The rise in the number of working mothers switching to self-employment might appear positive, but new research shows the underlying causes could be a serious problem. Dr Meraiah Foley explains her research.
Much has been made in recent years about the rise of the so-called "mumpreneurs" – working mothers who leave behind the stresses of corporate life to find fulfilment and success running their own businesses from the kitchen bench.
Home-based businesses are one of the fastest growing business sectors in Australia, and mothers of young children are up to three times more likely to be self-employed than other working women, according to the Australian Institute of Family Studies and the Australian Bureau of Statistics.
Last year, Small Business Minister Bruce Billson credited "mumpreneurs" with driving small business growth in Australia while forging a path to the ever elusive "work-life balance".
Buoyed by these reports, many exhausted women may be considering a switch to self-employment. They would not be alone. Across Australia, thousands of working mothers have joined networking groups aimed at nurturing their entrepreneurial aspirations.
The first big study of maternal self-employment in Australia suggests that it is an option of last resort for many women that carries serious long-term economic consequences.
I surveyed and interviewed 60 self-employed mothers about why they started their own businesses instead of staying with their previous employers or seeking new jobs.
Inhospitable workplace cultures and the high cost of childcare were the two main factors. About two-thirds of the women surveyed cited inflexible work schedules, poor quality part-time jobs, and discriminatory attitudes towards part-time and flexible workers as the main push factors. Among these were six women who were made redundant while pregnant or on maternity leave, echoing findings from the Australian Human Rights Commission that women with children still face high levels of discrimination in Australian workplaces.
For others, the inability to find suitable affordable childcare on the days and times they needed it left self-employment as their only viable alternative.
Although the women enjoyed greater levels of flexibility in self-employment, many felt socially and professionally isolated, with no clear road map for their career futures. Some were earning significantly less in self-employment than they were as salaried workers, and had no paid holiday or sick leave. Nearly two-thirds of these women were not contributing to superannuation.
One single mother, who left a corporate role to become a family day-care provider because of her own childcare conflicts, described superannuation as "a little black cloud" hanging over her. "I'm thinking, this will come back to bite me in 30 years' time," she told me. "But I haven't got time to really consider that, to be honest."
These women are right to feel uneasy.
The Senate inquiry into women's economic security in retirement, which produced its final report last week, found that most self-employed women made insufficient or no contributions to superannuation. Most small businesses run by women were not of sufficient value to provide them with economic security in retirement.
About 75 per cent of self-employed women have either no superannuation savings, or savings of less than $40,000, according to the Association of Superannuation Funds of Australia. The average superannuation balance of self-employed women aged 60-64 was estimated at $69,000 in 2011-12, about half the balance for female wage and salary earners in the same age group.
Nearly half of all owner-operated small businesses in Australia do not survive their first three years, the Bureau of Statistics says. And there is ample evidence that self-employed mothers face particular barriers when it comes to re-entering the job market – as both working mothers and "failed" entrepreneurs.
A much-cited study out of Stanford University, for example, has found that mothers are significantly disadvantaged when seeking employment, receiving about half as many call-backs for interviews as men and equally qualified women without children.
Other studies have found that when it comes to assessing female job applicants, employers perceive periods of self-employment no differently to periods of unemployment, and that self-employed women who do return to salaried employment are paid less than other employees relative to the experience they have.
Most of the women in my study were reluctant entrepreneurs. They described their transition to self-employment not as a positive choice, but as a frustrated response to the disappointments and setbacks they experienced as working mothers in Australian workplaces.
This Mother's Day, let's stop celebrating the rise of the "mumpreneurs" and start working to address the factors that push mothers into self-employment in the first place.
Dr Meraiah Foley completed her doctoral dissertation, Mothers in Company: The entrepreneurial motivations of self-employed mothers in Australia at the University of Sydney Business School. This article was first published on the Sydney Morning Herald.
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