‘Wouldn’t it be incredible if pay inequity for women entrepreneurs was no longer a problem?’
Viewpoints: An early-stage entrepreneur has a unique opportunity to set up her business with fair pay and compensation practices from the start in order to build the strong, fair, equitable, and resilient company of her dreams, writes Nicola Corzine, founding executive director of Nasdaq Entrepreneurial Center.
Editor's note: Our monthly Viewpoints series invites guest authors from outside of Wells Fargo to share an important perspective related to their work. Today, we welcome Nicola Corzine, founding executive director of Nasdaq Entrepreneurial Center.
Did you know women entrepreneurs pay themselves, on average, $53,000 less per year than men? This disparity creates a gap of $140 billion per year. Wouldn’t it be incredible if pay inequity for women entrepreneurs was no longer a reality or problem? We set out to tackle this problem when we embarked on more than a year of research with incredible women entrepreneurs, part of our Nasdaq Entrepreneurial Center community, alongside our learning partners at Fair Pay Workplace and Penn State University.
The honesty and earnestness of the more than 150 women who participated in our research helped us understand of the needs, frustrations, and opportunities they face head on every day. This understanding led us to identify three major lessons in pay inequity and create our Pay, Ownership, and Valuation toolkits.
Lessons learned about pay inequity
1. Women business owners, particularly women entrepreneurs of color, are leading the way in fair pay best practices. When we increase the number and sustainability of women-led businesses, it can be an effective mechanism to close the pay gap, create more equitable compensation practices, and generate wealth — particularly for households of color.
2. The number of years a woman entrepreneur has been in business and her business’s level of funding matter more than the company’s revenue as drivers of pay and business success. If an entrepreneur perseveres until the eighth year, the chances of that entrepreneur paying themselves a living wage grows significantly. When women entrepreneurs in our study addressed obstacles to success, access to capital was the number one barrier to company profitability, growth, and livable compensation. These entrepreneurs were also more likely to pay themselves if their companies had seed, series A, B, or C funding.
3. Care-taking expenses and household income volatility substantially limit the growth of women entrepreneurs. The majority of women entrepreneurs report monthly income instability, and more than one-third of these entrepreneurs do not have a three-month emergency fund to cover living expenses. More women business owners report being food insecure compared to the national average. Child care remains a significant, necessary expense for women entrepreneurs. Health care also remains a significant expense, limiting growth and calculated risk taking by women entrepreneurs.
Planning for success from the start
An early-stage entrepreneur has a unique opportunity to set up her business with fair pay and compensation practices from the start. With this in mind, we set out to create a series of toolkits, with the support of Wells Fargo Foundation, to help women gain clarity, set goals, and define pathways to fair pay practices for themselves and their employees. In this step-by-step workbook, tools, resources, and video content help entrepreneurs build a fair pay strategy. Also included is a resource guide, a milestone checklist, and case studies that look deeper at fair pay practices across different organizations.
These toolkits are designed to help women business owners answer questions like, “What is my target to pay myself?” and “When can I start paying myself more?” with tools to mobilize action to these targets.
Our goal is to help women entrepreneurs gain clarity on their pay principles so they can build the strong, fair, equitable, and resilient companies of their dreams.