According to the Women’s Business Enterprise National Council, there are now over 13 million women-owned businesses operating in the United States. This is a significant increase over the previous two years.
However, a recent study found that some states had more favorable business environments for women-owned firms than others. California, Colorado, and New York were among those leading the way.
According to metrics like the percentage of women-owned small businesses, women-to-men pay ratios, female unemployment rates, the number of women-owned businesses per 10,000 residents in each state, and the number of women-owned businesses that generate $1 million or more in annual revenue, the study from boutique lending firm Clarify Capital ranked the best U.S. states for women-owned businesses.
According to their rankings, the top five states for women-owned businesses are as follows:
California
Colorado
New York
Florida
Vermont
California’s position at the top of this list is rather expected: It is where Silicon Valley is located. California has more women-owned firms than any other state with annual revenue of over $1 million. It also has the fifth-smallest gender pay gap out of all 50 states.
The pay disparity statistic is noteworthy. California has made a significant effort in recent years to close the gender pay gap in the state. In January, the state signed the Equal Pay Pledge. This aims to improve pay parity among the state’s government employees. According to data from the U.S. Census Bureau, women in the state currently make up about 88% of what males do in terms of pay. This is compared to 81% nationally.
According to a recent Citigroup analysis, narrowing the gender gap could add up to $2 trillion to the global GDP. It would also produce up to 433 million new jobs.
According to data from PitchBook, female entrepreneurs have received an average of $10.2 million per deal in recent years. This makes California one of the top states in the nation for funding female-founded firms. This is second only to Massachusetts’ $13 million average. According to Pitchbook, only 2.1 percent of venture capital funding in the U.S. went to firms created by women in 2021.
According to Clarify Capital, Colorado is in second position, with a 52 percent increase in women-owned firms since 2002. The state also has the most female-owned enterprises per 10,000 inhabitants. Third place goes to New York, which has the second best women-to-men pay ratio (85%). It also has the third-highest proportion of women-owned enterprises with at least $1 million in annual revenue.
The states at the bottom of the list, on the other hand, have greater rates of female unemployment and pay ratios for women that are lower than the national average.
According to Clarify Capital, these are the worst states for women-owned businesses:
North Carolina
Mississippi
Alabama
Arkansas
Kentucky
West Virginia came in the bottom place. Partly due to the state ranking 50th in both the percentage of women-owned enterprises per 10,000 population and the female unemployment rate. Mississippi came in at number 49 overall. A particularly bad showing in terms of the gender pay gap: Women in the state earn just 77% of what males do, which is much less than the national average. The same is true in Alabama, which came in 48th overall and has a 75 percent women-to-men pay ratio, per the Census Bureau.