The number of women-owned businesses in the United States has been on a steady rise over the past two years. According to the Women’s Business Enterprise National Council, there are now approximately 13 million women-owned businesses in the country.
However, the conditions for women-owned companies vary from state to state. A recent study by Clarify Capital, a boutique lending firm, has ranked the best and worst states for women-owned businesses based on metrics such as percentage of female-owned small businesses, women-to-men pay ratios, female unemployment rates, number of female-owned companies per 10,000 residents, and how many women-owned businesses in each state pull in $1 million or more in annual revenue.
The top five states for women-owned businesses are California, Colorado, New York, Florida, and Vermont. California leads the pack due to having more women-owned businesses with over $1 million in annual revenue than any other state, as well as ranking fifth among all 50 states in terms of the gender pay gap.
California has made a strong push to narrow the state’s gender pay gap, including signing the Equal Pay Pledge in January. This pledge aims to improve pay equity among the state’s government workforce.
Currently, women workers in the state earn roughly 88% of the wages of their male counterparts, which is better than the nationwide figure of 81%, according to the U.S. Census Bureau.
Closing the gender pay gap could add as much as $2 trillion to the global gross domestic product while creating up to 433 million new jobs, according to a recent report from Citigroup.
California is also one of the top states for funding female-founded startups, averaging $10.2 million per deal for female founders in recent years, according to numbers from PitchBook. This is second only to Massachusetts’ $13 million average.
It is a significant accomplishment, considering only about 2.1% of venture capital dollars in the U.S. went to female-founded startups in 2021, according to Pitchbook.
Colorado ranks second on the list, with a 52% increase in women-owned businesses since 2002. Colorado also boasts the most female-owned businesses per 10,000 residents.
New York is third, offering the second-best women-to-men pay ratio (85%) and the third-highest number of women-owned businesses bringing in at least $1 million in annual revenue.
On the other hand, the worst states for women-owned businesses, according to Clarify Capital, are West Virginia, Mississippi, Alabama, Arkansas, and Kentucky. These states have higher female unemployment rates and women-to-men pay ratios that fall below the national average.
West Virginia ranks dead last, finishing 50th in both female unemployment rates and the number of women-owned businesses per 10,000 residents.
Mississippi ranks 49th overall, with a particularly poor showing in terms of the gender pay gap: Women in the state make just 77% of their male counterparts’ wages, which is below the national average.
Alabama ranks 48th on the overall ranking, where the women-to-men pay ratio is 75%, according to the Census Bureau.
The growth of women-owned businesses in the United States is a promising trend, but there is still work to be done in terms of improving the conditions for these businesses, particularly in states where they are struggling. By supporting women-owned businesses and narrowing the gender pay gap, the country could see significant economic growth and job creation.