Social Issue Question: Should the new administration offer incentives for investing in women-owned businesses?
Introduction to the issue: Barack Obama and Joe Biden’s Plan for Small Business includes encouraging investment in women-owned businesses, providing more support to women business owners and reducing discrimination in lending. Women currently are majority owners of more than 28% of U.S. businesses and are more likely than white male business owners to have their loan applications denied.
Prior to his election as President, Obama promised to “Implement the Women-Owned Business contracting program that was signed into law by President Bill Clinton, but has yet to be implemented by the Bush Administration.” The program is intended to get more women-owned businesses to compete for federal contracts.
On October 29, 2007, Maryland Senator, Benjamin Cardin, announced before the U.S. One Hundred Tenth Congress on that the Small Business Administration failed to meet any of the small business contracting goals for 2006, including goals for women-owned businesses, which fell well below the five percent objective. In late 2007, the Small Business Administration proposed the “Set-Aside Program” which would reserve federal contracts only for women-owned businesses in four industries that the administration deemed disadvantaged. The amendments to the contracting program were met with fierce resistance from women business owners.
Industries with the greatest number of women-owned businesses include: Healthcare and Social Assistance, services and retail trade. According to Margaret Smith, 2007-2008 Chair of the Board of Directors Center for Women’s Business research, women-owned businesses now represent more than half of all healthcare and educational service businesses. As of 2007, the percentage of govenment contracts awarded to women-owned healthcare businesses is only 7%, and the percentage for women-owned educational services is only 2%. The Obama administration will use statistics such as these to influence his plan of action in solving these inequities among distribution of government contracts.
History, Background and Context:
Many women in the U.S. feel that they have always been treated as second-class citizens and are victims of gender-bias due to the current economic structure. This sentiment can be traced back to the suffragists of 1896 and the feminists of the 60’s who wanted to effect a new worldview and know that having a political voice is the key.
In 1988, the federal government created the National Women’s Business Council to find ways to encourage female entrepreneurs. The public law bill No: 100-533 was passed in 1988 was aimed to establish women’s business centers and provide women-owned businesses with better access to federal contracts. The budget for the women’s business centers was $20 million in 2007.
These programs have had a dramatic impact on the growth of women-owned businesses and firms, as well as entrepreneurship. The Center for Women’s Business Research reports that from 1997 to 2006, women-owned firms grew by 42%, nearly twice the number of all other firms.
Consumer Studies have shown that in the U.S., women make or influence approximately 83% of all purchasing decisions. A great number of U.S. citizens believe that policy decisions in Washington, D.C. do not reflect the interests of women, even though their influence is a dominating force in the economy.
Competing Ideas for Solving the Social Issue Question: The authors of Why Women Mean Business: Understanding the Emergence of Our Next Economic Revolution, Avivah Wittenberg-Cox and Alison Maitland, assert that the U.S. marketplace is suffering due to the lack of female representation in leadership positions of U.S. corporations. The tendency of women to resign from employment in order to start their own business enterprise is a result of the barriers women face in reaching leadership positions. The main argument of these authors is that incentives for investment in women-owned businesses is vital for the health of not only the U.S., but the global economy.
The article, “Time to End Gender Bias in Startup Support?“, uses data from The Center for Women’s Business Research comparing the percentage of growth, employment, and sales of U.S. women-owned firms with all other firms. The datashows that women-owned firms have grown by twice the percentage of all other firms; however, the growth percentage of the number of employees and sales are drastically higher for firms not owned by women. The assertion is that funding for women business programs should be reduced.
The argument in favor of implementing the Women-Owned Business Contracting Program claims that it diversifies the economy and spreads wealth and opportunities to less affluent citizens. From another viewpoint, the program is discriminating against men. The concern that companies may procure government contracts simply because the government needs to fulfill a quota raises the issue that the most qualified company may not receive the contract.
My Answer to the Social Issue Question:
I believe that the new administration should offer incentives for investing in women-owned business by providing public-sector banks with money reserved specifically for women wishing to start a business enterprise. The interview conducted with Ruth Wren of the Lane Community College Women’s Center reinforces the assertion that there is a vast population of women who wish to become entrepreneurs, but do not have sufficient access to start-up funding.
The money allocated for women’s business centers ($20 million in 2007 for the 100 offices run by the Small Business Administration) across the country should be awarded as loans to women with a business plan. This would instigate competition throughout the economy as female entrepreneurs develop innovative business practices, which would give them a competitive edge over businesses run by men that have maintained the same basic network infrastructure for decades.
I support Obama’s initiative concerning the women-owned business contracting program. It ensures that any possible gender-bias is outweighed by the five percent federal contracting benchmark. A simplification of the number and complexity of the requirements of small business contracting programs is necessary to help the Small Business Administration fulfill its goal of awarding five percent of federal contracts to women.
Arguments Against my Answer:
To remove funding from women business centers would diminish the resources available to women who wish to start a business. These institutions must continue to receive funding in order to push the economy toward parity between men and women business owners. Women constitute 51% of the American population, yet own only 28% of U.S. Businesses.
Certain banks, such as American Express, have diversified their loaning practices to favor conducting business with women-and minority-owned businesses. It is a waste of capital to divert government money to loaning to female entrepreneurs who may or may not succeed, especially if women business centers have funding reduced.
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