Line of Inquiry: Richard Hornbeck on the Virtuous Cycle of Women’s Participation in 19th-Century Manufacturing

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This project started with a long-standing, large-scale data collection exercise that we’ve been doing to digitize the census of manufactures in the United States from 1850, 1860, 1870, and 1880. And so for those four decades, it gives us a very comprehensive view into manufacturing activity in the United States. So we see almost all of the medium- to larger-scale manufacturing enterprises in the US, even down to a relatively small threshold of $500 in sales that might be relatively smaller establishments run out of someone’s home.

One of the things that we started to see when we were collecting this large-scale data is that relatively rare phenomenon that wouldn’t have been very visible in smaller samples started to emerge. Things, for example, like certain establishments that seemingly were owned and operated by women.

Now, it was only maybe roughly 1 or 2 percent of manufacturing establishments at this time, but because we have such a large sample, we can still observe maybe 3- or 4,000 establishments that look to be run by women. And that was intriguing because most of the economics literature at this time has focused on women’s labor market participation, how women increasingly got more involved in working in particular establishments. And this will provide a counterpoint to that, which is how women increasingly started to get more involved in actually owning and operating the businesses themselves.

And so we could start to see: What were these female-headed establishments like? What particular industries were they specializing in? And how were they distinct from the male-headed establishments at that time?

So we see women-headed establishments specializing in particular industries, like women’s clothing and hat making, things that they might have been sort of more familiar with from home production, and then looking to scale that up into more market-oriented production. But women are also owning and operating businesses across a wider range of manufacturing activity—the same sorts of things that men were owning and operating at that time.

We see that the female-headed businesses are smaller, and not only are they smaller in terms of sales, but they’re also using less capital as a share of their overall expenditures, or their overall sales, which suggests some friction, some rigidities in women getting access to finance, access to capital for starting up or operating one of these businesses. And it’s intriguing because it suggests that, well, if the economy could do a better job of getting capital to places where it has its highest return, then maybe the aggregate economy would benefit from making these opportunities increasingly available to women at this time.

So we see women owning and operating these businesses even at a smaller scale. And then, in those operations, they’re also hiring women more. They’re more likely to hire women. They’re more likely to only hire women, and they’re paying women higher wages. And so, it feeds back into what we were thinking about women’s labor market participation, which they, given that these female-headed businesses are sort of disproportionately hiring women, as more women get drawn into the labor force, there’s gonna be more people that they could potentially work with. And also, as more women start to own businesses, that’s gonna create more opportunities for women as well. So it creates this potential virtuous cycle between what people are focused on, which is increasing labor market participation of women, and this other counterpoint that we can now see in these new data, which is increasing female business ownership and operation itself.

We see this emerging in the historical United States, which I think provides an interesting comparison and contrast with a lot of things people have been looking into nowadays in modern developing countries across, like, India, Zambia, Ghana, in terms of increasing women’s involvement in the economy in terms of business operation. Just from my own, like, personal life, I remember talking with my cousin-in-law in India, who, you know, was very good at making sweets in her home. And so, she started actually a small business to sort of manufacture and sell these sweets to neighbors. And started actually to hire a couple of workers, started to use more materials, started to invest a little bit more capital, but still was a relatively small-scale operation. And it never really scaled beyond just this sort of home enterprise. Whereas in contrast, sometimes I find myself reading the back of a pretzel bag, and there’ll be some story on the back of the pretzel bag about this woman who made very good pretzels at home, but then realized that actually other people like these pretzels a lot as well. And so, you know, she started hiring workers. She started using more capital and bringing in some more materials, scaling up the operation, but then really expanding it into a large-scale business—advertising, distribution. That’s why I’m reading this on the back of a pretzel bag now, but I get these delicious pretzels that otherwise, you know, maybe I wouldn’t have had that same opportunity. And so, the broader economy is benefiting as these opportunities become more broadly available.

One other exercise that we do in the paper is we take these women who are the head of these businesses and we link them to the census population, both just simply to confirm that they do indeed seem to be women, and not just sort of the rare number of men that have names that we might have thought were women. And indeed, most of these are women that we can link the census of population. But then once we’ve linked the census of population, we can then start to look at, well, how are these women who own these businesses distinct from, you know, other women just generally in the population? And we see that they tend to be older. They’re more literate, They’re more likely white. They’re more likely immigrant, which speaks to the different opportunities and draws in that different people might have in business ownership at this time. We see that they’re more likely to be widows, which suggests that some of these establishments might be things that were passed on to them when their husband died, but it’s still not the majority of the businesses that are owned by widows.

And so, it’s an interesting puzzle about, well, how did these particular women end up being the ones that launched these businesses, or were operating these businesses? And it’s just something I think, you know, we’re gonna have to leave to sort of future work, but we’re excited to see where this can develop.

And it really, I think, illustrates the strength of collecting all of the census data, where you can start getting into these situations that are more rare from the overall scope of manufacturing activity, but you can see it once you have all of the data available. And so, it’s one of the things that’s hard to resist, you know, as an economic historian, is just data collection, and just the sorts of things that you can see once you can shine a light on things that we hadn’t previously known. And so, a lot of it just starts with, well, this is some really interesting data and it’s gonna give a view into something that we can then look to explore more.