This decline in entrepreneurship among the young adults is linked partially to exorbitant student debt, reports a 2016 survey by Young Invincibles and Small Business Majority. It is common for young adults to take out loans as they pursue higher education, and the number of students who borrowed money for such purposes rose 89 percent between the years 2004 and 2014. During this same time, average debt balances grew by 77 percent. A 2015 survey by Gallup and Purdue University reveals that student debt can influence millennials in delaying their entrepreneurial pursuits. Of those who graduated college with student loan debt, 19 percent said they have put off starting businesses of their own. If one’s student loan debt is more than $25,000, then the percentage of delayment increased to 25 percent. Because student loan debt has an inhibiting effect on the ability of the younger generation to start new enterprises, which are important for the economic growth and wellbeing of the nation, the report recommends an increase in programs that can assist recent graduates in managing their debt.
Women-Owned Businesses Share of All Firms by Firms, Employment and Revenue
Source: 2017 State of Women-Owned Businesses Report, American Express
Studies show that there are gender differences in terms of student loan debt. For instance, a 2017 report by the American Association of University Women (AAUW) indicates that millennial women face a higher burden of student loan debt $20,907 for women with bachelor’s degrees, compared to $19,454 for men in 2012 compared to their male counterparts. While both genders share similar amounts of student loan debt, women tend to have lower personal income, thus it takes longer for them to pay it off. Intersecting factors that might contribute to a woman’s higher debt burden include college major, occupation, and work hours. Not to mention, women in the labor force are subject to a gender wage gap and “pink tax” that play a role in their annual income, and in how much money they are able to put aside toward paying off their student loans.
Current State of Women-Owned Businesses
Despite struggles millennial women might face in becoming future business owners, they can be inspired by the rising numbers of thriving and lucrative women-owned businesses that are taking up a large share of firms in the United States. It has been 30 years since the H.R. 5050: Women’s Business Ownership Act was passed, which was meant to address discriminatory practices that made it more difficult for women to start their own businesses. Some of its key legislative changes, such as eliminating the need for women to have a male co-signer for a business loan and creating the National Women’s Business Council (NWBC), led to an increase in the number and success of women-owned businesses. The 2017 State of Women-Owned Businesses Report, commissioned by American Express, states that the number, and revenue, of women-owned businesses in the United States has more than doubled in the last 20 years. There are 114 percent more women-owned businesses in the nation than there were two decades ago, and their revenue has increased by 103 percent by 1997. Moreover, the growth of women-owned businesses is taking place 2.5 times faster than the national average, with women starting an average of 849 new businesses per day. Small businesses owned by minority women, especially African American women, have grown exponentially over the past 20 years. Firms owned by minority women comprise 46 percent of all women-owned firms, have over 2 million employees combined, and generate a total of $361 billion in revenue. According to the report, the number of firms owned by women of color grew by 467 percent during this time, which is over four times the rate of all women-owned businesses. African American women take the lead among minority women in the net number of women-owned businesses created per day and the total number of firms in 2017. Below is a list of net new women-owned businesses per diem by race and/or ethnicity from 1997 to 2017, followed by list of the total number of women-owned firms, also by race and/or ethnicity.
NAWRB 2018 Women in Housing Ecosystem Report (WHER)
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