Black women lead entrepreneurship, but why? Here are 3 reasons.
Last month, there was an article in the Harvard Business Review examining Black women and our proclivity for starting businesses despite all of the challenges we face along the way. "Black Women Are More Likely to Start a Business Than White Men," opens by saying, "In the United States, an astounding 17% of Black women are in the process of starting or running new businesses. That’s compared to just 10% of white women, and 15% of white men." This plight and its resultant statistics are well documented. They underpin the dominant narrative surrounding Black women and entrepreneurship, which is too often limited to the challenges we face upon entry. Page one of a quick online search of "Black women and entrepreneurship" yielded 10 results—all of them focused on investment, or lack there of, in businesses started by Black women.
It is important to acknowledge that Black women embark upon entrepreneurial pursuits for the same reasons as other women, but this decision is heavily influenced by societal factors that are unique to us. I am proposing a shift in that conversation to analyze and better understand these factors as a driver toward entrepreneurship in the first place. Drawing from my own experience and research, I have compiled a non-exhaustive list of three reasons why.
Greater earning potential/ barriers to corporate advancement
In 2020, Black women earned $0.62 for every dollar that a white man earned (it's even lower for Latina women). This translates into a lot of frustration, and we reach the point where we feel that by taking control of our own careers, we have the potential to earn an income commensurate to our skill and experience—all we really want to begin with. Cassandra C. Bailey of Pepperdine University wrote in her 2011 Masters thesis: "Being self-employed gives them the autonomy to advance to levels that they would not, otherwise, have reached had they remained at their jobs."
A big part of the reason I took the risk and left a comfortable 9-5 the first time (I've exited the traditional workforce twice) is because I was overqualified for the job I was hired to do straight out of graduate school. I felt stuck in a job with no real career advancement potential or meaningful opportunities to demonstrate my skill and potential. Bailey's research posits: "...the psychological frustration caused by shifting has influenced some African American women executives to utilize their ideas, skills, and talents as a conduit to their own business ventures. Other emotional strains in the workplace may include the desire to place themselves in positions for growth that they do not believe they will achieve in their current positions."
Four years into my first post-graduate degree job, I decided to leave and pursue my side hustle full-time, a side hustle I never necessarily had the intention to pursue full-time to begin with.
Discrimination in the workplace
Black women's spirit isn't any more entrepreneurial than another gender or ethnicity. By that same token, we're not any less qualified for the many jobs, opportunities, and career advancement that we are denied because we are Black.
Both times I left the traditional workforce, it was in part precipitated by a toxic work environment. Both overtly and subconsciously, I was regularly confronted by bias against my Black-American and African backgrounds. The environment and the culture took a toll on my mental and physical health, so surviving as long as I could there until I had another option was the priority. Remaining there was the goal.
In both instances, there was no in-house department or person I could go to (and who I trusted) as a resource in navigating the situation, and discrimination can be hard to prove. There is still a very real problem when 60 years after the founding of the U.S. Equal Employment Opportunity Commission, Black women are faced with racism and discrimination in the workplace to the point where we rather leave than continue on a career path that many of obtained an education for. It is no coincidence that more than three-fourths of Black women entrepreneurs have at least a college degree, yet we still find ourselves unable to do the jobs we were hired to do with those degrees because of discrimination.
Fewer personal resources
Kelley, Majbouri, and Randolph suggest that "...educated Black women are encumbered with debt, and have fewer personal resources and low collateral." The irony is that this debt and lack of resources affects us on both sides of the workforce paradox—we rarely have access to resources that enable maintaining a traditional career, and then again when seeking funding to start or maintain a business. Another reason relates to the former. I left my 9-5 was because of childcare costs. Exiting the structure of the traditional workforce to scale my side business when my son started elementary school gave me the flexibility to work, and be there for school drop-offs and pick-ups rather than paying someone else to do it, which I didn't have the resources for. (We were living in Brooklyn at the time, so it wasn't exactly cheap, but this is the story in most of the many cities in the North Eastern corridor.)
Familial wealth can open a multitude of doors for future generations, and just make some things easier: an inheritance can pay for extracurriculars or higher education; a shrewd investment can bankroll a down payment on a first home; it can pay for childcare. Without the fruit of wealth-building mechanisms to fill in the gaps left by an insufficient social safety net, many Black women create other options, even if that means leaving the traditional workforce (and possibly taking a pay-cut) in order to fulfill domestic obligations. Black families do not have multiple generations of wealth at their disposal to fill in the gaps. We have other means, but money is not historically one of them. Women of all ethnic backgrounds face similar a dilemma (as the pandemic has highlighted), but not for the same structural and historical reasons as Black women do.
The HBR article underscores how to make entreprenership easier for Black women once we commit to that. I want a robust and nuanced conversation about the why we end up here, against even more odds, and how to address those reasons head-on.
Don't get me wrong. I love being my own boss. I create my own opportunities on a daily basis. I became the boss I wished I had, and work directly with a cause I care about. But entrepreneurship is scary, and we have to ensure that entrepreneurship is a genuine desire for Black women, and not false dilemma. We can start by scrutinizing the workplace and policy environments that drive many of us out of the traditional workforce and into the riskier venture of entrepreneurship.
Here's what each of us can do today: Managers should audit their Diversity, Equity, and Inclusion initiatives, and be sure that there is genuine representation in that audit and decision-making. The academy and journalists should dedicate resources to documenting more stories that share this side of the Black women's journey into entrepreneurship. The rest of us can audit how we spend our money and obtain our services. Are we spending our money with businesses and communities that have faced or continue to face barriers to wealth creation? In today's world of e-commerce, it is easier to have a more diverse approach to shopping than ever before. This is how each of us can begin to make a difference today.