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Former McDonald's CEO: We're in a small-business recession

A weak May jobs report raised concerns about the labor market. But a former McDonald's chief executive thinks the U.S. economy may be in worse shape than it seems.

"I think we're in a small-business recession, and if we don't start opening up the opportunity for entrepreneurs to grow their business, we're going to continue see this drop in jobs. We need to energize small businesses," Ed Rensi told CNBC's "Closing Bell" on Friday.

The U.S. economy added just 38,000 jobs in May, the Labor Department said Friday. The number came in well below economists' expectations for about 162,000, according to Thomson Reuters.

A Sports Authority store about to close in Matteson, Illinois.
Daniel Acker | Bloomberg | Getty Images
A Sports Authority store about to close in Matteson, Illinois.

The headline unemployment rate dipped to 4.7 percent. A more encompassing rate held steady at 9.7 percent.

Those figures came after lackluster gross domestic product growth in the first quarter.

Multiple factors could continue to drag on entrepreneurship and small-business hiring, Rensi said. He cited taxation, regulations and minimum wage increases, among others.

The federal minimum wage is $7.25 an hour, though some cities and states have set a higher rate. Democratic presidential candidate Sen. Bernie Sanders of Vermont and others have argued for a $15-per-hour federal minimum wage saying it will increase consumer spending and lower income inequality.

Rensi contended that technology has replaced workers for decades, and "will accelerate if these minimum wage rates end up at $15 an hour." However, he said states should regulate minimum wages because they understand consumers and economic demands of the area better.

Wages should be higher in more expensive localities, he said.