Bill Miles, Mint Images, Getty Images
According to the latest numbers from the Census Bureau, the number of one-man and one-woman businesses in the U.S. has grown 28 percent over the past decade.

Totaling 22.5 million as of 2011, these "nonemployer businesses" -- businesses that have no paid employees and are subject to federal income tax -- now account for roughly "75 percent of all U.S. business locations," according to the Census Bureau, and include everything from insurance businesses to real estate agencies to barbershops.

And there's no sign that growth will slow down.

Today's David vs. Goliath Battle

According to Forbes columnist Elaine Pofeldt, technology is helping many of these firms achieve success despite their modest size. These businesses are leveraging the Internet to reach new customers, and some are using platforms like Amazon.com to give them a global storefront.

Pofeldt expects that as more folks catch on to this opportunity, "we're going to see a lot more of these firms in coming years." But is that a good thing?

It's obviously good for these sole proprietors, who are able to keep costs down thanks to helpful apps and cloud-based programs.

On top of that, small businesses have traditionally been "engines of growth for the economy and, particularly ... job creators," according to Nathan Sheets of Citi Research. In fact, since the late 1970s, small businesses have generated about 60 percent of new jobs. What's more, most of this growth comes from these "young firms -- new start-ups," says Sheets.

Historically, a rise in small-business numbers has foreshadowed a period of economic prosperity. But the same technology that's making one-man shops so easy to run may mean today's small businesses might not have a similar effect.

Technology May Be Too Good

Today, retailers can automate their business processes using Amazon's seller services so that Amazon (AMZN) not only handles the transaction, but manages inventory and fulfills shipment as well -- eliminating the need for hired help.

On the other hand, "one-man" businesses like insurance companies and real estate agencies -- the kind which usually do need additional bodies -- are more frequently making use of contractors, who are responsible for their own taxes and benefits, and who can be easily let go on a whim if money gets tight.

Technology makes it easier to manage these pseudo-employees, with constant cellphone contact, virtual computer monitoring, etc., reducing the need for business owners to provide a physical office.

But Here's the Scary Part ...

As economic analyst Dane Stangler writes, "The U.S. economy has enjoyed positive rates of new job creation for the past thirty years largely because of the steady pace at which new firms come into existence.... [T]he net creation of new jobs among [large established companies] is usually zero."

Given this history, it's not all that surprising to read about IBM's (IBM), Lockheed Martin's (LMT), or Bank of America's (BAC) recent or upcoming layoffs.

However, if small firms are also not hiring -- moving from one-person shops to full-fledged small businesses, America's economy at large could be doomed.

If small firms continue to remain hesitant to add employees, or continue to prefer technological alternatives to hiring help, years from now, we may look back on today's 7.6% unemployment rate and reminisce about how low it was.

Motley Fool contributor Adam Wiederman has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America, International Business Machines., and Lockheed Martin. Try any of our Foolish newsletter services free for 30 days.

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nladney

This is all pure speculation. Maybe all those people not being hired by the new small companies will start their own small companies. Who knows? This article's speculation is irresponsible.

July 24 2013 at 4:24 PM Report abuse rate up rate down Reply
1 reply to nladney's comment
Karen Wood

http://www.dailyfinance.com/

July 25 2013 at 7:40 AM Report abuse rate up rate down Reply
mike at home

The individuals who want to work will prosper those who want to be dependent on others will face the uncirtanity of unemployment

July 24 2013 at 2:42 PM Report abuse rate up rate down Reply
Frank and Barbar

Hard to start a business when banks"Who have all the money" will not lend any of it out. The interest rates are way to low"0.25%" so banks can't charge high interest rate. Thus they will not lend. Raise the Prime " Discount Window" interest rate to 4 or 5 % and watch the banks start to throw money at people. The banks who where saved by the Federal Reserve are the problem.

July 24 2013 at 2:20 PM Report abuse rate up rate down Reply
1 reply to Frank and Barbar's comment
nladney

There's a problem with your solution. Raising the interest rate to 5% means the feds would have to pay that rate on their borrowed money. 5% of $16 trillion is $800 billion, about $500 billion more than now. That's 20% more than the feds are spending now. You think deficits are bad now, an increase in interest rates will require massive cuts in all fed spending or increasing the deficit even more.

July 24 2013 at 4:20 PM Report abuse rate up rate down Reply
drpmindmender

Here's a real money-maker - Start a PAC

Right now, there are multiple groups raising tens of thousands of dollars, just to give George Zimmerman a new gun., yielding a 99+% tax-free profit...

...Talk about a license to steal.

July 24 2013 at 1:37 PM Report abuse rate up rate down Reply
Normie Baby

America's economy was doomed when we started sending our manufacturing base overseas. And it won't get better until it returns.

July 24 2013 at 12:52 PM Report abuse +6 rate up rate down Reply
Iselin007

Funny Timesizing promotes part time jobs to save the jobs of everyone but the result is older workers and the handicapped terminated and part timers doing the work of 2 or 3 people making the greedy richer!

July 24 2013 at 12:33 PM Report abuse +3 rate up rate down Reply
Iselin007

I think that after WWIII the scammers and shiesters of Healthcare will fall by the wayside making National Healthcare affordable for all.

July 24 2013 at 12:08 PM Report abuse -1 rate up rate down Reply
1 reply to Iselin007's comment
Frank and Barbar

That Funny. Thanks for the laugh.

July 24 2013 at 2:15 PM Report abuse rate up rate down Reply
moretrorun

You forgot the independent pharmacist who has been bullied out by the big drug chains, the physicians who are now part of hospital corporations, the attempt to do away with independent tax preparers in favor of the large and more expensive corporations and the others which space does not permit.
Self-employment eliminates the need for unemployment compensation as self-employed are supposedly always employed even if they aren't making money. Additional retirement plans are available to self-employed which reduces the need for aid for seniors if they take advantage of these plans.
Self-employment is good for the economy. But the article is short-sighted, incomplete, and I submit simply wrong. Big business is gobbling up small business. There is no rise out there. Look again.

July 24 2013 at 12:01 PM Report abuse +3 rate up rate down Reply
3 replies to moretrorun's comment
Iselin007

Domesday Book 1086: Robert son of Walchelin; Gee whose family could that be? ;)

July 24 2013 at 11:51 AM Report abuse -1 rate up rate down Reply
Iselin007

Church records in Europe record data that refers to many of our ancestors before an after the Norman conquest. Empires fell then an they will continue to fall well into the future until the end.

July 24 2013 at 11:48 AM Report abuse +1 rate up rate down Reply