The growth rate of new businesses remains stalled, but the
share of women-owned firms has climbed. While the growth rate of new businesses
remains stalled, fresh government data show the share of women-owned firms has
climbed. The total number of U.S. firms edged up 2% to 27.6 million between
2007 and 2012, according to preliminary U.S. Census Bureau data released this
week. But the number of women-owned firms grew much faster, rising 27% during
The overall figures provide the latest evidence of a
worrisome decline in business formation. The number of firms with paid
employees fell by 5% to 5.4 million between 2007 and 2012 and is 2% below 2002
levels, according to the new census data.
U.S. gross domestic product, adjusted for inflation,
declined at an average annual rate of 1.5% from 2007 to 2009 as the economy
contracted during the recession, then increased by an average rate of 2.1%
during the next three years, according to the Bureau of Economic Analysis.
Women showed big gains in business ownership in the census
data, with the share of female-owned firms rising to 36% of all firms in 2012
from 29% in 2007. The number of self-employed women and the number of women
running businesses with employees both increased, pushing the total number of
women-owned firms to 9.9 million in 2012.
“Women’s entrepreneurial appetites are at an all-time high,”
said Carla Harris, chair of the National Women’s Business Council, a
nonpartisan federal advisory council, adding that the rate of growth of
female-owned businesses is almost four times the rate of businesses owned by
men. But women continue to face challenges accessing capital and other
obstacles to growth, she said.
April Cleek, 36 years old, opted to set up shop as an
independent consultant in 2008 after three years working for large companies. Two
years later, Ms. Cleek used her savings to launch EHR Concepts, a consulting
and staffing company that helps hospitals set up electronic medical records
systems. The Villa Rica, Ga., firm now has 12 full-time employees and a pool of
100 independent consultants who work on specific projects.
It is possible that at least a portion of the increase in
the women’s share could be explained by a change in Census Bureau methodology
that changed how some firms with more than one owner were classified, the
agency’s statisticians say, noting that figures released this week are
While the number of women-owned firms with employees rose by
16% between 2007 and 2012, women-owned firms tend to be smaller than those
owned by men, with an average of roughly 8.5 employees compared with 13.5
employees for firms with male owners. Some 11% of women-owned businesses have
employees other than the owner, compared with 23% of firms owned by men.
Women-owned firms accounted for just 4.8% of receipts in 2012.
The number of businesses owned by Hispanic women rose 87% to
1.48 million between 2007 and 2012, according to an analysis of the new data by
the National Women’s Business Council, while the number of businesses owned by
African-American women increased 68% to 1.53 million. But average receipts and
the number of firms with employees declined for both groups, according to the
The broader figures reflect a longer-term decline in new
business creation that has troubled many economists. The number of firms dying
has exceeded the number of startups each year between 2008 and 2012, according
to a recent research paper by economist John Haltiwanger of the
University of Maryland and co-authors at the Federal Reserve Board and the U.S.
Census Bureau that focused on firms with employees.
Slower population growth, increased business concentration
and greater regulation likely account for some of the decline in new business
formation, says Robert Litan, a nonresident senior fellow at the
Brookings Institution. But the extent of the decline remains puzzling, he adds,
given that the Internet revolution has made it a lot easier for firms to get
started and to grow than they could 10 years ago.
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