Gender wage gaps are often reported within organizations in the workplace, and new research shows they also may exist among those who are self-employed.
According to a report released by Statistics Canada looking at 3.5 million self-employed individuals between 2001 to 2013, 65% of those who had incorporated businesses were men, while only 35% were women. Those who were business owners were employers, and they received “much higher” income than unincorporated self-employed individuals, according to the study.
Self-employed workers include professionals such as doctors and lawyers running unincorporated firms, as well as commission-based salespersons. According to the study, incorporated firms are typically larger enterprises than those in the unincorporated sector, employing more people, using more capital per worker, and resulting in much higher output per worker.
Other “advantages” of incorporating include entering into contracts and owning property as a separate legal identity; surviving longer than the current business owner; and continuing to operate without much interruption even when the ownership is traded, the report said.
Many factors could be at play, but Cecilia Mkondiwa, senior director at the Women’s Enterprise Centre, says that access to capital for women still poses a barrier. She pointed to a report last year by the centre, which impacts the participation of women in entrepreneurial activity and the growth of existing businesses.
The report stated that in Canada, female business owners received an average of $65,000 in financing in 2015, versus the $350,000 for their male counterparts. “Insufficient capital and financing has been found to be a more significant reason for business discontinuance among women than men,” it said.
Workplace flexibility could be a main factor for women who are raising families. “Often, they start a business and decide not to incorporate because they want the additional flexibility to run the business, and maybe not run it if they need to take a step back,” the report said.