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  • Ryan Wittler

Who Did the Paycheck Protection Program Actually Help?


A new report from the Federal Reserve Bank of St. Louis shows that while the Paycheck Protection Program (PPP) distributed funds quickly, the loans disproportionately flowed to unintended business recipients and wealthier households, rather than the rank-and-file workers the program was meant to protect.

Report highlights:

The report cites a recent study that found only about one-quarter of the PPP’s $800 billion ultimately went to workers whose jobs were saved, estimating around 72% went to households with incomes in the top 20% nationally.

  • The Fed report found the impact of the PPP “compares unfavorably” with the two other major fiscal-policy programs enacted during the COVID pandemic: the $680 billion in unemployment insurance payouts and the $800 billion in direct economic impact payments.

The study found the PPP saved approximately 2.97 million jobs per week in the second quarter of 2020, and 1.75 million each week in the fourth quarter.

  • The cost per job saved for one year was $169,000 to $258,000, outpacing the average $58,200 paid in wages to small business employees in 2020.

Why it matters:

The St. Louis Fed says that while the PPP was timely (it began distributing funds three weeks after the pandemic was declared in the U.S. and, as of last month, has wound up 90% of the loans given), it was also poorly targeted, ultimately giving funds to unintended business recipients like creditors and suppliers, rather than workers.

  • The St. Louis Fed also described the program as “regressive,” as it benefited high-income households much more than others.

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