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
HTML EMBED:
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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

Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?

This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.

Could waiving patents increase the global supply of COVID-19 vaccines?

India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

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