Wage disparity still large, despite more women becoming own boss

November 17, 1999

Edmonton, Alberta, Canada--Study finds that a lot more women are becoming their own bosses but that the earnings disparity between the genders is still high. Women are lagging behind even more than in the workplace, according to a breakthrough study recently completed by a University of Alberta professor.

It's a lifelong dream for many people: to quit their job, escape from their boss's demands, go into business for themselves and live happily--and more wealthy--ever after. But for many Canadians and Americans, especially women, that dream is far from a reality.

"I expected some gender differences but I didn't expect them to be quite as pronounced," said Dr. Karen Hughes, a sociologist and assistant professor in the University of Alberta's women's studies department. She authored the report for the Canadian Policy Research Network (CPRN). "What I found is gender segregation in paid employment carries over even more when people go out on their own."

The study, Gender and Self-employment in Canada: Assessing Trends and Policy Implications, also found women are moving into self-employment at a much faster rate than men but only a minority are earning more than if they worked for an employer.

Hughes discovered earnings for self-employed workers are more polarized than for paid workers, and employers generally earn more than own-account workers. In terms of earnings for women and men, the wage gap in self-employment is greater than that among paid workers. In 1996, women in full-time paid employment made 72.8 per cent of their male peers' salaries. In comparison, full-time women employers made 69.2 per cent of what their male colleagues earned, while female own-account workers made 67.3 per cent of their male counterparts.

"There are a lot of different factors [influencing this statistic] since we can't say there is one reason why this is happening," said Hughes. "Some women are in small-scale businesses with low economic returns, and some women are making a trade-off between the amount of time they spend with a business and with their family."

Self-employment has expanded dramatically in Canada, accounting for more than one-quarter of all new jobs since the mid-1970s and roughly three-quarters of all new jobs in the 1990s. Currently, more than one in six workers, or nearly 2.5 million Canadians, work for themselves.

The study focuses on two distinct groups of the self-employed: employers (those who have paid employees) and own-account workers (those who work alone).

Over time the occupational profile of men and women employers has become more similar as women have moved into previously male domains, but for own-account workers, women continue to cluster in sales and services jobs while males stick to sales, construction, technical and transportation jobs. There is also a strong connection between what people do when they work for other people and when they go on their own.

Choice is key for determining the level of success people have in self-employment, said Dr. Dallas Cullen, chair of the women's studies program and an associate professor in the Faculty of Business at the University of Alberta. Some women may willingly take a job with less income as a trade-off for being in control over their own business.

"For some women having intrinsic satisfaction is more important than money," said Cullen. But if someone is forced into self-employment through downsizing, the psychological effects of being your own boss can be devastating, she said. "If I don't see myself as a small business person and I am forced into it, it's a hard way to operate," said Cullen, adding those who are willing entrepreneurs are more likely to do well.

A mixed message is also being sent to women who start a business in order to have flexibility with child-rearing. "Being responsible for child care and being an own-account worker is a horrific way to do things because you can't do either well," said Cullen. "There is also the assumption that you can limit your hours of work. In that case you have to have a partner who has a good career, so for a single mom the concept wouldn't work."

Government reports tend to say owning a business is "wonderful and people going into the area are going to benefit immensely," when they obviously may not, said sociology professor Dr. Harvey Krahn, also from the University of Alberta.

"We have come to view self-employment as a positive choice, since it appears to reflect more entrepreneurialism and choice-making, and not letting the labor market tell you where to go. At the same time, we forget self-employment reflects the same disparity that exists in the labor market," said Krahn.

One inevitable conclusion from this study is that educators and mentors must encourage young women to consider a broader range of employment such as engineering, computers or technology, whether self-employment is the outcome or not, said Krahn.
For more information, please contact: Dr. Karen Hughes, Women's Studies Program,
University of Alberta, Edmonton, Canada
1 (country code for Canada)-780-492-0320

Melanie Delmaine Pannack, Office of Public Affairs,
University of Alberta, Edmonton, Canada
1 (country code for Canada) 780-492-0436

University of Alberta

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