Women's Business Ownership Act

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The Women's Business Ownership Act of 1988 was an act of the United States Congress introduced by John LaFalce aimed at aiding the success of women business entrepreneurs. [1] [2] It provides a basis for policies, programs, and public/private sector initiatives supporting women's business endeavors. [3] The bill was signed into law on October 25, 1988. [1] For much of history, women were excluded from the business world, but at the time of the legislation women were becoming entrepreneurs at a fast rate. [3] The market contains many inequities that influence the success women in business are able to achieve. Sexual stereotyping and past societal barriers result in women not having the same access to ownership or control. [3] The Women's Business Ownership Act was drafted in response to the Small Business Committee's series of six hearings on problems facing women entrepreneurs and follows the recommendations outlined in the Committee report "New Economic Realities: The Rise of Women Entrepreneurs." [3] within business opportunities for women. [3]

Contents

Congressional Findings

The Congressional Committee identified four barriers to women owned businesses that they wished to address. [3]

  1. "the need for technical training to maximize growth potential of women owned business"
  2. "inequality of access to commercial credit"
  3. "virtual exclusion of women owned business from government procurement activities"
  4. "inadequacy of information and data relative to women owned business"

These findings were included in the Committee Report 100-736, which was filed on June 28, 1988. Findings like this are critical in order to formulate the basis for public policies and programs in order to benefit women entrepreneurs. [3]

List of organizations that endorsed the legislation

Outcomes of the Women's Business Ownership Act

Women's Business Centers

The Women's Business Ownership Act provided seed funding for women's business centers through an annual grant process by the Small Business Administration. [4] They were intended to provide technical assistance to women in order to form businesses, particularly those who were socially or economically disadvantaged. Women's business centers provide training, technical assistance, and support for entrepreneurship for women. [4] The Global Entrepreneurship Monitor research project has consistently shown that women have lower entrepreneurship endeavors than men, but research on women's business centers indicate that the centers in the United States are accomplishing their intended mission. [4]

Women lack equal access to education, finance, and other support services, such as business networks. [5] Women often also have to pay higher interest rates than men for similar loans. [6] In addition to these logistical factors, women are often influenced by societal norms, such as being unlikely to be exposed to the concept of negotiation. The lack of resources for women entrepreneurs in daily assistance in the beginning stages of their businesses make it difficult for women to start businesses. [7] As a result, women entrepreneurs are more likely than men to stay in business for only short periods of time. [8] Women’s Business Centers seek to offer assistance with the day-to-day operations of starting a business, hoping to help women overcome the barriers they face to entrepreneurship.

Since 1995, the Center for Women in Business Enterprise in Boston and Worcester have helped over 14,000 entrepreneurs. This is indicative of the demand for such services. [2] Women's Business Center Program has had significant economic impact, with more than one half of the Centers showing growth in number of clients helped, gross receipts, profits, the creation of jobs, and new firms started. [9]

National Women's Business Council

Created by the Women's Business Ownership Act, the National Women's Business Council is a non-partisan federal advisory board created to present policy advice about women small business issues to the President and Congress. [2] [10] It has resulted in the Census Bureau being required to include women business owners in its census survey. [2]

Established in 1988, it started as an advisory board intended to identify the barriers for women-owned businesses and report annually to the president and Congress. By the early 1990s, the National Women's Business Council included women business owners, policy makers, bankers, and representatives of women's business organizations in the discussion of potential solutions to the problems women-owned businesses face, which were then presented to the president and Congress. The Small Business Reauthorization Act changed the structure of the National Women's Business Council in 1994 to its current form, which includes women business owners and representatives of women's business organizations. The law was expanded in 1998 for the National Women's Business council to include the current fifteen members. [10]

The members of the National Women's Business Council are appointed to three year terms. The fifteen members include: [10]

Race and the Women's Business Ownership Act

White women working on the legislation for the Women’s Business Ownership Act were concerned that adding amendments for women of color would make the bill too controversial to pass or “putting race and sex together in the same legislation complicates the issue and might threaten the passage of the legislation.” [11] This concern indicates the marginalization that women face, but also the additional barriers for women of color.

The National Association of Women Business Owners (NAWBO) was a main proponent for the passing of the bill. NAWBO argued that stereotypes of women created barriers to women business owners. However, NAWBO was hesitant to include women of color to its ranks. They were nervous that, due to the political climate of the time, adding a racial component to what was already considered progressive legislation intended to address women’s issues would provoke push back from conservatives. The coalition eventually was convinced that it was important to include women of color because their interests could be addressed by NAWBO without also involving the community of minority men business owners. A small sub-coalition was created, which consisted of the Organization of Pan Asian American Women, the Black Women’s Agenda, and the Coalition of Minority Women in Business. [11]

Processes that are racialized and affect entrepreneurship are often gendered and classed as well. [12] Residential segregation, racialized social networks, and wealth inequality influence blacks’ entrepreneurial behavior by reducing their access to resources necessary to start businesses. These aspects are also influenced by gender and class. [12] As of 2015, only about 5% of CEOs of Fortune 500 companies are women, and the majority are white. [13] On average for full-time work, a white man will earn almost 56% more than a black woman. [14] Black entrepreneurs understand their business ownership within a context of race, but also within the context of other social groups, like gender. [12]

Socioeconomic Status and the Women's Business Ownership Act

Initially, women’s interest groups were accused of representing only middle- and upper-middle-class women when selecting issues to politically address. However, the interests of working class and poor women have received increased attention. [15] Measures implemented by the Women’s Business Ownership Act, such as the Women's Business Centers, were intentionally implemented for women of lower socioeconomic status. [4]

Affirmative Action for Women

Affirmative action programs are often used as a way to make the playing field equal for minority and women owned businesses, and can contribute to the ability for business entry and survival. [16] These programs for women can be considered in terms of education, employment, and business ownership. For women business owners, affirmative action programs are considered legislation that encourage government agencies and contractors to do business with women-owned businesses. Programs that provide financial, management, and technical assistance to women business owners are also considered to be aspects of affirmative action. [14] Affirmative action legislation has led to substantial improvements in the employment of minorities and women. [17] While affirmative action independently is not enough to provide opportunities to those facing discrimination or marginalization, evidence suggests that it is beneficial in helping women and minorities to attain more education or economic gains. [17] Ronald Reagan's administration from 1981 to 1989, or during the passage of the Women's Business Ownership Act, was adamantly opposed to affirmative action. [17] There was a concern that the heavy opposition undermined the effectiveness of the policies. [17]

Research conducted after the abolition of affirmative action in Washington and California found evidence to suggest there were slight increases in self-employment among minorities and women with no affirmative action. This is believed to be due to the opportunity cost of starting a business falling because of the restricting opportunities in a traditional labor market. However, this may not be true when considering different race and gender groups. [16]

Related Research Articles

Affirmative action refers to a set of policies and practices within a government or organization seeking to benefit marginalized groups. Historically and internationally, support for affirmative action has been justified by the idea that it may help with bridging inequalities in employment and pay, increasing access to education, and promoting diversity, social equity and redressing alleged wrongs, harms, or hindrances, also called substantive equality.

<span class="mw-page-title-main">Small business</span> Business with fewer employees or revenue

Small businesses are types of corporations, partnerships, or sole proprietorships which have a small number of employees and/or less annual revenue than a regular-sized business or corporation. Businesses are defined as "small" in terms of being able to apply for government support and qualify for preferential tax policy. The qualifications vary depending on the country and industry. Small businesses range from fifteen employees under the Australian Fair Work Act 2009, fifty employees according to the definition used by the European Union, and fewer than five hundred employees to qualify for many U.S. Small Business Administration programs. While small businesses can be classified according to other methods, such as annual revenues, shipments, sales, assets, annual gross, net revenue, net profits, the number of employees is one of the most widely used measures.

<span class="mw-page-title-main">Executive Order 11246</span> Equal employment opportunity

Executive Order 11246, signed by President Lyndon B. Johnson on September 24, 1965, established requirements for non-discriminatory practices in hiring and employment on the part of U.S. government contractors. It "prohibits federal contractors and federally assisted construction contractors and subcontractors, who do over $10,000 in Government business in one year from discriminating in employment decisions on the basis of race, color, religion, sex, or national origin." It also requires contractors to "take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin." The phrase affirmative action had appeared previously in Executive Order 10925 in 1961.

The U.S. Women's Chamber of Commerce was founded in 2001 to increase economic growth opportunities for women. As the only national organization of its kind, the U.S. Women's Chamber of Commerce works in concert with its over 500,000 members, national and local association partners, and key influencers to open doors for women business owners and career professionals.

<span class="mw-page-title-main">Equal employment opportunity</span> Protection of US employees from types of employment discrimination

Equal employment opportunity is equal opportunity to attain or maintain employment in a company, organization, or other institution. Examples of legislation to foster it or to protect it from eroding include the U.S. Equal Employment Opportunity Commission, which was established by Title VII of the Civil Rights Act of 1964 to assist in the protection of United States employees from discrimination. The law was the first federal law designed to protect most US employees from employment discrimination based on that employee's race, color, religion, sex, or national origin.

<span class="mw-page-title-main">Affirmative action in the United States</span>

In the United States, affirmative action consists of government-mandated, government-approved, and voluntary private programs granting special consideration to groups considered or classified as historically excluded, specifically racial minorities and women. These programs tend to focus on access to education and employment in order to redress the disadvantages associated with past and present discrimination. Another goal of affirmative action policies is to ensure that public institutions, such as universities, hospitals, and police forces, are more representative of the populations they serve.

An individual development account (IDA) is an asset building tool designed to enable low-income families to save towards a targeted amount usually used for building assets in the form of home ownership, post-secondary education and small business ownership. In principle IDAs work as matched savings accounts that supplement the savings of low-income households with matching funds drawn from a variety of private and public sources.

Inclusive entrepreneurship is about a set of attitudes, competences and skills which allow people to turn their dreams into concrete projects or “enterprises” and then see these through to fruition. It is about more than starting an individual business. Inclusive entrepreneurship can be applied to self-employment, starting or growing micro or small enterprises and to social enterprise using business based approaches driven by social mission. Indeed, the personal qualities required for entrepreneurship are essential for success in the knowledge economy – whether this be in the private or public sectors.

Employment equity, as defined in federal Canadian law by the Employment Equity Act, requires federal jurisdiction employers to engage in proactive employment practices to increase the representation of four designated groups: women, people with disabilities, visible minorities, and Indigenous peoples. The act states that "employment equity means more than treating persons the same way but also requires special measures and the accommodation of differences".

<span class="mw-page-title-main">Small Business Administration</span> United States government agency

The United States Small Business Administration (SBA) is an independent agency of the United States government that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters." The agency's activities have been summarized as the "3 Cs" of capital, contracts and counseling.

The White House Council on Women and Girls was an advisory council within the Office of Intergovernmental Affairs of the Executive Office of the President of the United States. It was established by Executive Order 13506 on March 11, 2009, with a broad mandate to advise the president on issues relating to the welfare of women and girls in order to ensure gender equality. It also ensured that other White House agencies acted in a manner to allow all things to be possible for all people. The Council was chaired by Valerie Jarrett and included the heads of every federal agency and major White House office.

The phrase women in business refers to female businesspeople who hold positions, particularly leadership in the fields of commerce, business, and entrepreneurship. It advocates for their increased participation in business.

<span class="mw-page-title-main">Female entrepreneurs</span> Women who organize and manage an enterprise

Female entrepreneurs are women who organize and manage an enterprise, particularly a business. Female entrepreneurship has steadily increased in the United States during the 20th and 21st century, with number of female owned businesses increasing at a rate of 5% since 1997. This growth has led to the rise of wealthy self-made females such as Coco Chanel, Diane Hendricks, Meg Whitman, and Oprah Winfrey.

A woman-owned business is a specific designation used by American government agencies and industry associations to set aside special programs to encourage and empower female business owners. Most definitions of this term involve a practical look at the legal and ownership structure, as well as the issue of control of the day-to-day operations of a business. The consideration of control of a business is meant to discourage the practice of men placing wives, daughters, or low-level female employees in positions of ownership, when in fact she may have little to do with the day-to-day management of the company, for the sake of receiving some government benefits or other consideration.

<span class="mw-page-title-main">Minister of Small Business Development</span> South African ministerial position

The Minister of Small Business Development is a Minister in the Cabinet of South Africa.

<span class="mw-page-title-main">Black-owned business</span> Business enterprise owned by one or more African-Americans

In the US, Black-owned businesses, also known as African American businesses, originated in the days of slavery before 1865. Emancipation and civil rights permitted businessmen to operate inside the American legal structure starting in the Reconstruction Era (1863–77) and afterwards. By the 1890s, thousands of small business operations had opened in urban areas. The most rapid growth came in the early 20th century, as the increasingly rigid Jim Crow system of segregation moved urban Blacks into a community large enough to support a business establishment. The National Negro Business League—which Booker T. Washington, college president, promoted—opened over 600 chapters. It reached every city with a significant Black population.

<i>Feminine Capital</i>

Feminine Capital: Unlocking the Power of Women Entrepreneurs is a non-fiction book written by Barbara J. Orser and Catherine J. Elliott. The book provides insight into how the intersection between entrepreneurship and feminism is evolving. The authors situate women’s entrepreneurship within the broader contexts of economics and feminism, and considers how sex role stereotypes have led to entrepreneurial characteristics that are predominantly masculine.

Social entrepreneurship in South Asia involves business activities that have a social benefit, often for people at the bottom of the pyramid. It is an emerging area of entrepreneurship that is supported by both the public sector and the private sector.

<span class="mw-page-title-main">2020 California Proposition 16</span> Measure to undo the states ban on affirmative action

Proposition 16 is a California ballot proposition that appeared on the November 3, 2020, general election ballot, asking California voters to amend the Constitution of California to repeal Proposition 209 (1996). Proposition 209 amended the state constitution to prohibit government institutions from considering race, sex, or ethnicity, specifically in the areas of public employment, public contracting, and public education. Therefore, Proposition 209 banned the use of race- and gender-based affirmative action in California's public sector.

Minority entrepreneurship refers to entrepreneurial activity by individuals who belong to a minority group. In the United States, minority groups often include people who identify as African American, Hispanic, or indigenous; these social groups do not own businesses at a rate commensurate to their share of the population. For example, African American-owned businesses comprise 2.3% of businesses in 2022 even though African Americans are 14.2% of the American population. One explanation for this discrepancy is the history and persistence of discriminatory economic practices that result in a disparity in credit scores between white Americans and minority groups. The inequity in creditworthiness begins with redlining, but modern challenges to minority entrepreneurship also include corporate consolidation and an unrepresentative venture capital industry. There have been recent efforts to bolster minority entrepreneurs, often through startup incubators and minority-focused venture capital.

References

  1. 1 2 "Text of H.R. 5050 (100th): Women's Business Ownership Act of 1988 (Passed Congress/Enrolled Bill version) – GovTrack.us" (PDF). GovTrack.us. Retrieved 2016-12-03.
  2. 1 2 3 4 "OPPORTUNITIES AND CHALLENGES FOR WOMEN ENTREPRENEURS ON THE 20TH ANNIVERSARY OF THE WOMEN'S BUSINESS OWNERSHIP ACT" (PDF). Committee on Small Business and Entrepreneurship. September 9, 2008. Retrieved December 6, 2016.
  3. 1 2 3 4 5 6 7 Selected documents pertaining to the Women's Business Ownership Act of 1988 (Public Law 100-533) /. Washington. 1988-01-01.
  4. 1 2 3 4 Langowitz, Nan; Sharpe, Norean; Godwyn, Mary (2006). "Women's Business Centers in the United States: Effective Entrepreneurship Training and Policy Implementation". Journal of Small Business & Entrepreneurship. 19 (2): 167–182. doi:10.1080/08276331.2006.10593365. S2CID   167711794.
  5. ↑ Warnecke, Tonia (2016). "Capabilities, human development, and design thinking: a framework for gender-sensitive entrepreneurship programs". Review of Social Economy. 74 (4): 420–430. doi:10.1080/00346764.2016.1201136. S2CID   148528878.
  6. ↑ Van Staveren, Irene (2002). "Global Finance and Gender". Civil Society and Global Finance: 228–246.
  7. ↑ Warnecke, Tonia (2014). "Are We Fostering Opportunity Entrepreneurship for Women? Exploring Policies and Programmes in China and India". International Journal of Entrepreneurship and Innovation Management. 18 (2/3): 154–181. doi:10.1504/IJEIM.2014.062880.
  8. ↑ Nallari, Griffith, Wang, Adriamananjara, Chen, Bhattacharya, Raj, Breda, Yidan, Soamiely, Derek, Rwitwika (2012). "A Primer on Policies for Jobs". World Bank: 112–125. hdl:10986/2390.{{cite journal}}: CS1 maint: multiple names: authors list (link)
  9. ↑ Analyzing the Impact of the Women's Business Center Program. Washington DC: National Women's Business Council. 2004.
  10. 1 2 3 "About NWBC". National Women's Business Council. Retrieved December 18, 2016.PD-icon.svg This article incorporates text from this source, which is in the public domain .
  11. 1 2 Inuzuka, June (2009). "Women of Color and Public Policy: A Case Study of the Women's Business Ownership Act". International Small Business Journal. 27: 1215.
  12. 1 2 3 Wingfield, Adia Harvey; Taylor, Taura (2016). "Race, gender, and class in entrepreneurship: intersectional counterframes and black business owners". Ethnic and Racial Studies. 39 (9): 1676–1696. doi:10.1080/01419870.2016.1178789. S2CID   148462197.
  13. ↑ "Women and Leadership". Pew Research Center’s Social & Demographic Trends Project. 2015-01-14. Retrieved 2016-12-21.
  14. 1 2 "Affirmative Action and What It Means for Women – NWLC". NWLC. Retrieved 2016-12-21.
  15. ↑ Palley, Marian Lief (1987). The Women's Movement in Recent American History. New York: W.W. Norton and Company. pp. 150–154 – via ERIC.
  16. 1 2 Fairlie, Robert; Marion, Justin (2010-12-02). "Affirmative action programs and business ownership among minorities and women". Small Business Economics. 39 (2): 319–339. doi: 10.1007/s11187-010-9305-4 . ISSN   0921-898X.
  17. 1 2 3 4 Pinkston, Garland (1984). Affirmative Action to Open the Doors of Job Opportunity. A Policy of Fairness and Compassion That Has Worked. Washington, DC: Citizens' Commission on Civil Rights.
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