Reducing Barriers to Entrepreneurship Among Military Spouses

Military spouses should be the next frontier in supporting entrepreneurship.

A change recently introduced by Sens. Amy Klobuchar (D-MN) and Thom Tillis (R-NC) to the National Defense Authorization Act (NDAA) would encourage support for entrepreneurs with military spouses. Military Spouses Are An Important Potential Source Of New Businesses – And entrepreneurship is an extremely important economic option for military spouses. But to realize entrepreneurial ambitions, they need help.

First some basic data:

• There are nearly three quarters of a million military spouses in the United States.
• It is a strongly female population (about 90%) and younger than the average American worker.
• They are higher educated than the total labor force.

Yet their employment rate is low: about 57% compared to 76% in general. During COVID-19, about four out of every ten military spouses who had served left the workforce. Unemployment is also consistent higher among military spouses and, when employed, tend to earn less than other workers, in part because of a greater chance of being underemployment.

a 2016 analysis by the Sorenson Impact Center (at the University of Utah) and Blue Star Families found that this employment and income gap — and their consequences — add up to a total “social cost” of between $700 million and $1 billion per year. (Social costs include foregone tax revenue, unemployment benefits, and public costs related to health issues.)

These labor market issues are the result of indirect challenges. Unsurprisingly, as a 2018 report of the Council of Economic Advisers, they face “geographical and temporal constraints” due to the relocations of their active-serving spouses. This is not a tragedy – it is part of maintaining a modern army. Tragically, our laws and policies at the federal and state levels don’t do much to reduce the barriers this lifestyle imposes on military spouses. There are a number of programs at the Department of Defense. And in 2019, Congress passed the bipartisan law on portable certification of spouses, meant to help overcome barriers created by state-level vocational licensing requirements.

Help Wanted

Where extra help is needed is to support those military spouses who are entrepreneurs and those – probably many – who see setting up a business as a possible way out of the above employment challenges. Entrepreneurship “is ideal for this population,” says Moni Jeffersonfounder and CEO of the Association of Military Spouse Entrepreneurs (AMSE). “It takes advantage of their talents; military husbands have so many skills.”

Barriers to military spouse entrepreneurship are many, according to Jefferson. For example, if the family moves, they have to re-establish their business. Many business owners move with their spouses, of course, but military spouses are moving every few years and have to make tough decisions, such as disbanding their old business entity and starting a new one or making interstate fees.

Where this is particularly painful is when an entrepreneur with a military spouse is a government contractor, “often a requirement is to have been in business for at least a year,” Jefferson says. As for contracts, Jefferson points to the possibility that the federal government will create a new set-aside category for companies owned by military spouses. Such categories exist for veterans with disabilities, women, and other “disadvantaged” small businesses. The Ministry of Defense accounts for more than half of the government small business contracts and could explore ways to identify military spouse entrepreneurs for awards.

Business rules even differ between military bases, Jefferson says. It would also help to find ways to harmonize these. But the “biggest thing that’s missing is help and support for those running their businesses so they can grow, such as help with digital tools and services.”

That’s where the Klobuchar-Tillis amendment comes in handy. If passed, it would instruct the Small Business Administration (SBA) to help military spouses set up and operate businesses. Will it help?

Possibly. The amendment does not say much about the content of that aid. Interviews with people in the world of entrepreneurship support show that existing SBA assistance programs are uneven in quality and inconsistent in content. In addition, the SBA can do little about some of the other challenges raised by Jefferson, such as the shrinking and intractable state-level barriers.

If the amendment passes and the SBA takes on this task, Jefferson has suggestions on what it should focus on: “Entrepreneurs with military spouses need a cheerleader. They need a community with a high level of involvement.” SBA will need to work with those on the front lines of entrepreneurship to ensure that all aid provided ties into private support organizations and is community-focused, not just technicalities.

Most importantly, it is a start and a signal. Getting this issue right could mean not only much-needed support for military spouses, but also major economic benefits for military families and, most importantly, all the communities in which they operate.