As a small time employer they take a lot of the employees issues out of your hands and place it in the hands of the state (which is GOOD because now I won't need a HR person, insurance specialist, and so on).
For example, health insurance: not the employer's problem, long term/short term disability: not the employer's problem, holiday ("vacation") time/sick leave/maternity/paternity: already defined by law (which is GOOD, since now no drama) and often times the employee is compensated from the state (e.g. maternity leave).
In the US it is incredibly uncompetitive between small and large businesses. Small businesses just cannot offer the same perks and pay (they literally pay more for the perks too), and that means you cannot hire the best.
While small time employers in europe may not be able to match pay like for like, they can almost always match "benefits." Plus the work life balance remains real so people with families can continue to remain competitive.
The only real way to even do a startup now in the US is via huge investment from a VC (just to pick up the employee pay packet). True "basement startups" are all but dead, which definitely isn't the case in much of Europe (particularly in several minority communities which are flourishing).
That all being said, if I wanted to open a "programmer sweatshop" I'd definitely do it in the US or China. Just pay new grads slightly above the minimum wage, offer no benefits, and rake in all the profits yourself -- the US allows that easily both due to the law (or lack of) and because much of the US populace feel that people exploited "deserve" it (e.g. Walmart workers) for being "lazy." You'd be a "local business hero" as opposed to Europe where you'd be hated pretty universally.