• $510 billion in loans were issued through the Payroll Protection Program in 2020.
• Business owners and stakeholders have been the main beneficiaries of these loans, according to a new study.
• As a result, only 2% of those loans went to low-income households, the economists concluded.

The Payroll Protection Program launched in April 2020 and issued $510 billion in low-interest unsecured loans of up to $10 million by the end of the year. The speed of this unprecedented program helped businesses keep their doors open, but workers were not the main beneficiaries of the PPP, according to a study written by economists earlier this month.

The authors, including David Autor, a professor at the Massachusetts Institute of Technology, and economists from

Federal Reserve

, found that PPP saved 1.98 million and 3 million years of employment over 14 months. The study was conducted using data from payroll software provider ADP and the Bureau of Labor Statistics.

Economists estimated that $115 billion to $175 billion in PPP loans went to paychecks, meaning only 23 to 34 percent of PPP funds went directly to workers who otherwise would have lost their jobs.

Where did the rest go? The remaining 66% to 77% went to business owners and stakeholders, including shareholders, creditors and suppliers.

The authors also estimated that the program spent between $170,000 and $257,000 per job-year saved.

“The vertiginous rise of the PPP, its high cost per job saved and its regressive impact have a common origin: the PPP was essentially untargeted because the United States did not have the administrative infrastructure to do otherwise” , reads the working document, shared by the National Office. economic research.

The picture becomes darker when the authors trace how PPP dollars were disbursed to households. The study estimated that $365.9 billion, or 72%, of PPP dollars ultimately went to the top quintile of top earners, who make up a disproportionate share of the nation’s income earners and business owners. The bottom quintile got $13.2 billion, or 2.6% of the $510 billion.

The authors also noted that the increase in PPP per dollar of GDP was 0.36, according to the Congressional Budget Office, compared to 0.60 and 0.67 for stimulus checks and unemployment insurance checks. improved.

“Given the highly skewed distributional impact of PPP payments, we agree that PPP was probably the least effective of the three programs in stimulating the macroeconomy,” the study said.

The authors place much of the blame on the PPP’s minimum loan terms. The first two tranches, worth a combined $510 billion, had few requirements beyond having 500 or fewer employees and certifying financial damages from the pandemic.

Economists have recommended that the United States prepare a more sophisticated administrative system like those in other high-income countries so it can run programs that target the most needy Americans in future emergencies.