Black Women Are Using Side Hustles to Mitigate the Pay Gap. Is It Helping or Hurting Them? DEI expert Nika White discusses how side hustles — while serving as a supplementary income — are also hurting people of color, particularly women.
By Nika White Edited by Maria Bailey
Key Takeaways
- Black women are turning to side hustles to pay themselves a fairer wage — but there is a catch.
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As of 2023, one in three Americans had a side hustle. From picking up an extra job in the gig economy to igniting an exciting entrepreneurial venture, millions of people started side hustles, and Black women were part of that wave. One cause of the side hustle boom was the rising cost of living and the need to counter the effects of inflation. Nearly one in four Americans depended on their side hustle earnings for their everyday expenses.
While side hustles have helped many people get by with their everyday needs, they've also helped build Black wealth, especially amongst Black women, who have been one of the fastest-growing groups of entrepreneurs in recent years. Nearly one in three Black women have taken up part-time work or a side hustle alongside their full-time job — and this is (in part) a result of the pay disparity. While pursuing a side hustle, many people of color have suffered from a lack of work-life balance, or work-life blend, as I often say in my diversity, equity and inclusion (DEI) consultancy. Ultimately, are side hustles helping or hurting Black women in their pursuit of entrepreneurship and fair pay? I'd say it's a mixed bag.
Related: Why Paying Women An Equal Wage Helps — Not Hurts — Your Business
Black women aren't expected to achieve equal pay until the year 2227
According to the Institute for Women's Policy Research, Black women earn only $0.61 for every dollar earned by a man, and it's estimated Black women won't reach pay equity until the year 2227. You read that right — over 200 years from now. Their research is linked to the low job quality options that Black women are afforded. But they're not the only group still struggling for equal pay. Asian-American women earn $0.85 for every dollar a man earns, Native-American women earn just $0.58, and Latinas earn only $0.53. The numbers are shocking. But what's not surprising is the need for women to supplement their income with side hustles.
Barriers to equal pay for Black women
One of the biggest hurdles for pay equity is related to pay discrimination. Many Black women face pay discrimination in the workplace because of unconscious bias and their employers' perceptions of their capabilities based on race and gender. Consequently, Black women are often paid less for the same work done by a white and/or male counterpart. Another barrier is the secretive nature of salary transparency, which prevents workers from discussing their earnings and comparing and contrasting pay differences.
There's also a devaluation of what's been called "women's work," or occupations dominated by female workers, such as child care. In general, "women's work" has been devalued across the economy for centuries, with women consistently earning less than their male counterparts in more traditionally male-dominated professions.
Occupational segregation plays a huge role as well. Black women carry an additional burden of living at the intersection of gender and race. As a result, they're highly underrepresented in male-dominated fields like construction and manufacturing and in high-earning professions like chief executive, physician or finance. Currently, only 1.4% of Black women occupy C-suite positions in industries like these.
Black women are turning to side hustles to pay themselves a fairer wage
There are numerous examples of minority business owners who have not only started side hustles to earn a few extra dollars every month but have effectively scaled their side hustles to full-time roles. For example, Cassiy Johnson started a print-on-demand business through Etsy and scaled it to $800,000 in annual revenue in 2020.
What's even more powerful is the impact that minority-owned businesses have on the overall economy. Black business owners in the United States reportedly own 3.5 million businesses and employ more than 1.2 million people. Therefore, Black-owned businesses have helped employ more people than previously thought. Its ripple effects have helped individuals who may have faced various types of systemic racism in the workforce to focus on building wealth for their own families instead of building wealth for a large company. For many people, starting a side hustle that turned into a sustainable business has elevated their family's wealth trajectory in meaningful ways.
Related: How to Build Wealth Through a Side Hustle
Unequal pay has harmed the mental wellbeing of Black women
Like with all new businesses, working around the clock can cause many people to experience higher stress, increased risk of burnout and potential mental health challenges. Black women entrepreneurs are just as affected by mental health challenges as anyone else. Unfortunately, one report has shown that people of color, in general, experienced worsening mental health because of the pandemic and disproportionate barriers to mental health resources. In addition, the fear of failure and imposter syndrome can also hold entrepreneurs back from achieving their business goals and create roadblocks for their mental wellbeing. On top of wearing multiple hats in their businesses, Black entrepreneurs, in particular, were denied loans nearly twice as often as white business owners. All that said, starting a side hustle while working a full-time job — and trying to scale with loans and other capital — can be a mental and emotional challenge for entrepreneurs, especially Black women.
Final thoughts
While side hustles have had a powerful positive impact on Black women, they've also had their drawbacks. The median net worth of Black households increased by 60% between 2019 and 2022, and other promising trends were found in Latino, Asian and immigrant communities partially because of side hustles. Building wealth has become even more accessible for Black women than in previous decades. Side hustles have helped in that regard. But with the toll taken on mental health and the stress of not acquiring the capital necessary to scale, not everyone has been able to thrive in their side hustle. The rise of Black woman-owned businesses is only increasing. However, the more we can pay Black women a fair wage in their pursuits, the better our economy and communities will be.
