Employment Options for Low-Income Women: Microenterprise versus the Labor Market.

This study builds on research that examines the effects of microenterprise on poor women in the United States. Household income, income from the business, and poverty status were examined over time and comparisons were drawn among three groups of women: low-income women who participated in one of seven U.S. microenterprise assistance programs; low-income self-employed women not attached to microenterprise assistance programs; and low-income women working but not self-employed. The findings cast doubt on the effectiveness of microenterprise assistance programs as an antipoverty strategy in the United States. However, women in the three groups moved out of poverty at the same rate. Policy, program, and practice implications are discussed. Key words: employment; low income; microenterprise; poverty; program evaluation; women In recent years microenterprise has been promoted in the United States as a strategy to encourage women's economic and social development. There are more than 300 microenterprise assistance programs in the United States, many of them promoting self-employment among low-income women (Langer, Orwick, & Kays, 1999). Microenterprise has been proposed as a strategy for job creation and self-sufficiency (Benus, Johnson, Wood, Grover, & Shen, 1995; Raheim, 1997), as an antipoverty strategy (Balkin, 1989; Banerjee, 1998; Clark & Huston, 1993; Light & Rosenstein, 1995), as an alternative to welfare (U.S. Department of Health and Human Services [DHHS], 1990), and as a way to empower low-income women, provide economic opportunity, and help them exit the secondary labor market (Raheim, 1996; Raheim & Bolden, 1995). Critics of microenterprise suggest that providing credit will do little to reduce poverty in the United States (Neff, 1996). Rather than reducing poverty, many micro-businesses support low-paying (self-paid) jobs that further trap individuals in poverty and perpetuate existing power structures (Bates & Servon, 1996). Because women may be encouraged to pursue small-scale, home-based businesses consistent with gender roles (for example, child care, alterations, and catering), they remain economically vulnerable and at the margin of the mainstream economy (Ehlers & Main, 1998; Loscocco & Robinson, 1991). Women, especially low-income women and women of color, face barriers such as access to capital, information and networking opportunities, and management experience in developing successful small businesses (Keeley, 1990; Mondal & Tune, 1993; Novogratz, 1992). Microenterprise assistance programs typically provide some combination of capital or aid in obtaining business loans, self-employment training, technical assistance, and peer support. Microenterprise programs have sought to provide access to financial capital and business training that otherwise may not be available to poor women (Langer et al., 1999). Research on the effects of microenterprise suggests that women may improve their economic well-being through microenterprise (Clark & Huston, 1993; Clark, Kays, Zandniapour, Soto, & Doyle, 1999; Raheim & Alter, 1998). However, with few exceptions (Benus et al., 1995), the studies are cross-sectional and lack control or comparison groups, making it is impossible to tell whether the outcomes (that is, increased household income, movement out of poverty) are a result of microenterprise assistance programs. This study builds on research on the effects of microenterprise on poor women in the United States. Household income and poverty status were examined over time, and comparisons were drawn among low-income women who participated in one of seven U.S. microenterprise assistance programs; low-income self-employed women not attached to microenterprise assistance programs; and low-income women working but not self-employed. Although not a true experiment, this study, through the use of a quasi-experimental design with matched comparison groups and repeated measures, allows significant differences in outcomes among groups to more readily be attributed to microenterprise assistance programs. …