While criticism of the gender pay gap has been aimed at large businesses, new research has highlighted that this issue is pervasive among small businesses as well, which comprise 97 per cent of the total businesses in Australia.
The latest research by business technology provider Reckon revealed that 70 per cent of female small-business owners pay themselves a salary, compared to 77.9 per cent of men. On average, male small-business owners pay themselves a salary of around $89,759, almost double what female small-business owners pay themselves ($48,729).
Even when adjusting for the number of hours worked, the median full-time equivalent salary for women fell short by a considerable margin, with men earning $80,408 compared to $67,473 for women.
If taking into account the small-business owners who have opted not to pay themselves a salary, women most frequently reported taking home 0-10 per cent of their business’s revenue (21.2 per cent). This was followed by 16.5 per cent reporting taking home 41-50 per cent of their revenue. In contrast, men were more likely to report earnings at both extremes, with 16.4 per cent taking home 91-100 per cent of their business revenue and 15 per cent earning 0-10 per cent.
The research also found that the gender pay gap also exists among side hustlers. Among those who reported owning a “side hustle”, women earned only 40 per cent of what men made. Women had a median annual income of $4,000 from their side hustles, while men earned $10,000.
Interestingly, female business ownership has increased by 77.4 per cent since 1991. Reckon noted that while male business ownership has also seen growth at 43.2 per cent, the rise among women is notably higher.
Still, the share of female business owners has only climbed from 30.6 per cent to 35.4 per cent over the past 23 years. Reckon has pointed out that this imbalance in the gender landscape of small-business ownership further amplifies the continuing struggles facing female small-business owners.
Jessica Morris, Head of People and Culture at Reckon, commented on the results saying, “While the number of female small-business owners has grown over the last couple of decades, there is still a lot of work to do to create equality between small business owners. Women are not only running fewer businesses but also earning less than their male counterparts.”
Morris added, “This highlights the need to support and empower female entrepreneurs. We need to create an environment that encourages female entrepreneurs to know their worth, as well as navigate challenges such as imposter syndrome and financial difficulties.”
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