Over the past two years, the number of women-owned businesses in the United States has increased significantly — to about 13 million today, according to the Women’s Business Enterprise National Council.
But according to a recent study, conditions are better for women-owned businesses in some states than in others, with California, Colorado and New York leading the way.
The study, from boutique lending firm Clarify Capital, ranked the best US states for women-owned businesses based on metrics such as percentage of small businesses owned by women, female-to-male pay ratios , female unemployment rate, number of female-owned businesses. per 10,000 people in each state and how many women-owned businesses in each state generate $1 million or more in annual revenue.
Here are the top five states for women-owned businesses, according to these rankings:
- New York
To some extent, California’s presence at the top of the list is unsurprising: it’s the birthplace of Silicon Valley. California has more women-owned businesses with more than $1 million in annual revenue than any other state and ranks fifth among the 50 states in terms of the gender pay gap.
This pay gap statistic is important. California has made great efforts in recent years to close the gender pay gap in the state, including signing the Equal Pay Pledge in January, which aims to improve pay equity among state government employees. Female workers in the state currently earn about 88% of the wages of their male counterparts, compared to 81% nationally, according to the US Census Bureau.
A recent report from Citigroup found that closing the gender gap could add up to $2 trillion to global gross domestic product while creating up to 433 million new jobs.
Clarify Capital also noted that California is one of the top states in the country for funding startups founded by women — averaging $10.2 million per deal for female founders in recent years, according to figures from PitchBook. That’s second only to Massachusetts’ $13 million average, and a big deal in itself: Only about 2.1% of venture capital dollars in the United States went to startups founded by women in 2021. , according to Pitchbook.
In second place is Colorado, which has seen a 52% increase in women-owned businesses since 2002, noted Clarify Capital. Colorado also has the highest number of female-owned businesses per 10,000 population. New York is third, with the second-best female-to-male pay ratio (85%) and the third-highest number of women-owned businesses generating at least $1 million in annual revenue.
At the other end of the spectrum, states at the bottom of the rankings suffer from higher female unemployment rates and lower female-to-male earnings ratios than the national average. Here are the worst states for women-owned businesses, according to Clarify Capital:
- West Virginia
West Virginia ranked dead last, largely due to its 50th place in female unemployment rate and number of female-owned businesses per 10,000 population. Mississippi ranked 49th overall, with a particularly poor performance in terms of the gender pay gap: women in the state earn only 77% of the salary of their male counterparts, which is lower than the national average.
The same is true in Alabama — 48th overall — where the female-to-male pay ratio is 75%, according to the Census Bureau.
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