Hard Times for Small Business

One area of the economy that has still not reached full recovery is the nation’s small businesses. Economists at Citigroup have found that payrolls at companies with fewer than 500 employees now account for less than 50 percent of the total workforce – the first time that has happened since 2008, in the midst of the recession. Small businesses’ share of America’s GDP has dropped from nearly 50 percent in 2001 to about 45 percent now.

Small business as a force has been declining for some time now. Small businesses were responsible for 61 percent of all new jobs created in the decade from 1998 to 2007. But that number was 65 percent in the ten years prior to that, and 77 percent in the decade that ended in 1987.

Altogether, the total number of small businesses in America had come down to 4.9 million in 2010. In 2007, before the effects of the recession, that number had reached a peak of 5.3 million.