This post has been corrected.
The idea of small businesses driving a broader jobs recovery in the United States is weakened by a simple truth: Small businesses just aren't as central to the U.S. economy as elsewhere.
A smaller share of workers in the United States work in small business than in many other upper- and middle-income countries., according to CEPR's analysis of a new OECD report, cited by The Washington Post. The report also found that large corporations account for a larger share of jobs in the United States than in any comparable country.
Only 11.1 percent of Americans work for a business with up to nine workers, and just 34.1 percent work for a business with up to 50 employees, according to the Center for Economic and Policy Research's John Schmitt's analysis of the report. Meanwhile, 52.7 percent of Americans work for a corporation with at least 250 employees. In most European countries, between 14 and 40 percent of workers are employed by a corporation of that size.
The true size of the United States' small business sector may help explain the recent lack of job growth. Corporations are hoarding record amounts of cash, and companies such as Lockheed Martin and Merck & Co. recently have been unafraid to lay off many workers at once.
Indeed, large corporations have been squeezing more profits from their current employees as overall profits rise, while wages and payrolls have not grown in a corresponding way. Corporate profits in the third quarter of 2010 were the highest on record, according to The New York Times. Even as corporate profits have risen two-thirds to $1.6 trillion as of last year, the number of non-farm jobs in the U.S. has fallen 3 percent.
That's party explained by a focus on expanding overseas at the expense of hiring at home. In the 2000s, U.S.-based multinational companies have added 2.4 million jobs in foreign countries and slashed 2.9 million jobs in the United States, according to the Commerce Department.
Some right-leaning politicians have claimed that small businesses are the linchpin of the American economy, and that taxes and regulations have prevented them from hiring more workers. Just yesterday, Texas Governor and presidential candidate Rick Perry said, "This president does not understand how to free up the small business men and women...by lowering the tax burden." Even so, as The Huffington Post reported in May, many small business owners have said that tax policy minimally impacts their hiring decisions.
"What we do in business, how we spend our money, how we allocate our resources -- that has very little to do with tax policy," said Michael Teahan, who owns and operates Espresso Resource.
However, it seems increasingly clear that even if small businesses start to hire again in full force, they would not be able to alleviate joblessness in the same way that large corporations could. Corporate giants such as Walmart and McDonald's each employ twice as many people around the world as the population of Rhode Island: more than 2 million people. But large companies such as Apple, Google, and General Electric are hoarding larger amounts of cash than the gross domestic product of countries such as Estonia and Iceland.
Correction: A previous version of this post mistakenly attributed analysis of the OECD report to The Washington Post.