HR 5050 – The Women’s Business Ownership Act of 1988

October 25th is the 30th anniversary of President Reagan’s signing of the historic Women’s Business Ownership Act of 1988.

When John LaFalce (D-NY) became Chairman of the House Small Business Committee in 1987,  he was focused on “what I could do to give the economy the biggest bang.  I thought that we had an untapped goldmine in women entrepreneurs.” 

So when Gillian Rudd – President of the National Association of Women Business Owners (NAWBO) in 1988 -- and Chairman LaFalce got into a conversation at a House Small Business Committee reception that year, they decided that it would be a perfect time to hold several days of comprehensive hearings on women’s business ownership.

After the Congressional reception, five leaders from the Washington DC chapter of NAWBO, including me, held a Strategic Slumber Party at a cabin in the hills of Virginia, at which we barely slumbered.  Instead, we mapped out strategy all night, on how we could create an amazing set of hearings that would transform women’s entrepreneurship in the United States.

Because Chairman LaFalce “wanted a 50-50 chance for women,” he reserved a number, House Resolution (HR) 5050 – the informal name by which the legislation was known before the bill became law – and claimed it as soon as that number became available.

Congressman LaFalce remembers, “There were old boys networks in the 1980s, but very few old girls networks at that time. So we wanted to create a mechanism to bring women together and to educate them on entrepreneurship.”  The legislation created five women’s business centers to educate women entrepreneurs, and there are now more than 100 of these centers that train women entrepreneurs around the United States.

In the late 1980s, the government counted mostly sole proprietorships that were women-owned, rather than larger corporations.  This resulted in policymakers thinking that all women-owned businesses were tiny.  Thus, the legislation required the Census Bureau to begin counting all women-owned businesses, which enabled women entrepreneurs to suddenly become visible. 

Wanting to “rid the economy of discrimination against women,” John LaFalce also thought that we needed “to get rid of regulations in a number of states that required a male guarantor for business loans.” The witness we invited to address this issue was Lillian Lincoln (later Lambert).  In 1969, she was the first female African-American to graduate from the Harvard Business School.  She started her own firm, Centennial One, a building services company, in 1976. When she decided to apply for a business loan, Ms. Lincoln did not have a living father, husband or brother who could co-sign her business loan application.  Instead, she had to get her 17-year-old son to sign the loan for her – even though she was supporting her young “guarantor” entirely through the income from her growing business.  Centennial One was generating $20 million in annual sales by the time that Lillian Lincoln sold the company in 2001.

Finally, John LaFalce and NAWBO’s leadership wanted to keep the eyes of the government on the role of women in the economy over an extended period of time, rather than only during this set of hearings. Hence, the legislation created the National Women’s Business Council, to provide policy recommendations to the Congress, the Administrator of the Small Business Administration, and to the President of the United States.

Ten members of the Washington DC chapter of NAWBO worked intensively on the hearings over a period of several months, to identify witnesses, draft testimony, train witnesses and orchestrate media coverage.  Throughout the entire process, NAWBO leaders worked hand in glove with Chairman John LaFalce (D-NY); Andy Ireland, Ranking Minority on the House Small Business Committee (R-FL); and Don Terry, the Committee’s Staff Director.

It was crucial to NAWBO, Chairman LaFalce and Congressman Ireland that we have roughly the same number of Democrats and Republicans as co-sponsors, to ensure that the issue was completely bipartisan. Ultimately, the legislation passed with near unanimous support in both the House and Senate, in only 103 days.  The bill was signed by President Reagan on October 25th – 30 years ago today – as the Women’s Business Ownership Act of 1988.

One issue that NAWBO desperately wanted to have included in the final legislation was access to federal procurement.  However, NAWBO’s policy team was almost certain that we would not be able to get the legislation passed if that component was included, so we dropped it, thinking that the National Women’s Business Council could get it passed the following year.  In fact, it took many years to make substantive progress on federal procurement.

I talked with retired Congressman LaFalce two days ago, to ask him what his thoughts were on his role in creating this landmark legislation.  He told me, “I look back on this legislation very fondly, and was extremely honored when NAWBO gave me its first Congressperson of the Year Award. I also was so pleased to learn recently that the Women’s Business Ownership Act of 1988 is now referred to as ‘The Big Bang of Women’s Entrepreneurship in America.’  That’s exactly what I set out to do when I became Chairman of the Committee – to give the economy the biggest bang I possibly could, by tapping an untapped goldmine – women entrepreneurs.”

Virginia Littlejohn is President and Co-Founder of Quantum Leaps, Inc. She is a past national President of the National Association of Women Business Owners, and one of the architects of this legislation.