Female workers face a number of challenges, including inequities in pay and underrepresentation in certain industries and occupations. And while the share of female business owners is on the rise, women still own far fewer businesses than men. While women account for 48 percent of all workers nationally, they make up just 38.4 percent of business owners according to data from the Census Bureau. Among owners of incorporated businesses, women are even more scarce, accounting for just one-third of incorporated business owners.
The share of female business ownership has increased by several percentage points over the last decade, going from 35.2 percent in 2010 to 38.4 percent in 2019. Women start businesses for many of the same reasons as men—namely, to be their own boss, to follow a passion, or to pursue a new opportunity. But women are much more likely than men to cite increased flexibility and the ability to control their schedules as important motivators in starting their own businesses.
Although female business ownership is becoming more common, women are less likely than men to incorporate their businesses. While 41 percent of unincorporated business owners are women, they account for only 33 percent of incorporated business owners. In addition to advantages such as personal asset protection and stronger record-keeping, business incorporation provides easier access to capital. Even tax filing for the self-employed can be advantageous, which includes allowing business owners to spread losses out over a larger period of time, deducting benefits for employees, as well as deductions for startup and operational costs. As such, the difference in incorporation rates across men- and women-owned businesses contributes to the gap in earnings and funding between male and female businesses.
In every sector of employment, men tend to earn more than women. Whether employed at private companies, working in government, or self-employed, men earn an average of 25 percent more than women. Furthermore, self-employed women in unincorporated businesses actually earn even less than women employed in any other sector. Even women who own incorporated businesses still earn less than women in almost every other sector.
Female business ownership rates vary significantly on a geographic basis. Female business ownership is more prevalent on the West Coast and less common in the Midwest. At the state level, Hawaii and Oregon boast the largest share of business owners who are female, at 46 and 44.6 percent, respectively. Conversely, New Hampshire and North Dakota have the lowest rates of female business ownership, at 32.6 and 30.9 percent, respectively.
To find the states with the most female business owners, researchers at Self Financial analyzed the latest data from the U.S. Census Bureau. The researchers ranked states according to the percentage of business owners who are female. Researchers also calculated the total number of female business owners, the total number of female business owners for both incorporated and unincorporated firms, and the most active industry for female business owners.
The analysis found that there are 859,459 female business owners in California, which amounts to 39.4% of all business owners in the state. Here is a summary of the data for California:
- Percentage of business owners who are female: 39.4%
- Total number of female business owners: 859,459
- Total number of female business owners (incorporated firms): 226,266
- Total number of female business owners (unincorporated firms): 633,193
- Most active industry for female business owners: Other Services, Except Public Administration
For reference, here are the statistics for the entire United States:
- Percentage of business owners who are female: 38.4%
- Total number of female business owners: 5,885,105
- Total number of female business owners (incorporated firms): 1,900,931
- Total number of female business owners (unincorporated firms): 3,984,174
- Most active industry for female business owners: Professional, Scientific, and Management, and Administrative, and Waste Management Services
For more information, a detailed methodology, and complete results, you can find the original report on Self Financial’s website: https://www.self.inc/blog/cities-with-most-female-business-owners