Do small businesses drive the economy?

Consider these facts:

• 90 per cent of small firms have fewer than 20 workers, employing 21.6 million people on an annual payroll of just $726 million. Therefore, it's at least debatable whether small businesses drive anything.

• The federal government's Office of Advocacy released a 2010 report on the income and wealth of small business between 1998 and 2007. Most had annual household incomes < $99,000 in 1998, 2001, 2004 and 2007. Only 15-19 per cent had incomes > $100,000. Around 50% of small businesses reported gross sales of under $50,000 a year.

• Most businesses are sole proprietors, which means only one person is getting paid.

• Of businesses that employ more than one person, 13-15 per cent between 1998 and 2007 were classified as S corporations, which means a tax up or down makes little difference since they usually don't pay federal income taxes anyway.

• A report by the Federal Reserve Bank of St Louis studied job growth between 1992 and 2010. It notes that gross job gains were 2.8 million per quarter. That's very impressive. But if you take into count the number of small businesses that failed, that number is dramatically lower: just 173,000. That's not so impressive, and reflects the churn of small business owners.

• There are approx 150 million employed people in the US.  According to Social Security Administration, half of all wage earners - or approx 75 million people - made less than $27,000 two years ago.

And consider this: What businesses need to make more money is demand, and to create demand, you need a middle class whose consumption of goods and services would truly drive the economy.  An economy cannot be sustained by the consumption of the wealthy class.Now let's look at the last 20+ years:

• Average income for the 99% went up 5 times.

• Average income of the top 1% went up over 200 times.

• Cost of goods went up 10 times. 

Increase in real value of the minimum wage since 1990: 21%Increase in cost of living since 1990: 67%One year's earnings at the minimum wage: $15,080Corporate profits are up 20%Households with children need to earn 20% more this year than last to maintain their normal lifestyle.