Comment from the National Women’s Business Council on the Annual Business Survey

ByNWBC Council

Comment from the National Women’s Business Council on the Annual Business Survey

This comment was submitted to The Department of Commerce, U.S. Census Bureau by the National Women’s Business Council on the Census Bureau’s business data developments and Annual Business Survey (ABS):

The National Women’s Business Council (NWBC or the Council) is a non-partisan federal advisory council created to serve as an independent source of advice and counsel to the White House, Congress, and U.S. Small Business Administration on economic issues of impact and importance to women business owners and entrepreneurs. The NWBC was established as part of the Women’s Business Ownership Act of 1988 as an advisory body, charged to identify barriers to, as well as opportunities for, success among women-owned businesses and reports annually to the U.S. Small Business Administration, the White House and Congress on its findings. It has continued a plethora of efforts under this charge for thirty years, and remains committed to conducting research on issues important to women business owners, developing actionable policy recommendations derived from this research, and communicating findings and recommendations widely. To meet research and policy demands and objectives of a rapidly evolving entrepreneurial and business ecosystem, survey efforts to improve and measure business dynamics in the United States is of great value.

The Council is writing to support the U.S. Census Bureau’s proposed development of the Annual Business Survey. According to the Census Bureau “[i]n an effort to improve the measurement of business dynamics in the United States, the Census Bureau plans to conduct the Annual Business Survey (ABS). The ABS is a new survey designed to combine Census Bureau firm-level collections to reduce respondent burden, increase data quality, reduce operational costs, and operate more efficiently. The ABS replaces the five-year Survey of Business Owners (SBO) for employer businesses, the Annual Survey of Entrepreneurs (ASE), and the Business R&D and Innovation for Microbusinesses (BRDI-M) surveys. ABS estimates will include the number of firms, sales/receipts, annual payroll, and employment by gender, ethnicity, race, and veteran status as well as R&D and Innovation and various other relevant topics.” The NWBC strongly supports this data collection effort as it demonstrates a commitment by the Census Bureau to increase the breadth and depth of government data and expand access to existing government data on women-owned and women-led businesses to advance the ability to conduct timely, relevant research. Though such efforts by the Census Bureau significantly improves the state of data related to women business owners, the NWBC  would like to call attention to salient issues to ensure that data collection efforts are holistic and reflect pertinent data points for women entrepreneurs.

Various issues regarding data analysis arise when discussing the two most salient surveys regarding women-owned firms. The Survey of Business Owners and Self-Employed Persons (SBO) is widely recognized as the most comprehensive, regularly collected source of information on selected economic and demographic characteristics for businesses and business owners by gender, ethnicity, race, and veteran status; and the Annual Survey of Entrepreneurs (ASE) provides current data related to employer firms. These surveys are valuable sources of data on women’s business ownership in this country; however, these efforts are limited in their utility. For example, at present, the SBO is fielded once every 5 years with results reported on a several-year lag. Additionally, the ASE is limited in scope as it is focused specifically on employer firms which results in the vast majority of women-owned firms being excluded from analysis. This limited scope is best demonstrated by an analysis of the 2012 SBO which demonstrates that 89.5 percent of women-owned firms have no employees other than the owner. Thus, the ASE does not provide for holistic representation of current data on women-owned firms in the U.S. Given these limitations, the Council is hopeful that alternative data collection efforts will bring about needed enhancements in regards to timeliness and a more comprehensive data to best capture the state of women-owned firms.

On January 18, 2018 the National Women’s Business Council held a roundtable discussion with special guests from the U.S. Census Bureau’s Governments and Business Owners Program in the Economic Reimbursable Surveys Division, the U.S. Census Bureau’s Center for Administrative Records Research and Applications, and various stakeholders throughout the women’s entrepreneurial ecosystem who utilize the SBO and ASE in their research and policy development. The Council commends the Census’ initiative to meet with stakeholders and hold an open discussion regarding the Annual Business Survey. Independent of this roundtable discussion, the Council has done extensive research on surveys pertaining to entrepreneurship and survey gaps via literature reviews and stakeholder conversations. The following recommendations embody both the sentiments presented in the most recent roundtable conversation as well as NWBC research on survey development.

NWBC recommends the collection and consideration of the additional data points:

Consider the Role of Local Policies/Geography. The provision of economic incentives for entrepreneurship to stimulate growth in lagging geographic regions is a widely advocated policy tool. Recent literature has pointed to the strong influence of locational characteristics in business success. Specifically, building on regional technology strengths is key to business growth.

Incorporate Employee Characteristics: Stakeholder communities have advocated for greater collection efforts regarding the use of 1099 employees, types of insurance and benefits provided by employers including health, dental, life, child and elder care, disability, flexible schedules, teleworking, paid and unpaid sick leave, paternal leave, and employee fringe benefits such as tuition assistance or reimbursement, loans, discounts, and perk allowance e.g. metro or gas allotments.

Incorporate Business Owner Characteristics: The NWBC understands that the new data collection efforts will examine business structure. Yet, the Council would like to reiterate that S Corp, C Corp, LLC, sole proprietorship, etc. should be collected to allow for research pertaining to the tax code.

Consider Barriers, Needs and Support Systems for Business Owners.  Recent research on women business ownership and management, released by the Center for Women in Business (2014), discusses barriers, needs and support for startups by women and subsequent business growth. Over the last 15 years, women-owned firms have increased at a rate 2-1/2 that of the national average and now account for almost 40 percent of all privately-held businesses.

Incorporate Questions Related to the Role of Education, Resources, and Mentorship.  Entrepreneurial education is widely regarded as an important dimension to enable individuals to start their own businesses.  Additionally, the entrepreneurial ecosystem is diverse and therefore a thorough understanding of the role of resources available through the U.S. Small Business Administration and other support entities should be considered to evaluate outreach and utility of said resources. NWBC research demonstrates that women have higher student debt burden which could be affecting rates of entrepreneurship. The Council strongly encourages data collection efforts regarding student debt.

Consider an Expansive Module on Patenting and STEM Commercialization.  The literature provides several motivations for patenting, including preventing competition on the part of software entrepreneurs, using patents for “strategic” reasons such as gaining leverage in cross-licensing negotiations, and “signaling” reasons, such as improving the chances of securing investment. 

Additional Considerations and Comments:

According to SBO analysis from 2007 to 2012, women of color have seen very high growth rates in the percentage increase in the numbers of firms. While the number of white women-owned businesses has increased by 10.1% since 2007, the number of companies owned by Asian women has increased by 44.3%; black women-owned businesses have grown by 67.5%; and Hispanic women-owned operations have increased by 87.5%. Across all ethnicities, the number of women-owned firms is increasing even faster than the number of men-owned businesses. The SBO permits for more granular geographic analysis of women of color, however the ASE does not allow for such analysis.

Therefore, NWBC strongly urges that the Census Bureau consider demographic intersectionality as a vital component to understanding the trends and unique experiences of women entrepreneurs. Specifically, the NWBC suggests that gender by race and ethnicity, as well as other demographics at a national and state level should be available for both employer and non-employer firms. This data is essential to understanding the changing demographics of women business owners and entrepreneurs throughout the United States.

As previously discussed, the ASE does not in fact survey the vast majority of women-owned firms due to its limited scope of employer firms. Non-employer firms are vital components of the U.S. economy and represent over 8.8 million women business owners. The Council reemphasizes the importance that that the Annual Business Survey ensures regular data efforts for employer and non-employer firms.

Lastly, the Council applauds the U.S. Census Bureau’s desire to improve data collection efforts to provide more timely and high quality data.  The NWBC supports continued or increased funding to the U.S. Census Bureau’s business data collection efforts, particularly funding that will improve data validity, geographic specificity, or collection frequency.

The NWBC believes that this new survey will make a substantive contribution to the field, and that the Annual Business Survey will provide stakeholders with the necessary data to develop strong research that provides critical insights for policy and programmatic decisions that meet the needs of business owners throughout the United States.

As a diverse council of women business owners and members of women’s business organizations, the NWBC is uniquely positioned to provide independent, non-partisan consultation based on rigorous research of issues regarding women’s entrepreneurship and economic participation. The Council will continue to be a pipeline for the collective voices of women business owners and additional parties. We are honored to have the privilege of advising the U.S, Census Bureau, and look forward to working closely as it relates to advancing data collection efforts for women business owners. Please do not hesitate to let us know if we can be of assistance.

About the author

NWBC Council editor

The National Women’s Business Council (NWBC) is a non-partisan federal advisory council created to serve as an independent source of advice and counsel to the President, Congress, and the U.S. Small Business Administration on economic issues of importance to women business owners.