The country's unemployment rate is 8.3 percent, the lowest in three years. But the U.S. still has 5.6 million fewer jobs than before the recession. Assuming the pace of hiring from last year continues, it will take three years to recover all the lost jobs.
Small businesses aren't helping much. They cut more workers than they hired in all but three months last year, and contributed zero to job gains again in January, according to a survey by the National Federal of Independent Business.
To change that record, Republicans say Obama needs to cut federal rules and paperwork that are burdensome for small businesses that don't have human resource departments, legal staff and vast resources like big businesses.
To comply with federal regulations on the environment, for instance, companies with fewer than 20 workers spent $4,101 per worker in 2008, or 4<0x00BD> times more than companies employing 500 or more, according to the Small Business Administration.
The same study showed these businesses spent three times more per worker on tax preparation than did their larger counterparts.
"As regulatory complexity increases, it's hard on small firms," says William Dunkelberg, chief economist at the National Federation of Independent Business, a group closely allied with Republicans. "We need to get government out of the way."
But many economists think the root of the job problem is deeper.
Again, it's the difference between old small businesses and new small ones, and the U.S. is not creating enough of the new ones.
It was true even before the Great Recession: The number of startups less than a year old was no higher in the boom year of 2006 than it was 30 years ago, when the economy was much smaller, according to the Census Bureau. And the ones that are launching are hiring fewer people, too.
The grim takeaway is that the U.S. could struggle with high unemployment long after a pickup in economic growth.
Even the idea that small businesses play an outsized role in the economy has come under attack lately.
A study from the left-leaning Center for Economic and Policy Research shows that the self-employed worker, that rugged exemplar of the small businessperson, accounted for less of the working population in the U.S. than in the other 20 rich countries tracked, except for Luxembourg.
Another study by economists at Harvard and Dartmouth suggests that might not be such a bad thing because poorer countries are more likely to have a higher share of their workers self-employed.
Adding fuel to the argument, Kelly Edmiston, an economist at the Federal Reserve Bank of Kansas City, showed that workers at small businesses are more likely to lose their jobs and less likely to have vacation days, retirement plans and a range of other benefits, including health care. Some 41 percent of companies employing less than 100 people offered no medical insurance at all.
So, myths about job creation aside, why isn't the U.S. launching more startups? The risky economy, regulations or health care costs — a bigger burden for small companies — could be scaring them off.
Haltiwanger thinks demographics may be at work. He says businesses are often started by people in their 30s and 40s. So as the population ages and more baby boomers retire, the number of startups falls.
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