Women Earn Less, Even in Own Businesses - Brief Article

USA Today (Society for the Advancement of Education), August, 2001

Women who hope to break the glass ceiling by starting their own business at home may be in for an unpleasant shock. A review of research on home-based businesses showed that females who work from home still earn less than their male counterparts. In one study, for example, men working from home earned an average of $45.29 an hour; women, $17.29.

Women earned less money than men even when they were in the same occupations, worked the same number of hours, and used the same management practices, points out Kathryn Stafford, associate professor of consumer sciences at Ohio State University's College of Human Ecology, Columbus. Men worked more hours a year than did women--1,750 vs. 1,350--but that wasn't the reason for the gender pay gap. Females earned about $28 less per hour than males in gross earnings.

Women owners of home-based businesses have some disadvantages that may be hurting their earnings. For instance, they are likely to own businesses that are labor-intensive, but are operating with only one or two employees. Men's home-based businesses are more likely to have either paid employees or family assistance. In addition, while research indicates females tend to have more experience than males in the field in which they start their business, men tend to have more management experience than women.

Another key reason for the pay gap may be that women are combining child care with work, which is hurting their productivity, Stafford suggests. "Child care may mean women have less time to spend on their business, but it shouldn't depress their hourly rate. Still, we found that when men have young children, their earnings go up, while women's go down. It may be that women are more stressed and overworked when they are trying to take care of children and their business, so they are less productive during their working hours. However, we don't have a way to measure that."

Stafford believes a major issue is that females simply don't get paid as much as males for the same work. "Women may be underpricing what they sell, or maybe the market won't allow women to set prices equivalent to those set by men. Maybe some women perceive their income to be supplemental to their husband's and this affects their price setting."