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Center for American Progress

Why Are Many Women of Color Becoming Entrepreneurs?

Why Are Many Women of Color Becoming Entrepreneurs?

Women of color entrepreneurs stand to play an even bigger role in the U.S. economy as the nation becomes more diverse.

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Women of color are a principal force behind one of the most important components of America’s current marketplace and our nation’s future economy: entrepreneurship. Today, women of color are the majority owners of close to one-third of all women-owned firms in the nation. Increased access to business capital—including microenterprises, venture-capital-funded firms, and crowd funding—has helped the number of women entrepreneurs grow substantially. But women of color face significant obstacles in starting their own businesses, leading to the question of why so many of them turn to entrepreneurship. The growth of women of color as business owners is part of a long-term trend, but the question of why this trend is occurring is often left unanswered. Looking at the alternative to entrepreneurship—the traditional workplace—sheds light on some of the reasons.

Many women of color who become entrepreneurs do so in order to pursue their innovative desires. But too often, structural obstacles in the traditional workforce limit women and push them to find alternatives such as entrepreneurship. Women, and women of color in particular, face unique challenges in traditional, corporate workplaces. In the long run, these challenges negatively affect women of color by limiting their ability to advance in the workplace. They also harm our nation’s businesses, which forego the benefits—particularly innovation—that come with a diverse workplace. Some of the barriers that women of color face include limited access to mentors, exclusion from elite networks, and the gender wage gap. Women, on average, have historically made less than men. For example, an American Association of University Women study found that in 2012, African American women made 64 percent, Latina women made 53 percent, Asian women made 87 percent, and white women made 78 percent of their white male counterparts’ wages.

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