Analysis: Are small businesses overrated?

America loves its small businesses.

According to a Gallup poll, 70 percent of us say we have a "great deal" or "quite a lot" of confidence in our Main Street merchants and other small companies, as compared to only 21 percent for big companies. Politicians love small businesses, too. Democrats regard us as Davids fighting the corporate Goliaths. Republicans say we are the best examples of capitalism at work. But not everyone is sharing the love. One person in particular believes that American small businesses are simply ... well ... overrated.

That person is Matt Bruenig. He's the founder of the People's Policy Project, a think tank with the mission of publishing ideas and analysis that, according to its website, assists in the development of an economic system that serves the many, and not the few.

Bruenig makes his case in an article he recently wrote for Jacobin, where he questions the "remarkably high" level of enthusiasm that many Americans have about small businesses, as well as the idea that mom-and-pop shops and small-time entrepreneurs are "inherently just beautiful." He believes that promoting small businesses as the heroes against villainous corporate America is "mostly a bad idea." More importantly, he makes a few very good points.

One of the points he makes, using U.S. Census data, is that small businesses mostly pay lower wages than big companies. Considerably less, actually, with big companies (those with more than 1,000 employees) paying, on average, almost $1,000 more a week than their smaller (nine employees or less) counterparts. Adding in benefits like health insurance only increases the disparity. Only 20 percent of small companies provide health insurance to their employees as compared to 99.8 percent of bigger corporations. "Larger employers tend to have the resources to make welfare systems for their workers while smaller employers do not," he writes.

When it comes to protecting employees, Bruenig says it's the large employers that come out way ahead. Most small businesses are exempted from government labor regulations that address racial, gender, religious, disability, age and other discrimination. Only employers with more than 50 employees must comply with the Family and Medical Leave Act requiring employers to continue to provide health coverage to employees on leave for medical or personal reasons. Labor organizations have more restrictions over their abilities to organize unions at smaller employers.

For Bruenig, it all adds up to one conclusion: small businesses are overrated.

"This isn't to say small businesses are totally useless," he writes. "The creation of new businesses, which often start out small, is one of the ways that innovation gets injected into the system." But in the end, Bruenig feels that small companies are basically treated with a little too much love.