Defining Women

Does the U.S. Census undercount female entrepreneurs?

There are 5.4 million women-owned businesses in the U.S., with nearly $819 billion in annual sales, according to new data from the Census Bureau. With numbers like that, you would expect the National Foundation for Women Business Owners to jump up and yell: "You go, girl!" Instead, the leading advocacy group for female entrepreneurs is grumbling. That's because last May, it released its own stats, showing 9.1 million women-owned businesses.

Why such a big gap? Because different people define "woman-owned" differently. The 1992 Economic Census regarded companies 50% owned by women to be "woman-owned." But the latest report, released in April and based on 1997 data, applied a new threshold: 51%. The NFWBO, by contrast, counts 50-50 partnerships, as well as companies managed by women that have gone public or sold equity to investors.

Census officials say they adopted the new standard to get in line with the largest data users, such as the Small Business Administration. But groups like the NFWBO say that the narrower definition provides an inaccurate picture. The dispute is far from academic. The federal government, for example, uses the stricter 51% standard when handing out affirmative-action status--one reason, advocacy groups say, that women's businesses received just 2.5% of federal contracts in 1999.

Both sides agree on one thing: Even with the Census' new definition, the number of woman-owned businesses soared 16% between 1992 and 1997, compared to 6% for all businesses. "No matter what you do with the data, women-owned businesses are growing," says NFWBO Executive Director Sharon Hadary. How much could be a source of debate for the next five years.

By Joan Raymond

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