Empowering Women Entrepreneurs Can Boost Startup Activity

The word “startup” may make you think of a bunch of young tech gurus developing software in a Silicon Valley garage, but startups today take many forms, and more and more of them are being founded by women. In fact, women are starting businesses at double the rate of their male counterparts.

The Kauffman Foundation recently issued its annual report of startup activity, a comprehensive survey of new business creation and entrepreneurship in the U.S. Kauffman’s data showed that despite a short-term upward trend, startup activity in the U.S. continues to fall below the levels seen in the 1980s. But before you go digging around for your old shoulder pads and leg warmers, there are easier ways to usher in a new golden age of startup activity.

Last year, Women’s Foundation teamed up with researchers at the University of Missouri’s Truman School Institute of Public Policy to explore the challenges and barriers facing women entrepreneurs trying to start and grow a business. We discovered a bureaucratic thicket of occupational licensing regulations, in fields ranging from architecture to cosmetology, that make it harder for women to enter into these professions.

Many of these requirements are outdated or excessive, and aren’t necessary to protect public health and safety. In some cases, like natural hair braiding, the licensure requirements aren’t even relevant to the profession they regulate. People with occupational licenses earn thirty percent more on average than those without these certifications, so for women who don’t have the time or the money to cut through all this costly red tape, these regulations can limit their ability to move up the economic ladder.

Here are four simple steps states can take to help working women boost their earning potential and reduce the income gap, without compromising public health or safety.

  1. Licensure requirements should undergo a cost-benefit analysis and periodic reviews to determine whether they’re necessary and working as intended.
  2. Collect data to analyze trends so that policymakers can accurately evaluate these regulations and their impact.
  3. Develop mentoring programs designed to provide technical assistance to prospective women entrepreneurs. This technical assistance could focus on a variety of issues, including any licensing requirements, and could provide the support and encouragement women need to start their own business.
  4. Appoint more women from more diverse backgrounds to serve on the boards and commissions that govern these regulations. These boards are often controlled by industry insiders who have a vested interest in making it harder for competitors to enter the marketplace. As of 2016, it was estimated that there were more than 1,300 positions on Missouri’s boards and commissions with vacancies or individuals serving expired terms. Appointing more women to these vacancies, as our Appointments Project is working to do, will ensure women have a seat at the table when these regulations are being developed.

Luckily, we don’t have to bring back the excesses of the 1980s to create a better environment for startups and entrepreneurs to thrive. Making it easier for women to start and grow a business can help empower women, reduce the pay gap, and rev up America’s economy.

For more information on Women's Foundation, visit: www.womens-foundation.org


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