COVID & Unemployment

PPP boosted employment through early June, study finds

Justin Ho Jul 23, 2020
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With the coronavirus closing many businesses, the Paycheck Protection Program saved millions of jobs that would have been lost, according to MIT research. Justin Sullivan/Getty Images
COVID & Unemployment

PPP boosted employment through early June, study finds

Justin Ho Jul 23, 2020
With the coronavirus closing many businesses, the Paycheck Protection Program saved millions of jobs that would have been lost, according to MIT research. Justin Sullivan/Getty Images
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There’s a new study out this week that found the forgivable PPP loans out there added as many as 3.2 million jobs through the first week of June.

However, it is way too early to tell whether the jobs saved by the Paycheck Protection Program are here to stay.

“We don’t know if those jobs will persist. If that allows businesses to remain viable that otherwise would have gone under, or if those jobs are going to fade away the minute PPP ends,” said MIT’s David Autor, who authored the study.

Autor said the findings suggest the government was successful in getting money into the hands of businesses and the employees whose jobs were saved.

“So even if you conclude that the PPP had no long-term effect on employment, you would not say the money was just, you know, thrown down a hole. It was distributed to citizens,” he said.

The thing is, businesses that received PPP loans employed roughly 50 million people before the crisis, said Ernie Tedeschi, an economist at Evercore ISI.

The fact that the program only saved 2 or 3 million jobs, so far “suggests to me that the PPP went to a lot of businesses who otherwise didn’t need the money,” he said.

The paper also found that the cost of the jobs saved amounted to roughly $224,000 per job. Tedeschi said that is high but not surprising, given how fast the program rolled out.

Overall, he said, the study can help policymakers improve future aid programs.

“We can see that the next time we want to do small business aid, we should probably target it better than the way we did in the PPP,” he said.

MIT’s Autor said we’ll continue to learn more about how the program has boosted employment as businesses report their payroll numbers in the months ahead.

COVID-19 Economy FAQs

With a slow vaccine rollout so far, how has the government changed its approach?

On Tuesday, Jan. 12, Health and Human Services Secretary Alex Azar announced changes to how the federal government is distributing vaccine doses. The CDC has expanded coronavirus vaccine eligibility to everyone 65 and older, along with people with conditions that might raise their risks of complications from COVID-19. The new approach also looks to reward those states that are the most efficient by giving them more doses, but critics say that won’t address underlying problems some states are having with vaccine rollout.

What kind of help can small businesses get right now?

A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.

What does the hiring situation in the U.S. look like as we enter the new year?

New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.

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