Philanthropy Roundtable Adjunct Senior Fellow Patrice Onwuka works on our True Diversity initiative, an equality-based, holistic framework for embracing diversity. Some of her recent research has focused on how to provide pathways to opportunities for all Americans and the problems with gender quotas in the workplace. Learn more about Patrice’s story here. Visit TrueDiversity.org for more information.
U.S. women’s economic progress is often measured by female representation in leadership and board positions. By that metric, women are making strides in corporate America.
According to new data from SpencerStuart, the percentage of S&P 500 board female directors grew from 30% in 2021 to about 32% in 2022. This a positive update to our 2022 True Diversity paper, “Improving Board Diversity: Lessons from Sweden and Norway,” in which we reported that women represented “30% of all S&P 500 directors — the most ever.” In addition, the share of new female independent directors added during the 2022 proxy season rose to 46% from 43% in 2021. There were fewer independent directors overall though in 2022 (396 compared to 456 directors in 2021).
Additionally, Deloitte’s 7th annual board diversity census found that 30% of Fortune 500 board seats and 29% of directors were held by women in 2022 – up from 27% and 26%, respectively, in 2020. Among the even smaller group of Fortune 100 companies, the shares of women holding board seats or director roles similarly increased by three to four percentage points to 32% and 31% respectively, over the same time period.
While gender parity in the corporate world is not the sole measure of economic progress for women, the increased choices women enjoy in their careers is a better signal of women’s economic opportunity. Some women have no desire for the C-suite or to be named to a board. They want to be their own boss. The tremendous growth of women’s entrepreneurship confirms this.
As I testified recently during a U.S. Senate Small Business Committee hearing titled “Pathways to Women’s Entrepreneurship: Understanding Opportunities and Barriers”:
Today, women own 12 million small businesses (43% of all small businesses) generating $2.1 trillion in total sales. Only about one in 10 (1.1 million) of these businesses are employer firms, employing 10.1 million workers. Most women-owned businesses are one-woman shops. The 10.9 million self-employed women-owned firms generated about $300 billion in sales according to the Census Bureau Annual Business Survey, 2018.
Women were starting an average of 1,817 new businesses per day in the U.S. just before the pandemic, according to an analysis commissioned by American Express.
Self-employment and entrepreneurship afford women the ability to control their time, fulfill their passions and/or balance other priorities such as childrearing and caregiving:
According to a survey conducted by Guidant, the leading pull and push factors drawing women into entrepreneurship are autonomy and flexibility (27%) and dissatisfaction with Corporate America (23%). Women are also more likely than men to launch a business based on passion.
For many women, entrepreneurship is not a sudden decision, but a long-standing ambition. Some 84% of female business owners polled said they had dreams of starting their own business for “as long as they could remember.”
Female entrepreneurs face myriad challenges including funding and growing their firms. Some of the challenges I outlined in my testimony are created by well-intentioned but ill-advised government policies. For example, reclassifying freelancers as employees wipes out independent work for millions of people who prefer to be independent contractors rather than employees.
Government efforts to force gender diversification of corporate boards are similarly ill-advised, if not illegal. Quotas reduce individuals to immutable characteristics rather than treating them as individuals with different experiences and aspirations and won’t achieve the diversity of thought that strengthens boards or leads to bigger bottom lines. Concerningly, policymakers would like to export diversity quotas to the nonprofit sector, forcing organizations to divert from their missions.
Take the Golden State for example. California’s board diversity quotas have been invalidated by state courts and appellate courts for violating the equal protection clause of state law. A federal battle will hopefully put an end to the board quota mandate for good.
Despite the legal blows, corporations are voluntarily choosing to add more women to their boards, lending credence to the argument that mandates are unneeded.
The motivation behind gender mandates may be to advance gender parity in the boardroom as a societal good. However, we must recognize that women do not all hold the same desires in the workplace. Furthermore, the experience of women in other countries suggests that greater female board representation does not necessarily lead to better outcomes for younger women or for women lower down the economic ladder.
Climbing the corporate ladder and entrepreneurship both offer paths to economic mobility for women that half a century ago were largely unthinkable. We welcome individual women exercising agency and choosing the best path for their life. Government’s role should be to stand aside rather than in the way.