OWL’s current economic security initiative is ‘Our Women Mean Business: Encore Careers After 40’
OWL recognizes the growing number of skilled and talented women over 40 who are starting their own business. The more than nine million women-owned businesses have become a force in the nation’s economy. Our initiative is designed to encourage and support these entrepreneurs by:
• increasing their access to venture and other forms of capital
• highlighting best practices, including local and state policies
• identifying business challenges and solutions
• educating policy makers on entrepreneurial successes and obstacles
• compiling resources for mentoring and training
Women-owned businesses are growing
• Women are starting over 1,200 new businesses per day - double the rate from three years ago
• There are over 9.1 million women-owned businesses in the U.S.
• One-third of all U.S. firms have women as majority owners
• Women-owned businesses generate nearly $1.5 trillion in revenues and employ 7.9 million people
Women-owned businesses have steadily increased their influence on the U.S. economy. Since 1997, women-owned firms have:
• increased in number by 68%
• grown revenues by 72%
• added 11% more jobs
(American Express State of Women-Owned Businesses Report)
Entrepreneurship is not just for young people
• Over the last decade, the highest rate of entrepreneurship in America has been among the 55-64 age group.
• People over 55 are almost twice as likely to found successful companies than those between ages 20-34
• In 2013, about 20% of all new businesses were started by entrepreneurs aged 50-59 years, and 15% were age 60 and over
What’s driving the growth in women-owned business?
Women pursue entrepreneurship for a variety of reasons. Some want more control of their time and work schedule. Others feel held back in their current job by a glass ceiling. Older women may decide to start their own business due to obstacles in finding or keeping a traditional job or because they cannot afford to retire.
• Despite laws against age discrimination, older people have a much harder time finding work
• Older workers are more likely to have been laid off from industries that are downsizing
• Women are more likely than men to have gaps in employment due to family responsibilities, which result in lower Social Security payments and make it more difficult for them to re-enter the workforce
• Women are less likely than men to have employer pensions
Women-owned businesses have good track records
• Companies with at least one female senior executive are more likely to succeed than companies with only men in charge
• Among venture-backed startups with five or more female executives, 61% were successful, compared with a 50% failure rate overall
(2012 Dow Jones report)
• Venture capital firms that invest in women-owned/led businesses performed better overall
(SBA Report 4/2013)
But they still face obstacles
Women-led businesses are one of the fastest growing groups of entrepreneurial firms, yet few of these firms receive private equity funding.
Gender bias is a major obstacle:
• Out of 136 countries measured by gender equality, the U.S. was ranked 23rd overall (2013 Global Gender Gap Index)
• A recent study showed that men — especially attractive ones — have a much easier time than women in securing funds from venture capitalists
(Harvard Business School)
• Startups with at least one woman on their founding team are 18% less likely to attract equity investors than their all-male counterparts, yet they are 20% more likely to have generated revenue
(Emory University 2013)
• Only 13% of all venture capital deals in the U.S. went to women in 2013. That means 87% of deals were given to all-male business teams
• Women entrepreneurs over 40 face a double hurdle. Most banks aren’t interested in financing a senior business start-up because it’s too small. And age bias can be a big factor.
(Elizabeth Isele, SeniorEntrepreneurshipWorks.org)
Women 40+ are the fastest-growing sector of the U.S. workforce and their presence in the workplace will continue to increase. However, they encounter real challenges in finding meaningful employment, competitive wages, and retirement security.
* Despite federal anti-discrimination laws, age-based discrimination complaints have increased over the past several years by 50%.
* Women still earn only 77 cents for every dollar men earn, and this disparity increases with age.
* Women represent a much smaller proportion (24%) than men (76%) in science, technology, engineering and math (STEM) jobs, which are fastest-growing employment sectors.
* Many working women are caregivers to children and/or aging parents. They are often required to cut back on work, decline promotions, or leave the workforce altogether to fulfill caregiving responsibilities.
* Underemployment is especially prevalent among older women. Of men age 55-61, only 7.2% are underemployed; for women in the same age group, the percentage jumps to 20.5%.
* After a lifetime of reduced income, women have less in savings and retirement benefits. Almost twice as many retired women live in poverty as retired men.
Social Security is women’s, as well as men’s, most important source of income in retirement. Several key aspects of the program help women: eligibility for Social Security benefits through their work and as spouses; the progressive benefit formula; the cost of living increases; and payments that last for the lifetime. These aspects must be protected.
In 2013, almost 19 million women received benefits on their own work history or as combination of their work and their husband’s work, while just over 2 million women received only spousal benefits and just over 4 million women received only survivor benefits. Retired women workers received an average of $1,100 per month while retired male workers received an average of $1,400 per month. Social Security benefits keep a significant portion of women out of poverty - 37.5% in 2012. In 2012, 26.5% of women relied on Social Security for 90% or more of their income.
Improvements to Social Security are key to increasing the retirement income security of older women and their families. OWL supports: 1. Creating an improved minimum benefit; 2. Credit for years spent care-giving; 3. Equal benefits for married same-sex couples, and 4. Improving the current COLA.
 Alison M. Shelton, “Social Security: A Key Retirement Resource for Women,” AARP Public Policy Institute, Fact Sheet 302, April 2014.
 Social Security Administration, “Fast Facts & Figures about Social Security,” August 2013.
 AARP fact sheet.
 AARP fact sheet.
After decades of work, both in the paid and unpaid workforce, women often find themselves without adequate retirement income. There are a number of reasons why. Women are less likely to participate in a pension plan even if they work for employers with a pension because their jobs tend not to be covered by it. Those jobs include part-time jobs which have fewer benefits in addition to smaller paychecks. Also, many women cut back on work, decline promotions, or leave the workforce entirely to fulfill caregiving responsibilities for family members. After a lifetime of smaller paychecks, women have less in Social Security benefits, savings and retirement benefits than their male counterparts. And, women are more likely to be poor than are men. The poverty rate for women 65 and older was 11%, while the poverty rate for men was 6%.
Social Security - Disability
A vital part of Social Security is the disability insurance program that provides modest benefits to individuals who suffer from a serious illness or impairment and cannot work because of their medical condition. In order to be eligible for benefits, individuals must work in jobs covered by Social Security, and the illness or impairment must be one that is expected to last a year or more or result in death. Spouses and dependent children of disabled workers may also be eligible for benefits based on the disabled worker’s record. After a person receives disability benefits for two years, that person will then be covered by Medicare automatically. In 2012, the most recent year for which figures are available, 960,000 disabled workers were awarded Social Security disability income benefits, as well as 563,000 spouses and dependent children. The average benefit awarded was $1,204 per month to a disabled worker, $322 per month to the spouse and $314 to a dependent child.
About 71% of Social Security disability insurance beneficiaries get half or more of their income from disability insurance. Nearly half of beneficiaries get 90% or more of their income from disability insurance.
Social Security provides the primary source of income for most retirees. The combined Old-Age, Survivors and Disability Insurance Trust Funds (OASDI) will continue to be fully funded until 2033, according to the 2014 Social Security trustees report issued July 28. After 2033, the income in the OASDI Trust Funds could pay 77% of scheduled benefits. Separately, the Disability Insurance (DI) trust fund can provide full benefits to disabled workers only until 2016, then 81% of benefits after that. Lawmakers should act soon to ensure that full benefits continue for disabled workers and their families. This could be done by raising the disability income tax rate from 0.9% to 1.1% to fully fund DI for the next 75 years or by reallocating some of the Old-Age, Survivors Insurance taxes to the Disability Insurance trust funds temporarily to allow the combined OASDI trust funds to pay full benefits until 2033. Over the long-term, policy makers need to make changes to the combined OASDI Trust Funds to ensure that full benefits to retired and disabled workers can be paid for generations to come.
Addressing the Wage Gap
The wage gap and its effect on women’s economic security has been an OWL issue since our founding in 1980. The good news is that over the past 34 years, the gap has narrowed. In the early 1980s, women earned about 60 cents for every dollar that men earned. By the time The Path to Poverty, OWL’s 1995 Mother’s Day report, was published, women’s wages were 76% of men’s. In recent years, the wage gap has stalled at 77%. In the most recent year for which figures are available, 2012, women earned 76.5% of what men earned.
Age is a factor that widens the wage gap for women. Young full-time working women (20-24 years old) were paid 89% of their male peers’ pay, while women 55-64 years old received 76% of their male peers’ pay. Women in the work force receive about 90% of what men are paid until around the age of 35, when median earnings for women increase more slowly than men’s median earnings. After that, women receive 75% to 80% of what men are paid.
There is more to be done. According to the Institute for Women’s Policy Research, if change continues at the same pace as the previous fifty years, it will take until 2058 for the gap to close.
President Obama signed the Lilly Ledbetter Fair Pay Act on January 29, 2009, which restored the protection against pay discrimination that was stripped away by the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co. While this was a good step, the gap remains and there is more work to be done. OWL supports legislation to add protections against gender-based pay discrimination.
OWL Recommendations on Economic Security
Our recommendations to strengthen women’s economic security include:
- an adequate, equitable wage for women
- strengthening and enforcing laws barring discrimination based on age, gender, sexual orientation, race, creed, disability and national origin
- funding and strengthening employment training programs for workers 40 and older
- raising the minimum wage
- requiring living wages and benefits for direct-care workers, 90% of whom are women
- strengthening Social Security to provide a higher benefit for workers with long careers but low lifetime earnings
- providing Social Security and tax credits for caregivers who spend time out of the paid workforce to care for a family member
- strengthening the existing pension system to make it more inclusive, adequate and fair for part-time and lower-income workers and their spouses
- improving employer retirement savings plans, such as 401(k)s, so that less of the risk and burden are placed on workers to invest and manage their money.