This report was jointly authored by Allyson Letteri, Director and Pro Ambassador at Thumbtack, and Lucas Puente, Lead Economist at Thumbtack, with input from our colleagues at Square.
Over the past few decades, there has been important progress in creating workplace gender parity. However, research continues to show that a “glass ceiling” has persisted for countless women in corporate America, affecting their income, their ability to achieve career advancement, and their susceptibility to workplace gender discrimination.
However, many women are increasingly finding another, often more satisfying path: working for themselves. We at Thumbtack, along with our partner for this report, Square, take pride in our shared mission to make it easier than ever for aspiring entrepreneurs to take the leap and start their own business. And in celebration of International Women’s Day on March 8 and Women’s History Month, we fielded an extensive survey of female small business owners to better understand their experiences of working for themselves.
Through this survey, we discovered that most women who work for themselves feel like they’re in a better economic situation than if they were working for someone else: 54 percent say they’re less susceptible to the gender pay gap, 58 percent say they’re less likely to experience workplace discrimination, and 70 percent say their potential for career growth is better than if they worked for someone else. However, they’re also cognizant of the challenges that come with being a self-employed woman in the local services sector; for example, 48 percent of our respondents in traditionally male-dominated industries (i.e., those in which fewer than two-in-five of our respondents identify as female) say they’ve had their expertise questioned on the job because of their gender, compared to only 5 percent of men. Overall, though, it’s clear than the vast majority (more than four-in-five) of the women we heard from are satisfied with their career and their choice to start their own business.
Characteristics of those working independently
In total, we heard from over 900 female freelance workers and small business owners across 47 states and the District of Columbia, working in fields ranging from photography to house painting to personal training. These women also represented a broad cross-section of educational backgrounds, with 20 percent having an advanced degree, 39 percent a college degree, 29 percent a technical or community college degree, and 12 percent a high school diploma.
Despite this variation in their backgrounds, though, a common attribute among almost all of our female respondents was their motivations for starting their own business. More than two-in-three reported launching their business to be their own boss, to have a more flexible schedule, and to be able to pursue their passion. The latter two factors in particular distinguish women from their male entrepreneurial counterparts, who cite these factors as motivators less frequently (in contrast, they’re more likely than women to cite increased earning potential as a motivator).
The women we heard from are also particularly likely to use the springboard of starting their own business to transition into a new field or to ease back into the labor market after a temporary hiatus from working. More than three-in-five of our respondents (62 percent) said that, prior to starting their own business, they were employed in a different field than they’re in today, a rate that’s 13 percentage points higher than the men in our sample. Similarly, two-in-five (40 percent) of the women that we heard from told us their current business is either their first full time job (22 percent) or their first job after more than a year away from the working world (24 percent).
Benefits of working independently
Our findings suggest that these female freelancers and small business owners are overwhelmingly very satisfied with their career choices. Highlighting this, more than four-in-five of our respondents agreed with each of the following statements:
- I’m proud to be running my own small business (92 percent agree).
- I’m happy to be in my current job (86 percent agree).
- Overall, I am satisfied with my career (83 percent agree).
As a comparison, the Conference Board reports that only 51 percent of American workers overall are satisfied with their job, a full 35 percentage points lower than the women in our sample.
In addition, the women who responded to our survey were more than eight times more likely to say that working for themselves made them both less likely to face workplace gender discrimination and also less susceptible to the “gender pay gap” than if they were working for someone else.
By working for themselves, women are also able to set their rates to properly reflect the value they provide to their clients. However, being able to charge what they deserve may be a challenge at first: a majority of both women (56 percent) and men (also 56 percent) report that, when starting out on their own, they had to undercharge for their services relative to their competitors, in order to build up their client roster.
As their businesses mature, though, most of the women we heard from told us that they’re ultimately able to earn more than they could working for someone else: more than two-thirds of our respondents told us that the hourly rate they set for themselves is higher than what they would earn in a traditional employment arrangement and 56 percent said their total take home pay is better by being self-employed. In fact, Thumbtack marketplace pricing data shows women are, on average, able to charge more than men in occupations ranging from attorneys, where women charge 2.5 percent more than men on an hourly basis, to home organizing, where women’s rates are 11.5 percent higher than men’s (note: across our biggest hourly-priced categories, there is zero statistical difference between men and women’s rates; in other words, there’s no measurable gender pay gap among the self-employed professionals on Thumbtack).
Krista Black, who runs a custom furniture building business, BuilderChicks, in Washington, D.C., was pretty direct about how working for herself has helped her financial bottom line: “I personally make a significant amount more money than what I was doing before.”
Women who work for themselves also feel better about their long run potential for career growth. 70 percent told us that, by being a freelancer or a small business owner, they had more possible career growth than if they were working for someone else, while only seven percent said the inverse was true.
The Importance of Community
The self-employed women we heard from pointed to a number of reasons for their business success, including their own hard work, business acumen, and professional skills, but also the support they receive from their professional networks, community of neighbors, and, in some cases, their local policymakers.
Our respondents were particularly positive about their ability to turn to a network of female business owners when they have questions about their business. 40 percent told us that they were able to do so – twice the rate that said they could not. And, fortunately, this is not just available to those women working in urban environments: those in big cities (39 percent) were about as likely to say they can do this as those in exurbs (42 percent) and suburbs (43 percent).
Similarly, 44 percent of our respondents agreed with the statement, “People in my community support small businesses owned and operated by women,” compared to only twelve percent that disagreed. This was particularly high in Colorado and Massachusetts, where nearly three-in-five percent of our respondents noted their communities’ high levels of support for female-owned businesses.
One area of potential improvement, though, is how local governments support small businesses owned and operated by women. Only 21 percent said that their local governments did enough to support businesses like theirs, compared to 26 percent who said they didn’t do enough, with 53 percent feeling neutral. At the top of the policy wish list for self-employed women: streamlining local tax rules so it’s easier to predict what they’ll owe in business taxes. Their other top local policy priorities include expanding training and networking programs (this is an especially high priority for those who say they aren’t able to tap into existing networks for advice) and reducing the local tax burden.
Fortunately, women small business owners in some cities report fairly strong levels of support from local policymakers. Washington, D.C. stood out on this dimension, significantly outpacing the results in the other nine large metro areas that we looked at. In the greater metro area of the nation’s capital, 36 percent of the female respondents said that local policymakers there were doing enough to support small businesses like theirs, 11 percentage points more than the share that said they weren’t doing enough. Our respondents in the D.C. area were also 26 percentage points more likely to say that their local government officials were working on solutions that will help rather than hurt (44 percents vs. 18 percent) their business ability to become more profitable or achieve more growth. That’s was the second best rate among the ten large cities we examined, just behind the Dallas-Fort Worth metro area. Though the Dallas area is last on the degree of perceived support for women-owned businesses, over half of our respondents there said that their local officials are trying to help grow their businesses.
Interestingly, several geographic and community factors, such as region, degree of urbanization (whether the respondent lives in an exurb, suburb, or big city), are not correlated with responses to this question.
Challenges of working independently
However, this is not to say that being self-employed isn’t without its challenges. For women running their own businesses, this biggest challenge is maintaining the lifeblood of any small business: customers. 44 percent of our respondents called acquiring new customers the most challenging problem for their business, almost thirty percentage points higher than the second-biggest challenge: competition from other small businesses (15 percent).
Getting access to benefits is another challenge for women who work for themselves. 23 percent of our respondents reported that healthcare access or costs were a challenge, making it their the biggest concern after customers and competition. And, since benefits like health insurance have traditionally been provided by employers (a system incentivized via the tax code), this challenge is much more salient for self-employed workers than it is for the general population. Women who primarily work for themselves are significantly less likely than those employed by another business or organization to have access to benefits like health insurance, paid time off, vision insurance, dental insurance, and family or parental leave. It’s not surprising then that 40 percent of the women we heard from said that working for themselves made accessing benefits harder than if they worked for someone else, compared to only 24 percent who said the opposite.
As a result of this widespread need, an overwhelming share of women who primarily work for themselves are in favor of a government policy to improve access to benefits for small business owners and independent workers. 84 percent say they’re in favor of such an initiative, seven percentage points more than the share of men in favor. This also cuts across party lines, with 88 percent of women who identify as Democrats in favor and 86 percent of self-identified Republicans. The challenge of accessing benefits for all small business owners is one of the reasons that Thumbtack is partnering with Alia to test different ways to help house cleaners get access to portable benefits like paid time off and insurance products.
In addition to these challenges, some of our female respondents told us that their gender sometimes brought about challenges in operating their business. 38 percent of our respondents said us they had felt like their professional authority or expertise was questioned because of their gender (five times the rate of men) and this was even higher among the Black women we heard from (52 percent). For women working independently in the home improvement, photography, and professional services sectors, this is particularly common, with almost half our respondents in those fields (48 percent) reporting that they’ve been questioned because of their gender.
We also heard that for some women, their gender made it harder to win new clients. In particular, more than 30 percent of the women we heard from working for themselves in a subset of industries (home improvement, lawn care, and professional services) told us that their “gender makes it harder to win new clients.”
Amy Wall, the co-owner of BuilderChicks, described her experience this way: “at the end of the day I have to prove myself because I am a woman compared to a man who is automatically trusted [more] even if they have no experience.”
The good news, though, is that, overall, the women we heard from were about twice as likely to report that their gender made it easier, not harder, to win new clients (32 to 17 percent). And this was especially true in the wellness sector, where 61 percent of the women in the industry, which includes occupations ranging from personal trainers to massage therapists to nutritionists, thought of their gender as an asset in attracting new business.
Over the past few decades, women have become more likely to be employed, more likely to work for themselves, and less likely to be left out from male-dominated fields, and all signs point to these trends continuing. The share of prime-working-age (25-54) women who are employed currently stands above 73.2 percent, higher than it’s been since 2001 and more than 15 percentage points higher than it was 30 years ago. The number of women-owned businesses has risen even more dramatically, up 52 percent (from 6.5 to 9.9 million) between 2002 and 2012 (the last available year of data).
We’re also seeing women are both increasingly entering male-dominated occupations and that female-dominated occupations are among the highest in-demand. Highlighting the latter, the Bureau of Labor Statistics estimates that female-dominated occupations (i.e., those in which at least two-thirds of workers identify as female) will grow by average of 10.4 percent through 2026, compared to 7.0 percent for male-dominated jobs. Similarly, the ten occupations with the most expected growth over the next eight years have, on average, 70 percent female workers, 23 percentage points more than the overall workforce. Overall, this points to a growing share of the labor market for female-dominated occupations as they’re expected to account for about 29 percent of job growth through 2026, compared to only 19 percent for male-dominated fields.
Finally, and perhaps most importantly, more and more women are likely to follow the path of trailblazers like Krista and Amy of BuilderChicks by entering traditionally male-dominated fields. Women are actually growing their presence in male-dominated occupations faster than in female-dominated ones. Between 2017 and 2018, women grew their presence in the former at a rate of 3.83 percent, compared to 0.99 percent in the latter (this is similar to what Jed Kolko and Claire Cain Miller recently found on the industry level in their analysis for the New York Times). The opposite isn’t true, though, as the share of men working in female-dominated fields actually fell by 1.23 percent in 2018.
Of course, this doesn’t mean women won’t continue to face economic challenges. In addition to continuing to face long standing issues like gender discrimination, some of the issues described above, like access to benefits, will become even more salient as an increasing number of women choose to work for themselves. Similarly, the persistent gender pay gap does not seem to be closing as quickly as we would like. Indeed, it could unfortunately grow, at least in the short-term and in some industries, since research shows that when women enter traditionally male-dominated fields, the pay actually often decreases. With both challenges and opportunities ahead for women small business owners, Thumbtack pros like like Krista and Amy inspire us and make us optimistic about the future. Along with our partners at Square we at Thumbtack are, excited to be a part of it.
Except where otherwise noted, these data were collected via the Thumbtack Economic Sentiment Survey, which captures the attitudes and perspectives of thousands of business owners from across the country every month to gauge how they are feeling about the economy, their businesses, and their careers. For this particular study, we focused on the 920 respondents to our January 2019 survey that identified as female. The female freelance workers and small business owners that we heard from spanned 47 states and the District of Columbia, and represented fields ranging from photography to house painting to personal training.