profile of millennial women: the future of entrepreneurship in america
a report from the National Women's Business Council
Millennial women, those born between 1981 and 1996, represent the future of entrepreneurship in America. According to 2015 Census Bureau data, there are 83.1 million millennials in the United States. By the year 2025, millennials will comprise 75 percent of the American workforce, and many will become entrepreneurs.
At the National Women’s Business Council (NWBC), we recognize the importance and necessity of empowering the next generation of women entrepreneurs. Entrepreneurship is vital to the U.S. economy. As of 2012, there were 10 million women-owned firms in the U.S., and 1,343,554 millennials women entrepreneurs. Millennials are widely considered entrepreneurial in nature.
The media portrays millennials as transforming the economy and spurning traditional forms of employment. However, upon closer review, studies show that millennial entrepreneurship is on the decline. While 66 percent of millennials surveyed by Bentley University want to start a business, less than 5 percent of American millennials are currently running a business.
Only 3.8 percent of millennial women, compared to 5.0 percent of millennial men, indicate entrepreneurship as their primary occupation. Millennials are starting fewer businesses than older generations did at the same age.5 When examining the most recent primary employment activity, less than 4 percent of 30-year-old millennials reported self-employment compared to 5.5 percent of Generation X and 6.7 percent of Baby Boomers at that same age. Since the 1980s, the percentage of individuals under age 30 who own a business has declined by 65 percent.
A Diverse Generation
Millennial women are more racially and ethnically diverse than entrepreneurial women of prior generations. Specifically, the percentage of millennial minority entrepreneurs is moving closer to parity with the percentage of millennial minorities in the population, indicating a move towards racial and ethnic parity in business ownership. 22.1 percent of millennial women-owned firms are considered minority-owned compared to 12.6 percent of women business owners 66 to 64 and 7.8 percent of women business owners 65 or over.
The literature indicates that the millennial generation, and women in particular, are the most educated generation to date and that entrepreneurship courses are expanding significantly on college campuses.36.4 percent of
millennial women entrepreneurs have received an Associate Degree or higher. This is also significantly higher than male entrepreneurs - 28.6 percent have attained an Associate Degree or higher. Millennial women are the most likely generation of women to hold a degree in a science, technology, engineering, or mathematics (STEM) field.
The Family Factor
Women entrepreneurs are more likely to be married than their non-entrepreneur counterparts. This trend exists regardless of age but is more pronounced for millennials. Among women entrepreneurs aged 16-35, over 45 percent are married compared to 30 percent of women non-entrepreneurs of the same age group. Marriage rates differ by geography. In the West North Central and Mountain regions, a larger proportion of women overall are married, compared to New England, the Middle Atlantic, and the Pacific regions.
Millennial women entrepreneurs are also significantly more likely to have children. The trend exists across all generations but is more apparent for the millennial generation, as 9.7 percent of millennial entrepreneurs gave birth within the past 12 months, compared to 8.2 percent of non-entrepreneurial millennial women.
The top five industries for millennial women entrepreneurs are: other services (which includes repair and maintenance; personal and household; death care, religious, grant-making, civil, professional, etc.); professional, scientific, and technical services; health care and social assistance; retail trade; and administrative support.
These five industries account for 66 percent of all millennial women-owned businesses. Despite millennial women receiving more degrees in STEM, there has been no notable shift of millennial women starting firms in more high-tech industries.
Earning Less Annual Income
Millennial women entrepreneurs earn statistically less annual income, even when controlled for number of weeks
worked per year, than their male counterparts. Millennial women entrepreneurs also earn more than 25 percent less than their millennial women labor force counterparts. This contrasts with millennial men entrepreneurs, who earn more than millennial men in the labor force.
Majority Non-Employer Firms
Millennial men are also over twice as likely as millennial women to have paid employees. 20.5 percent of millennial male entrepreneurs compared to only 11.2 percent of millennial women entrepreneurs have firms with employees. This trend exists for older generations as well.
NWBC Survey Results
In 2017, NWBC conducted a total of 9 focus groups located in Los Angeles, California, Denver, Colorado, and Boston to identify how student debt influences technology-based entrepreneurship among millennial entrepreneurs, as well as what additional challenges and barriers exist.
Each location had one group comprised of millennial women entrepreneurs with student debt, millennial women entrepreneurs without student debt, and millennial men entrepreneurs with mixed debt and no debt. All of these individuals were participating in technology-based entrepreneurship.
Key findings from the focus group analysis include:
• Millennial entrepreneurs, regardless of gender, have different perceptions of “entrepreneurial” and “entrepreneur” than what existing empirical data analysis captures. Specifically, focus groups respondents discussed challenges in defining and differentiating entrepreneurship versus entrepreneurial attitudes.
• Financial and economic circumstances influenced millennial perceptions about entrepreneurship, where millennial women discussed, to a greater extent than millennial men, the negative influence of the Great Recession on engaging in entrepreneurship. However, these women also discussed the role of the Great Recession in encouraging independent earning power and self-determination.
• Women participants with student debt were more likely than male participants to express a desire to pay off student debt prior to starting their business.
• The “side hustle” was a topic of discussion amongst the focus groups and was particularly prevalent among those with student debt. While not the primary focus of the research, it opens discussion about what activity qualifies as “entrepreneurial” versus “entrepreneurship” for millennials. Many considered themselves entrepreneurial while retaining traditional forms of employment, but also engaging in a “side hustle.”
• Both women and men noted that gender differences in access to capital (i.e., higher barriers for women) existed, and this was particularly true when it came to more informal networks as a means through which funding and opportunities were facilitated. Several men and women expressed the need for a cultural shift in how external funding is secured.
To read the NWBC Survey results in its entirety, please visit www.NWBC.gov/Research.
The National Women’s Business Council is a non-partisan federal advisory committee established to serve as an independent source of advice and policy recommendations to the Administrator of the SBA, Congress, and the President on economic issues of importance to women business owners.
The National Women’s Business Council was established as part of the Women’s Business Ownership Act of 1988 as an advisory body of women business owners. It was asked to identify the barriers to success for women-owned businesses and report annually to the president and Congress on their findings.
By the early 1990s, the Council had begun bringing together women business owners, policy makers, bankers, representatives of women’s business organizations and other stakeholders to discuss potential solutions to the challenges facing women business owners, and to recommend these solutions to the president and Congress.
In 1994, the Small Business Reauthorization Act changed the structure of the NWBC to its current form to include both women business owners and representatives of women’s business organizations.