COVID-19

Which businesses got PPP loans? Probably those that needed them the least, researchers say.

David Brancaccio, Nova Safo, Rose Conlon, and Alex Schroeder Jun 24, 2020
Heard on: Marketplace Morning Report
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COVID-19

Which businesses got PPP loans? Probably those that needed them the least, researchers say.

David Brancaccio, Nova Safo, Rose Conlon, and Alex Schroeder Jun 24, 2020
Getty Images
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Who got loans under the Paycheck Protection Program?

This is money — grants if the paperwork is done right — to keep businesses afloat and employees on payrolls until the effects of the pandemic ease. Under pressure from Congress, federal officials have agreed to eventually release that information. But there’s new research from Lawrence Schmidt at the MIT Sloan School of Management and Dimitris Papanikolaou of the Northwestern Kellogg School of Management that suggests those who got the most aid, may have needed it the least.

Marketplace’s Nova Safo has more on that. The following is an edited transcript of his conversation with “Marketplace Morning Report” host David Brancaccio.

Nova Safo: The researchers looked at a number of different data sets that are already available, and what he extrapolated is that those most affected by job losses right now — lower-income workers — got the least amount of money from the Paycheck Protection Program, because loan amounts were based on how much firms paid their employees. Here’s what Schmidt had to say:

“And so what this ends up meaning is that if you’re a firm that pays higher salaries, you’re going to be eligible for more aid. But this has the perhaps unintended consequence of sending more aid to the types of firms where perhaps people are least exposed to the pandemic.”

For example, Schmidt found the biggest loans went to the professional and technical services sector — lots of remote workers, fewer jobs lost.

David Brancaccio: Congress is now considering what another pandemic aid package might look like. In light of his findings, what does Schmidt suggest?

Safo: Well, what he’s saying is that the initial rounds of aid were pretty uniform, and that made sense because Congress needed to act quickly. But now Schmidt suggests a different approach:

“When some people are really being hit hard and others are going to be more or less OK, able to keep their jobs, it might be a little more advantageous to put into place a more targeted approach. Because then you could send larger checks or send checks for longer periods of time to these types of sectors that are severely disrupted.

One example he gave here is child care: Lower-income employees and women are more likely to not be able to work if they don’t have child care for kids stuck at home because schools are closed. So that’s one way he says Congress can target aid in the next round.

COVID-19 Economy FAQs

Pfizer said early data show its coronavirus vaccine is effective. So what’s next?

In the last few months, Pfizer and its partner BioNTech have shared other details of the process including trial blueprints, the breakdown of the subjects and ethnicities and whether they’re taking money from the government. They’re being especially transparent in order to try to temper public skepticism about this vaccine process. The next big test, said Jennifer Miller at the Yale School of Medicine, comes when drug companies release their data, “so that other scientists who the public trust can go in, replicate findings, and communicate them to the public. And hopefully build appropriate trust in a vaccine.”

How is President-elect Joe Biden planning to address the COVID-19 pandemic and the economic turmoil it’s created?

On Nov. 9, President-Elect Joe Biden announced three co-chairs of his new COVID-19 task force. But what kind of effect might this task force have during this transition time, before Biden takes office? “The transition team can do a lot to amplify and reinforce the messages of scientists and public health experts,” said Dr. Kelly Moore, associate director for the Immunization Action Coalition. Moore said Biden’s COVID task force can also “start talking to state leaders and other experts about exactly what they need to equip them to roll out the vaccines effectively.”

What does slower retail sales growth in October mean for the economy?

It is a truism that we repeat time and again at Marketplace: As goes the U.S. consumer, so goes the U.S. economy. And recently, we’ve been seeing plenty of signs of weakness in the consumer economy. Retail sales were up three-tenths of a percent in October, but the gain was weaker than expected and much weaker than September’s. John Leer, an economist at Morning Consult, said a lack of new fiscal stimulus from Congress is dampening consumers’ appetite to spend. So is the pandemic.

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