How to Fight the Gender Pay Gap as a Self-Employed Woman -- and Maximize Your Income
Biases exist regardless of whether you work as a full-time employee or a contractor. Here's how to take control of your earnings.
Editor’s Note: Each edition of this Women Entrepreneur series, Behind the Numbers, presents a stat about a disadvantage women face in work and in business, examines the dynamics at play and provides guidance to help women overcome obstacles.
The average woman makes 80 cents for every dollar the average man earns. If you suspect (or know for sure) that you’re being paid less than your male counterparts who have comparable levels of experience, and you’ve asked for a raise to no avail, entrepreneurship may be tempting. You might think, I’ll get to set my own rate, and therefore salary, and as long as I work hard, I’ll make what I deserve. Not so fast.
The reality is, there’s a gender pay gap between self-employed men and women, too. According to a study by cloud accounting company Freshbooks, it’s even larger than the overall pay gap: Self-employed women make 28 percent less than self-employed men, or 72 cents for every dollar a male earns.
That’s despite the fact that 33 percent of traditionally employed women surveyed by Freshbooks said they’ll leave their office job by 2020 to earn more money, and 70 percent of self-employed women report they make as much or more money as they did when they were traditionally employed. However, Freshbooks also learned that 20 percent of self-employed females say they have to charge less than their male counterparts to attract and retain clients.
So, charging lower rates to compete in the face of biases could be one reason self-employed women make less. Other factors include the fact there are more women-owned business that are newer to the game (less than three years old) and there is a higher percentage of self-employed females under the age of 50, meaning they are likely competing against men with more experience.
You can’t always pinpoint what the next guy (emphasis on guy) is making, and systemic gender bias may be an obstacle for self-employed women, in some cases.
“Companies still have to address their own biases around compensation, regardless of the status of the worker,” says Diane Mulcahy, author of The Gig Economy. “There's no reason to think that just because we're contractors, suddenly we'll be paid equally.”
If you want to make a living hustling, there are plenty of ways to position yourself for financial success, a few of which Mulcahy outlines below.
1. Do your homework.
If you’re selling your skills, research what the going rate is in the market. Try to determine what sort of experience and background others have and what they’re charging. Then, figure out where you fit in.
“When I talk to independent workers making the transition to independent work, that's often the thing they have the most difficulty with,” says Mulcahy, who’s also an independent worker herself, juggling writing, speaking, consulting and teaching. “You’ve just got to do your research, which also means, if you’re just starting out, you might have to charge below market rate to attract your first clients and hone your craft.”
Mulcahy adds you should have a plan in place of when you are going to start charging more and how to increase your rates over time.
2. Don’t be a hero: Hire another self-employed person.
Once you’ve got your footing, think about what aspects of self-employment you can outsource. To focus on your strengths that deliver high value, Mulcahy advises hiring help with scheduling, invoicing, bookkeeping or even managing your social media accounts. This doesn’t mean you’ll never touch your Instagram account again -- you’ll likely have to perform some oversight -- but you’ll now have more time to spend doing the work you’re passionate about that brings in income.
But that income should amount to more than what you’re spending on the offloaded task. “You want to arbitrage between your rate and the rate of the people you pay to do the things that you don't like to do,” Mulcahy says. And of course, make sure you pay the market rate so you don’t perpetuate the pay gap yourself!
3. Consider new skills.
Mulcahy provides the hypothetical example of a woman who spent years as a marketing VP within a company and goes out on her own, only to realize that the work she’s experienced in might not be the most lucrative thing she could do for the time she would invest.
“Think broadly about what skills you have, what interests you have,” Mulcahy says. “Conduct interviews with people in your life and say, 'When you think of me, what other things do you think I'd be good at?'”
You might pivot professionals completely or just add some new skills to your repertoire to diversify your income.
“Give yourself not only the potential to earn more, but also keep your cash flow more even,” she says, “because if one type of work or project dips, others can take its place.”
She emphasizes the various opportunities to educate yourself and gain certifications, including from online courses, which often let you work at your own pace, and education benefits, if you still work full-time for a company that subsidizes learning.
With any skill, you should also figure out how to maximize it.
“You could be teaching a marketing course, and you could be consulting with clients on marketing,” Mulcahy says. “Even within one type of expertise or set of experiences, you can leverage that into different income streams.”
4. Get the word out.
Once you’ve learned new skills or acquired new credentials, don’t be shy about them. Leverage LinkedIn, your website or other marketing materials and social media to spread the word. Also, consider pitching contributed articles to blogs and publications or seeking speaking engagements to discuss your expertise.
Keep in mind, however, that gender bias could be around any corner. “We've all seen pictures of conferences in which there are ‘manels’ -- panels of all men,” Mulcahy says.
She suggests looking for opportunities with conferences and organizers that seem to prioritize a gender balance even at prominent levels, such as keynote speeches, and ones where you’ll truly reach your target audience of potential clients.
Entrepreneur Editors' Picks
These Co-Founders Are Using 'Quiet Confidence' to Flip the Script on Cutthroat Startup Culture and Make Their Mark on a $46 Billion Industry
My 7-Year-Old Daughter Started Selling Eggs. Here's What She Taught Me About Running a Startup.
Why You Need to Become an Inclusive Leader (and How to Do It)
Career Transitions You Can Make in Your 40s and 50s
Billionaire Naveen Jain Is an Expert at Disrupting Fields He Has No Experience In. His Secret Sauce for Building Multi-Million Dollar Companies? 'You Have to Come as Naive.'
4 Principles to Develop Next-Level Leadership at Your Company
This Filipino American Founder Is Disrupting the Beverage Aisle by Introducing New Flavors to the Crowded Bubbly Water Market