The 5 best and worst states for women-owned businesses in America

In the last two years, the number of companies owned by women in the United States has grown significantly, to approximately 13 million today, according to the National Council for Women’s Enterprises.

But a recent study says conditions are better for women-owned businesses in some states than in others, with California, Colorado and New York leading.

The survey, conducted by boutique lending firm Clarify Capital, ranked the best states in the United States for women-owned businesses, based on indicators such as the percentage of small businesses owned by women, the pay ratio of women to men, and unemployment rates. women, number of companies owned by women per 10,000 residents in each state, and how many companies owned by women in each state attract $ 1 million or more in annual revenue.

Here are the top five states for women-owned businesses, according to these rankings:

  1. California
  2. Colorado
  3. new York
  4. Florida
  5. Vermont

To some extent, California’s presence at the top of this list is not surprising: it is the home of Silicon Valley. California boasts more women-owned businesses with more than $ 1 million in annual revenue than any other state, and ranks fifth among all 50 states in terms of the gender pay gap.

This pay gap is significant. California has made a strong push in recent years to reduce the gender pay gap in the state, including the signing of the Equal Pay Promise in January, which aims to improve pay equality among the state’s government workforce. Working women in the state currently earn approximately 88 percent of their male counterparts, compared to 81 percent nationwide, according to the U.S. Census Bureau.

A recent Citigroup report found that closing the gender gap could add up to $ 2 trillion to the world’s gross domestic product, while creating up to 433 million new jobs.

Clarify Capital also noted that California is one of the best states in the country for financing startups founded by women – an average of $ 10.2 million per deal for women founders in recent years, according to data from PitchBook. This is second only to the average $ 13 million in Massachusetts and is a big deal in itself: only about 2.1% of US venture capital dollars went to women-based startups in 2021, according to Pitchbook .

In second place is Colorado, where since 2002 there has been growth of 52% in enterprises owned by women, notes Clarify Capital. Colorado also boasts the most companies owned by women per 10,000 residents. New York is third, offering the second best pay ratio of women to men (85%) and the third largest number of companies owned by women, which bring in at least $ 1 million in annual revenue.

On the other side of the spectrum, states at the bottom of the rankings suffer from higher levels of female unemployment and the ratio of women’s pay to men, which falls below the national average. Here are the worst conditions for companies owned by women, according to Clarify Capital:

  1. West Virginia
  2. Mississippi
  3. Alabama
  4. Arkansas
  5. Kentucky

West Virginia ranks last, largely driven by finishing 50th in both women’s unemployment and the number of businesses owned by women per 10,000 residents. Mississippi ranks 49th overall, with particularly poor gender pay ratios: women in the state make up only 77 percent of their male counterparts, which is below the national average.

The same is true in Alabama – 48th place in the overall ranking – where the pay ratio of women to men is 75%, according to the Census Bureau.

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