Even when they own the business, women earn less than men

November 20, 2000

COLUMBUS, Ohio - Women who hope to break the glass ceiling by starting their own business at home may be in for an unpleasant shock.

A new review of research on home-based businesses showed that women who work from home still earn less than their male counterparts. In one study, for example, men working from home earned an average of $45.29 an hour, while women earned $17.29.

Women earned less than men even when they were in the same occupations, worked the same number of hours, and used the same management practices, said Kathryn Stafford, associate professor of consumer sciences at Ohio State University's College of Human Ecology.

"The same inequities that women face in the broader labor market occur when they own their own home-based business," Stafford said. "We were surprised and disheartened to find that."

The results were published as a chapter in the new book Gender and Home-Based Employment (Auburn House, 2000). Stafford co-authored the chapter with Barbara Rowe and Jeanette Arbuthnot of Utah State University; Rosemary Walker of Michigan State University; and George Haynes of Montana State University.

Although the authors of the chapter examined several studies, most of their conclusions were drawn from a nine-state regional research project that the authors themselves conducted. The authors examined 899 home-based workers in Hawaii, Iowa, Missouri, Michigan, Ohio, Pennsylvania, New York, Utah and Vermont, who were interviewed in 1989. Stafford said a more recent national sample surveyed in 1997 has yet to be completely analyzed, but preliminary results suggest the gender pay differences have not changed.

Stafford said women in the nine-state study tended to own businesses in female-dominated occupations such as beautician and craft-maker that generally pay less money than jobs in male-dominated occupations. But women earned less even when they were in the same occupations as men. For example, one study found that male owners of administrative support businesses earned 117 percent of what women in the same field earned.

As expected, men worked more hours a year than did women - 1,750 versus 1,350 hours, according to the nine-state study. But that wasn't the reason for the gender pay gap. The study showed that women earned about $28 less per hour than men in gross earnings.

Stafford said she and her colleagues carefully controlled for factors such as education and business experience that could have accounted for why women earned less than men, but none of these factors completely explained the pay gap.

But women owners of home-based businesses do have some disadvantages that may be hurting their earnings. For one, women in the nine-state study were likely to own businesses that are labor-intensive, but are operating with only one or two employees. Men's home-based businesses are more likely to have either paid employees or family assistance.

In addition, while research indicates women tend to have more experience than men in the field in which they start their business, men tend to have more management experience than women, Stafford said.

Another key reason for the pay gap may be that women are combining child care with work, which is hurting their productivity, Stafford said.

"Child care may mean women have less time to spend on their business, but it shouldn't depress their hourly rate," she said. "Still we found that when men have young children, their earnings go up, while women's go down.

"It may be that women are more stressed and overworked when they are trying to take care of children and their business, so they are less productive during their working hours. However, we don't have a way to measure that."

But Stafford believes that a major issue is that women simply don't get paid as much as men for the same work.

"Women may be underpricing what they sell, or maybe the market won't allow women to set prices equivalent to those set by men," she said. "Maybe some women perceive their income to be supplemental to their husband's and this affects their price-setting."

Stafford said the findings that she and her colleagues uncovered are not encouraging for women who want to start their own businesses from home.

"Although home-based businesses give women more flexibility and control of their work, this does not necessarily translate into more money for female owners," she said.
Contact: Kathryn Stafford, 614-292-4564; Stafford.2@osu.edu
Written by Jeff Grabmeier, 614-292-8457; Grabmeier.1@osu.edu

Ohio State University
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