Small Business Labs

The Freelance Gender Pay Gap

Bloomberg's Men Make 48% More Than Women in the Gig Economy. Study Finds covers an interesting ZenBusiness study on freelancer earnings by gender.

The study's methodology is quite clever.  

ZenBusiness scraped data on freelancers' names, specialties, and hourly rates for almost 6,000 US-based freelancers active on the talent marketplace Upwork.  

And after using a gender API to group the freelancers by sex, they calculated the average wage rates for men and women.

They found that the average hourly rate for men is 48% higher - $68.58 versus $46.30 for women.

As the Bloomberg chart below shows (click to enlarge), the study found that the pay gap varies quite a bit by job type.

Our broader studies of the overall independent workforce have found the gender pay gap between male and female independent workers to be in the 20% range.  

This is similar to the 16% gender gap Pew Research found for full-time workers.  

And although we're impressed by the ZenBusiness study, it's not without issues. 

For example, listed hourly rates may not reflect actual pay rates. 

We also know from our studies that, on average, part-time independent workers charge less than full-timers, older workers charge more than younger workers, and more experienced workers charge more than less experienced workers.

The ZenBusiness study doesn't have data on any of these attributes. But gender differences in any of these areas could easily skew the results.  

So kudos to ZenBusiness for raising this issue and pointing out this data. 

But more research is needed before conclusions can be drawn on the freelance gender gap associated with online talent marketplaces. 

The Growing Importance of Interpersonal Skills Favoring Women in High Wage Jobs

A recent academic study, The End of Men and Rise of Women in the High-Skilled Labor Market, shows that women are rapidly gaining ground in a number of high paying fields.

The reason is success in a growing number of high-skill professions requires more interpersonal skills like collaboration, empathy, and managing others. As the study points out, there's a lot of research showing women, on average, have stronger interpersonal skills than men. 

Key quote from the study abstract:

Since 1980, the probability that a college-educated man was employed in a cognitive/high-wage occupation fell. This contrasts starkly with the experience of college-educated women: their probability of working in these occupations rose, despite a much larger increase in the supply of educated women relative to men during this period.

So not only are women improving in terms of their likelihood of working in high wage occupations relative to men, the number of well educated women has exceeded that of men for several decades.

We've covered the growing education gap between women and men in the past and the gap appears to be increasing.

This education gap, combined with a greater need for social skills, is resulting not just in high skill professions, but the labor market in general.

At the same time, men continue to not do well. 

The recent New York Times article The Increasing Significance of the Decline of Men provides an in-depth look at the many problems men are facing.  Key quote:

... men of all races and ethnicities are dropping out of the workforce, abusing opiods and falling behind women in both college attendance and graduation rates.

The end of men is another topic we've long covered.

Yes, we're aware that men on average out earn women, hold more senior executive positions, etc. We also know there's still more work to be done on gender equality.

But the trends driving the end of men and the rise of women are powerful and show no signs of turning around. Expect women to continue to gain relative to men across a wide variety of social and economic measures in the coming years. 

Because of this, don't be surprised if in another decade or so we're talking about how to achieve gender equality for men. 

Our section on Women covers both the rise of women and the problems facing men in more detail.

The Motivations and Challenges of Diverse Small Business Owners

Gallup's Diverse Small Business Owners Share Their Experiences covers a series of surveys of different segments of small business owners.

The surveys asked about the motivations and challenges among Asian, African-American, Hispanic, Women, LGBT and Veteran small business owners.

Their key finding is small business owners have pretty much the same motivations and challenges regardless of their ethnic, racial and social backgrounds. Key quote:

There are more similarities than differences across diverse small-business owner segments. Racially and ethnically diverse small-business owners share similar broad challenges with the general population of owners. 

This echos our finding on this topic over the years.

Below are two charts from their reports showing the motivations for being a small business owner by different demographic cohorts.

I have to add I was much amused when I read the methodology section in these reports.

Methodology sections are normally not a source of mirth, but I laughed out loud when I read:

Owners with less than $10,000 in revenue were asked to confirm if they considered their work a business in order to be included in the survey.

This means some small businesses with less than $10,000 in revenue were included in these surveys. It also means many more small businesses with less than $100,000 were included.

Why is this funny?

The reason is the vast majority of small businesses with less than $100,000 in revenue are solo businesses and Gallup is on the record as saying solo business aren't real small businesses. They describe them as "inactive companies that have no sales, profits, customers or workers".

I find it funny that they don't consider these firms real, but still include them in their surveys.

Wage Versus Education Gap

Their are two really interesting male/female gaps in the U.S.  The wage gap, where men make more money on average than women, gets a lot of attention.

The education gap, where women and girls out perform men and boys at all levels of education, gets less attention.

Also getting little attention is the fact that these two gaps are linked.

Over time those that are better educated will be paid better. And as we've written about before, women currently comprise about 57% of all college students and it is expected this will grow to about 60% by 2019.

Women also out number men in most grad school programs and 2013 was the 5th year in a row that women earned more Ph.Ds than men. As the chart below shows, there are about 1.4 women in graduate school for every man and women have clear majorities in most fields.

 

Yes, men still dominate in math, computer science, physical science and business, but even in those fields the gap has been closing over the last decade.

Also, trends suggest the number of women studying business in grad school will pass the number of men over the next 5-7 years.  

So what about the wage gap?

It still exists with men continuing to earn more, on average, than women. The Washington Post's The Wage Gap - A Primer provides a detailed look at the current state of the wage gap.  

But the wage gap is closing, especially for Millennial women. There are multiple reasons for this, but the big one is women's growing education advantage.

Because of this, we continue to forecast wage parity between men and women in the 2020 time frame. 

We also continue to worry about the state of men and boys. We suspect today's wage gap will be reversed within the next decade or so.  

The Rise of Social Commerce Platforms

Chloe+Isabel is an online social jewelry retailer and they recently raised $15 million in venture funding.

Their platform allows women to build online stores featuring their favorite Chloe + Isabel jewelry, then market them via on and offline social networks. Think Tupperware parties going digital.

They are one of many companies creating social commerce platforms targeted at women. Other examples include Stella & Dot (jewelry and accessories), Ruby Ribbon (clothing).

The business model of these firms is straight forward. It used to be called multi-level marketing, but that got a bit of bad name so the industry switched to social commerce.  

The basics of the model are a company like Chloe+Isabel recruits independent workers to sell their products. The company provides the products and marketing support.

The independent sales rep sells the products and recruits new people to sell. The rep gets a commission on their own sales plus a commission on all sales done by the people they recruit. 

The platform companies stress 2 key features in their recruiting pitches, unlimited earnings and a flexible lifestyle. 

The social commerce/multi-level marketing it's a big industry in the U.S. and includes such well known companies as Amway and Herbalife. It's not surprising it's migrating online.

Pay Gap Closing for Millennial Women

According to recent government data and reported by Pew Research, women aged 25-34 are nearing wage parity with men of the same age.  

As the chart to the right shows, women’s hourly earnings were two-thirds (67%) of men’s in 1980 but have steadily improved and reached 93% of men’s in 2012. 

According to Pew, the reasons millennial women are catching up to men are:

... younger women have outpaced men in college-going and college graduation, which have opened doors to higher-paying jobs, often in male-dominated fields.

In addition, larger forces such as globalization and weakened unions disproportionately have hurt some types of jobs mainly held by men.

We expect the wage gap to continue to close for two key reasons. First, younger women are out performing younger men at every level of education - and especially in college. This will lead to greater wage parity.

And second, the greatest wage disparity exists in older cohorts and especially people aged 55 and older. As this group exits the workforce, the wage gap will close.  

Part-Time Women Out Earn Part-Time Men

In Part-Time Jobs, Women Outearn Men covers the interesting fact that women who work 35 hours or less per week earn about 110% of what men working similar hours earn.

The chart below, from the article, shows this data by various hours worked.

In general women's earning continue to increase faster than men's and the male/female earnings gap continues to close.

Back in 2010 we forecast that women would reach earnings parity with men around 2020. At the time we got a lot of push back on this forecast, but the data is showing earnings parity is likely in that time frame.

Survey Says Moms Want to Work Part-Time

Interesting results from a survey from the media company Hulafrog show that most Moms want to work part-time.  The survey results are summarized in the infographic below.

The key point is given their choice, 65 percent of the surveyed women with kids would work part-time, only 9 percent would work full-time and 26 percent would stay home.

This data is consistent with our independent worker studies findings; women (and increasingly men) are looking for flexible work options and increased work/life flexibility.

One important point is the survey is not based on a statistical sample of U.S. women or U.S. mothers. Instead, Hulafrog surveyed their online members. This group is better educated than women with chidren in general and likely has higher incomes.  Because of this, we cannot assume these results are valid for women with children overall.  But the data is still interesting and reflects the interests of a lot of mothers.

Feminine Leadership Values Ascending

The Athena Doctrine is a new book that argues "in a world that’s increasingly social, interdependent and transparent ... feminine values are ascendant."

The authors say feminine values and traits include cooperation, long-term thinking, flexibility, nurturing, wisdom and fairness.

The book is summarized in Feminine Values Can Give Tomorow's Leaders and Edge, an HRB article written by the book's authors.

The authors surveyed 64,000 people across the globe and found:

Two-thirds of survey respondents felt that "The world would be a better place if men thought more like women"

And as the chart below shows, the survey respondents also felt more key leadership traits were feminine as opposed to masculine.  

     

This is quite a shift from the old way of thinking, which is nicely summarized by Rex Harrison in the My Fair Lady movie clip "Why Can't a Women Be More Like A Man":

 

The rise of women is a well covered trend on this blog and we agree with the world is increasingly favoring feminine traits .  See our Women category for more on this topic.   

The Rise of Ethical, Sustainable, Slow Fashion

The collapse of the Rana Plaza building in Bangladesh's garment district earlier this year killed more than a 1,000 garment workers.  It also highlighted the ethical issues associated with the global fashion industry.

In response to this disaster - and broader fashion industry environmental and human rights problems - a number of new retailers and fashion labels that focus on social and environmental responsibility are springing up.

A good example is BeGood Clothing in San Francisco. They are predominately an online retailer of ethical and sustainable fashion, but they also have a retail store (pictured below).

BeGood is targeting the growing number of "conscious consumers" - people who want to know and minimize the environmental and social impact of their purchases.  Nielsen, the large consumer research firm, reports this is a large and growing share of global consumers.

According to an article in Triple Pundit, Fast Fashion Has to Slow Down, this is another step in the broader slow money movement, which has its roots in the growing trend towards local, organic, sustainable food. 

Slow fashion is also part of the broader shift towards local, handmade and/or artisan goods.  We've long covered the rise of the artisan economy and the growing number of goods being produced using sustainable and artisan methods - which includes everything from bikes to distilled spirits.

It's exciting to see the fashion industry becoming more sustainable. In addition to the environmental and social benefits that will accrue, this shift will also create new opportunities for small fashion businesses and artisans.