- The Payroll Protection Program has issued $510 billion in low-interest loans since April 2020. 72% of that cash has ultimately flowed to the top-fifth of high-income earners and business owners, according to a new study.
- The authors estimated that only 23% to 34% of PPP funds went directly to workers via paychecks — the remaining 66% to 77% went to business owners, shareholders, creditors, and suppliers.
- The economists suggest the US prepare a “sophisticated administrative system,” similar to other high-income countries that wield more efficient emergency financial programs.
Hayley Cuccinello from Insider writes:
“The Payroll Protection Program was launched in April 2020 and issued $510 billion in uncollateralized, low-interest loans of up to $10 million by the end of the year. The speed of this unprecedented program helped businesses keep their doors open, but workers weren’t the main beneficiaries of PPP, according to a study authored by economists earlier this month.
The authors, including Massachusetts Institute of Technology professor David Autor and economists from the Federal Reserve , found that PPP saved 1.98 million and 3 million years of employment over 14 months. The study was conducted using data from payroll software provider ADP and the Bureau of Labor Statistics.
The economists estimated that $115 billion to $175 billion in PPP loans went toward paychecks, meaning that only 23% to 34% of PPP funds went directly to workers who would otherwise have lost jobs.
Where did the rest go? The remaining 66% to 77% went to business owners and stakeholders, including shareholders, creditors, and suppliers…”
See full story here.