Academic economists who have studied the Paycheck Protection Program have concluded that it has saved relatively few jobs and that, at a cost of more than half a trillion dollars, it has been far less efficient than other government efforts to help the economy, the New York Times reported. “A very large chunk of the benefit went to a very small share of the firms, and those were probably the firms least in need,” said David Autor, an M.I.T. economist who led one study. The divergence in views over the program’s economic payoff stems in part from ambiguity about its goals: saving jobs or saving businesses. Using different methodology than the Treasury economists, Mr. Autor says the Paycheck Protection Program saved 1.4 million to 3.2 million jobs. Other researchers have offered broadly similar estimates. Given the program’s cost, saving jobs on that scale doesn’t necessarily qualify as a success. Unemployment benefits also provide income, at far less expense, and programs like food assistance and aid to state and local governments pack a larger economic punch, according to many assessments. And because the paycheck program was designed to reach as many businesses as possible, much of the money went to companies that were at little risk of laying off workers, or that would have brought them back quickly even without the help. Many policy experts on Wall Street and in Washington — as well as businesses and banks on Main Streets across the country — say the program’s merits should be assessed instead on what it did to save businesses. On that basis, they say, it helped prevent a greater calamity and fostered economic healing. Read more.
In related news, small businesses in Nebraska, Oklahoma and other rural states have been the most successful at getting federal pandemic relief in the $284 billion round of aid that opened this month, buoyed by a new rule that authorizes loans to many farms that didn’t qualify before, Bloomberg News reported. Measured by their share of the nation’s small-business payroll, four states, also including North Dakota and Wyoming, got more than twice their share of Paycheck Protection Program loans, based on an analysis of data from Jan. 11 to Jan. 24 released by the Small Business Administration this week. Lenders and applicants say that the process is simpler but slower than last year. Overall, $35 billion of forgivable loans were approved in the first two weeks of the January rollout, a fraction of the $349 billion disbursed in the first 13 days of the program last April. The latest PPP funding included rules aimed at fixing the program’s flaws: Restaurants can draw more debt and applications are more deeply scrutinized for fraud. One change benefited many small farmers and ranchers shut out last year. The Nebraska Farm Bureau, the largest member of the American Farm Bureau, and other agricultural groups successfully lobbied Congress to allow farm owners without paid employees to get aid even if they didn’t earn a net profit. The special rule for farmers was the result of a bipartisan effort led by Representative Ron Kind, a Wisconsin Democrat. “We are helping folks that could’ve used the help before but didn’t qualify,” said John Hansen, president of the Nebraska Farmers Union, which represents over 4,000 family farms and ranches. “The SBA is glad that newly eligible audiences are speaking with their lenders to participate in the Paycheck Protection Program to secure funding that keeps their workforce employed and on payroll during the pandemic,” the agency said in a statement. Read more.
