Women have suffered the brunt of the pandemic’s economic crisis. Newly launched women-owned businesses might just lift us out of it.
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When I first heard a talking head refer to our current economic downturn as a “shecession,” I knew exactly what they meant. Any parent who’s had to juggle work calls and helping their grade-schoolers with Zoom class acknowledges the temptation to give in to exhaustion and simply pick one.
Millions have lost their jobs as the pandemic forces businesses to shrink staff or close altogether, but the decline has been cataclysmic among women as we’re expected to face the impossible challenge of working a job and providing 24/7 childcare. When virtual school resumed across the country in September 2020, four times as many women as men dropped out of the labor force, many citing lack of childcare as the reason. A recent fact sheet from the National Women’s Law Center reported that while men continued to add jobs, there were “2.1 million fewer women in the labor force in December  than there were in February , before the pandemic started.”. This exodus has been especially pronounced among Black, Latinx, and Indigenous groups, all of whom are more likely to have lost their job, work on the front lines as essential workers, and lack access to quality childcare.
The pandemic has depressed women’s workforce participation to its lowest level since 1988. In a year, a generation of progress has evaporated before our eyes.
If there is a silver lining, it’s that crisis breeds innovation. One study found that 57 percent of Fortune 500 companies were founded during a recession or bear market. The Great Recession may have brought the steepest decline in employment since the end of World War II, but it also spurred entrepreneurship to its highest rate in more than a decade. Times like these are a leading driver of so-called “accidental entrepreneurs,” who strike off on their own out of necessity rather than desire.
Experts say that we are already in the midst of a startup boom, with the number of new businesses applying for a tax identification number in the third quarter of 2020 reaching historic highs. These new businesses, economists declare, will create the majority of new jobs in America. It’s too early to say for sure, but some believe the economy will ride a wave of “creative destruction” where a crop of more dynamic, adaptable small businesses emerge from the ashes of those pillaged by the pandemic.
Through this lens, I propose that we reframe the shecession conversation as the potential beginning of a huge boomtime for women-owned businesses — as it has been before when large numbers were cast out of the workforce. According to research from Cornerstone Capital Group, “Minority and women-owned businesses were particularly big job creators and stabilizers of the economy following the 2008-2009 recession, adding 1.8 million jobs in 2007-12.” Black women emerged from the same crisis as the fastest-growing group of entrepreneurs in the nation.
The pandemic may have primarily forced women out of the workplace, but that simply means that we could make up the majority of newly-minted small business owners.
Of course, we know there will be roadblocks on the way to that future. I founded my company, Hello Alice, in 2017 to serve what we call the New Majority of entrepreneurs, which includes women, people of color, the military-connected, those with disabilities, and the LGBTQ+ community — basically anyone who isn’t likely to walk out of a bank branch with the business loan they were looking for.
Similar to the wage gap women encounter in the workforce, only about 11% of venture capital funding went to women-owned businesses in 2020. Flaws in the earliest round of the Paycheck Protection Program left women and minority-owned businesses shut out of critical pandemic relief funding. Women starting their own businesses might be one of the best ways for us to control our own destiny while creating lots of jobs in the process, but these long-running barriers to capital access make progress an uphill climb.
Even so, it’s important to emphasize that many women are undeterred by these challenges. Looking at internal Hello Alice data, the majority of women on our platform rely on personal savings to start their businesses rather than wait for a lender’s permission. They primarily operate in sectors like beauty, health care, and retail. And while last year was not a good one for their bottom lines, 84 percent told us they expect their business to perform better in 2021 than in 2020.
I fundamentally view this moment with hope. We know more than ever about the gender gap that causes women-owned businesses to fail at higher rates, and I say this firsthand as someone whose first two businesses failed spectacularly. Connecting the next wave of women entrepreneurs with the funding and the community they need will go a long way toward changing the face of small business ownership in this country.
That’s one reason that I hope we keep talking about the potential for a shecession. According to data from Crunchbase, Black and female founders have claimed a huge portion of this year’s largest rounds of venture funding as conversations surrounding equity take center stage. President Joe Biden has made school reopening, affordable childcare, and paid leave a central part of his administration’s stimulus plan. And most recently, Vice President Kamala Harris has sounded the alarm by describing the pandemic’s impact on women as a “national emergency.”
If we can continue to channel this sense of urgency into action, the doom foretold for women could finally lapse into visions of the future we’ve long deserved.
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