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I suspect demographics has a much bigger role here than the author realizes. In the 1980s, the Baby Boomers were just hitting their peak earning years. In the mid-2000s they were starting to retire.

It's an interesting argument. But I dissagree. Baby Boomers that stayed in the business for themselves passed it on or retired large. Most Baby Boomers worked for the same company for many years and were motivated by PENSIONS. The Gen Xers (me included) were the generation that started job hopping in the 90's when the grass got greener and greener on the othe side of every fence. The 80's and 90's saw LOTs of start ups and failures in the tech industry. And those entrapenuers are in their prime right now 30s and 40s. There is a lot of potential there, including me. There is just too much regulated risk in starting up a business today. That regulated risk is heaped on top of the normal competitive risk that naturally exists.

I believe your argument certainly desrves a place in the numbers. But I would not agree that it compromises the largest cause for the statistics by far. For proof, look at the population growth of the nation with regards to Baby Boomers 30 years ago and eligible workers today. If the increase in labor participation was keeping up with population growth, the unemployment rate would be well into double digits.

There's a lot of truth to what you've said, but there's something to consider here that ought to make it easier to start a new business in many industries (despite the excessive regulation). As the legendary "supply side" economist George Gilder pointed out back in the 1980s, the age of computers and advanced telecommunications brought about an environment where investing in new capacity to improve productivity is cheaper than ever before. Think of how much it would cost Ford or GM to double their production capacity. Then think of how little it would cost an engineering or accounting firm to double its capacity through better software, faster computers, high-speed printers, etc.

One possible problem here might be that it is now too easy to improve productivity ... meaning that someone with a great idea for a start-up in a technology-based industry might decide it isn't worth it because the technology wouldn't be relevant long enough to make an initial investment pay off.

I don't see unemployment rates as an accurate measure of small-business activity. The person who has the capacity and the drive to start a business may not be the same as a typical long-term unemployed person.