Hm.. Orcs are easy to explain. I doubt Sauron or Saruman care at all about their lives. As the animated adaption put it: "When there's a whip there's a way". add in constant external warfare (and possible internal warfare too) and you end up with a low population.
Hobbits are implied to have a very different past from their LOTR circumstance (IIRC they conquered the Shire from the Orcs?), though I recall very few details are given. One may also suspect a low reproduction rate judging by lifespan. Perhaps the Shire started from a low base, and only by LOTR had enough for an industrial revolution?