A new report by the Federal Reserve Bank of St. Louis revealed that American taxpayers ended up paying $4 for every $1 in wages and benefits that workers received as a result of the Paycheck Protection Program (PPP).
Just The News reports that the study also revealed how the PPP ultimately did not protect jobs that were at risk of disappearing during the pandemic, and that money overwhelmingly went to wealthier households rather than middle- and low-income households.
The study, titled “Was the Paycheck Protection Program Effective,” was written by co-authors William Emmons and Drew Dahl. They concluded that, while “the PPP was a very large and very timely fiscal-policy intervention, saving about 3 million jobs at its peak in the second quarter of 2020 and distributing $800 billion well within two years of the onset of the COVID-19 crisis,” the program ultimately “was poorly targeted, as almost three-quarters of its benefits went to unintended recipients, including business owners, creditors and suppliers, rather than to workers.”
“Due to differences in the typical incomes of those varied constituencies, it also ended up being quite regressive compared with other major COVID-19 relief programs, as it benefited high-income households much more,” the report continued.
The PPP was first created in early 2020 as a temporary program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law by President Donald Trump. The program was intended to aid small businesses that were ordered to either slow down or stop operations altogether as part of the initial lockdown measures. Low-interest loans could be made for up to $10 million, without collateral, for businesses with fewer than 500 employees.
The report by the St. Louis Fed ultimately found that small business owners spent $3 out of every $4 in PPP loans on paying back suppliers and paying other expenses. Overall, 72 percent of PPP funds went to households with incomes in the top 20 percent, according to the report.