But which states are home to the most successful female entrepreneurs?
To determine this, Osum, an AI-powered market research tool, considered four key metrics: average earnings of female-owned businesses, percentage of female business owners earning over $100,000, growth rate of female-owned businesses, and the earnings disparity between male and female-owned businesses. Osum used U.S. Census data to break down this earnings gap by state and industry.
Key Findings
- States with the narrowest earnings gap: New Mexico ($16,000), Vermont ($16,289), and West Virginia ($23,442) have the narrowest earnings gap between male and female business owners.
- States with the widest earnings gap: The District of Columbia ($64,767), Idaho ($52,838), and Iowa ($45,289) have the widest earnings gap.
- Industries where females outearn males: Female business owners outearn their male counterparts in seven different industries, including spectator sports, newspaper publishing, and car washing services.
- Industries with largest earnings gap: Despite medicine and dentistry being two of the highest earning industries for female entrepreneurs, they still earn over $100,000 less than male business owners in these fields.
Top States For Female Business Owners
1. Connecticut
Connecticut leads with the highest average earnings for female entrepreneurs at $72,222 and nearly 13% of women surpassing the $100,000 income mark. Despite a notable pay gap of $38,479 compared to men, female-owned businesses are thriving with 20% growth in ownership over the last five years.
2. New Jersey
New Jersey has the second highest percentage of female business owners earning over $100,000 at 14.5%, surpassed only by the District of Columbia. Average pay is also high at $63,686, and the number of female business owners has grown at a rate of 25%. However, the state faces a relatively large earnings gap, with women in business earning $40,107 less than their male counterparts.
3. Nevada
Nevada has seen a remarkable 30% growth in female business ownership over the last five years, which is the most significant among the top states. Female entrepreneurs in Nevada earn an average of $60,313, which is slightly lower than in other leading states. However, the relatively small earnings gap of $28,867 between men and women helps boost the state’s ranking. A healthy 13.7% of female business owners earn over the $100,000 mark.
4. California
In California, female entrepreneurs earn an average of $65,698, with a notable 13.7% earning over $100,000 annually. Similar to Nevada, California has a relatively small pay gap at $32,472. Despite a modest 6% growth in female-owned businesses over the past five years, California maintains a relatively high percentage of female business owners compared to other states.
5. Massachusetts
Massachusetts boasts strong average earnings for female business owners at $65,006, and 14.4% of women business owners earn over $100,000 annually. Growth in female-owned businesses is in line with average at 16%. The earnings gap remains a challenge, with women earning $43,221 less than their male counterparts, which is the largest pay gap in the top five states.
States With The Lowest And Highest Earnings Gaps
One of the key metrics Osum looked at in terms of success of female entrepreneurs in each state was the earnings gap between women and men. The below table highlights the five states with the largest and smallest earnings gaps.
Industry Breakdown
Most Popular Businesses For Female Business Owners
The most popular business models among women are typically in traditionally female niches such as beauty and childcare. Women own over 90% of beauty salons and over 95% of childcare businesses in the US. Construction is also popular with female business owners, though they only account for 8% of total construction businesses. The three least popular businesses for women are water and utility services, electrical services, and logging.
Highest Earning Industries For Female Business Owners
The highest earning industries for female business owners are in the medical, financial, and legal fields. Despite the high earnings, women in these industries still earn less than half of what their male counterparts earn. The lowest earning industries for female business owners are courier services, commercial bakeries, museums or historical sites, and taxi or limo services.
Industries Where Female Business Owners Outearn Males
Male business owners outearn female business owners in most industries, but there are seven industries in the US where females outearn males.
These industries aren’t as typically popular with women as they are with men, but the women that have chosen to venture into these fields are earning well. The leading state in terms of average earnings in sports entertainment for women is California, while in newspaper publishing it’s Colorado.
The most significant earnings disparities between male and female business owners are found in medical offices and dental offices, with an earnings gap of $153,000 and $132,000 respectively. The numbers above represent the average annual amount by which female earnings exceed male earning.
Ask the Experts
Osum reached out to several successful female entrepreneurs to get their take on the findings and what can be done to boost female entrepreneurship in the U.S.
Candace Bushnell, bestselling novelist of ‘Sex and the City’, commented:
“It’s really about seeing other women succeed and doing things you might not have even imagined. I believe that any programs that clearly outline the steps to success for women are the kind that will grow female entrepreneurship nationwide. I recently attended a camp for female founders and entrepreneurs that featured many different speakers, and it was fascinating. I think we need more programs like that.”
Osum also spoke with Kari Byron, former ‘Mythbusters’ co-host, EXPLR co-founder, and co-director of the National STEM Festival, to get her insights on the surge in female entrepreneurship and the challenges faced by women in business. She specifically talked about the need for more industries not to write off mothers, who notably experience a lot of disparities in the workforce in general.
“I recently attended a U.S. Chamber of Commerce event discussing skills-based hiring for individuals without traditional educational backgrounds. One valuable group that emerged from this conversation was moms,” she said.
“Mothers possess an incredible skill set that isn’t necessarily taught, including time management, project management, and work-life balance. The ability to manage an entire group of kids involves scheduling and organizational skills that can be applied across many industries. So, beyond entrepreneurship, I feel that any program creating flexibility for women to be multifaceted – to be a mom, a woman, and a boss – will fuel female success and entrepreneurship nationwide. Programs that recognize and support this versatility are key to promoting female entrepreneurship and success in the workforce.”
While the data above collected by Osum shows exciting growth and change across the board, we still have a long way to go to reach pull parity, and dismantle the barriers that exist for a number of women. What is very clear is that this is no longer only a “man’s world”. The U.S. economy needs women business owners in order to continue its growth. We will continue to champion those who are working to push for change and progress across the board.
In the meantime, you can take a look at the full data breakdown and more insight from Osum.
