Most people are very familiar with the wage gap when it comes to men and women generally. It’s no secret that in the U.S., women make only 65 to 70 cents a dollar of what men make. But there’s also a huge pay gap when it comes down to race. If we actually factor in race and compare black women to their white male counterparts the gap widens significantly. There’s lots of data to support this. It’s something that tends to be in my face and my space all the time.
Googling stats on Forbes or leanin.org, you’ll see the all around state of black women in this country. On average, black women in the U.S. are paid 39% less than white men, and 21% less than white women. It’s not by accident that many black women I meet mention feeling triggered by white women in their work spaces. Don’t even get me started on chapter 9 in Robin DiAngelo’s White Fragility.
But the real reason I’m showing up today is because I want to talk about how the wage gap for black women is also impacting the starting rate at which black women are starting businesses.
There are 3 areas where the wage gap impact is really significant:
- The first is considering how the wage gap is impacting rates of employment for black women in the corporate arena.
- The second is looking at how access to capital for entrepreneurs is especially difficult for black women business owners.
- And the third is taking a look at what we then do with this information. And the responsibility that we all have to educate those who don’t even know that this problem exists.
1. Black women in the corporate arena
Let’s start with the corporate America issue. The reason why I left Corporate America is because, to be frank, a white woman who was my manager became threatened by my assertiveness in meetings. We didn’t get along. While making friends with coworkers isn’t a prerequisite, making sure that you’re liked plays a huge part in corporate politics.
Now, I have a master’s degree in management and a degree in English creative writing from NYU. But when you look at the reasons why I was let go from my last position, the things that were stated in the final few e-mails back and forth to HR were all around my inability to write emails without typos, and lack of respect for the prevailing management structure. This is a not so uncommon an occurrence. How many times has a black woman received and worked for more degrees, education, personal and professional development than her peers, and been rewarded the least?
This is significant. Looking at data from leanin.org we can see how the pay gap actually widens for women at higher education levels. Look at black women who have advanced degrees – I’m talking about those with Master’s and even PHDs. On average, there’s still a 35% gap in their weekly earnings when compared to white men. This is a huge jump from the 23% gap we see for those with a high school diploma or less.
How does this impact entrepreneurship and business startup numbers?
In developing countries we often see people achieve their degrees and then leave the country to seek employment elsewhere. This phenomenon, called brain-drain, can also be applied to what we see in the American corporate space for black women. Women who have advanced degrees and a high degree of expertise are not being fairly compensated for their knowledge. So they are now creating new spaces where they’re appreciated.
If you don’t like your current environment then you can always leave and create your own environment in entrepreneurship.
2. Access to Capital based on Race and Gender
The second factor I want to highlight is how the access to capital is impacted based on race and gender. Recently I watched She Did That Netflix documentary that highlights the accomplishments of black women entrepreneurs. All of them startups, and largely started on accident. As one woman describes, “I just saw a problem that needed solving and said, F it! I’ll do it.” Sound familiar to anyone?
But I think the most telling anecdote in that documentary was the tale of the two women who started The Lip Bar. The women describe being invited to be on the television show Shark Tank. And when they arrived, being met with a whole lot of misogyny and condescension from the judges on the panel. They realized very quickly that those who had access to capital and the means to distribute it did not understand their business model. They didn’t understand the problem they solved for their ideal market. So any idea that the women brought forward was going to be discounted or tossed aside. They did not get funding.
Black women businesses have an average revenue of under $50K a year and are usually run by an employee of one.
It is very hard to scale when you have no access to capital.
So how do small business owners of the black and female persuasion get money to build their enterprises? Most black women entrepreneurs fund their companies through their own savings. And yes, I’m talking about their savings account and their 401k and taking out equity in our homes. We’re bootstrapping this thing all along the way. Which puts us at a huge disadvantage when we think about accelerating growth. You need resources in order to scale up, which explains why so many women end up trapped side hustling and with very little help. Not only are black women entrepreneurs starting businesses at the highest rates of any other demographic, but you’ll also find they’re the ones who often are delegating the least.
Numbers demonstrate that half of small-business ownership is started by people of color. And half of those new businesses are started by women. But by and large, those businesses have an average revenue of under $50,000 a year. And are usually run by an employee of one. It is very hard to scale when you have no access to capital. That can also mean you may not be willing to hire or have the (financial) ability to hire, and get the help you need for the growth of the enterprise.
I had my business for a good two and a half years before I even hired a part-time assistant. And now at year 4 and change, I’m looking at taking on additional VAs to help me with consistency. All of this while funding everything out of pocket and through the revenue I’m able to generate from the business itself. This is the lean startup.
3. Educating and Supporting black women entrepreneurs
The third place I want to look is around how do we actually increase knowledge in this area so that others are willing to support small black-owned businesses. Here’s the key lesson learned from the two women who went on Shark Tank: While most of America is starting to recognize the buying power of black women they’re still not fully clear on some of the unique problems that this demographic has.
Come on black girl, you gotta toot your own horn and let people know what you’re doing and why it matters.
In looking at the data from leanin.org it’s startling to find out that only half of Americans think that there’s obstacles to advancement for black women. The other half assume that there are no obstacles and the path is clear. By telling our stories we not only do the rest of the world a service by helping them grow in their knowledge of others, but we also do ourselves a service. Because the more people understand us, the more likely they are to support our causes and further our own growth. Networking is one thing but put your achievements on blast. By truly educating people about the unique problems that you’re solving, we can create a movement towards allies in black entrepreneurship where black women are solving black problems.
So what does this all mean?
Women are leaving corporate America because the environment is not inclusive. Women are starting businesses without having adequate means to scale them with capital and (wo)manpower. Most of the problems that we solve in our businesses are not recognized, nor are the challenges to our growth fully understood. It’s like having an Olympic sprinter at the starting line and then weighing her down with 15 pound weights on each foot. On one hand, we’re fully equipped to move forward and advance, and on the other, folks are telling us that the shackles around our feet don’t exist.
If this is something you have experienced I highly encourage you to check out the She Runs It community. We’re actively working to support other women of color businesses as they grow and find resources for scaling through crowdsourcing skills that across our expanding network of highly educated individuals. We’d love to have you as part of our tribe and create a mass movement towards educating the public about black and brown women business magic.
References for stats for Women of Color and Black Women Entrepreneurs: