Government Spending

The Federal Government's Pandemic Jobs Program Was a Resounding Failure

Most of the $800 billion Paycheck Protection Program went to business owners, not preserving jobs, according to a new study.


In September 2020, as the pandemic dragged into its sixth month, Republicans on Congress' Select Subcommittee on the Coronavirus Crisis released a report on the rollout of the Paycheck Protection Program (PPP).

The program was among the most expensive of the pandemic relief measures passed in 2020, eventually growing to some $800 billion, making it among the most expensive government programs of 2020—nearly equivalent to the size of the American Recovery and Relief Act (ARRA), the 2009 stimulus package passed under President Barack Obama. Even apart from the rest of the pandemic relief spending, it was, all on its own, a massive economic rescue program.  

The GOP report described the PPP as "a forgivable loan program designed to provide a direct incentive for small businesses to keep their workers on the payroll." In other words, it was intended to save the jobs of ordinary workers, and the report—essentially an extended brag sheet—insisted that it had done precisely that, crediting then-President Donald Trump for its accomplishments. "The program's focus on getting money to workers quickly saved millions of jobs and kept the economy from collapse," the report concluded. One section is titled "President Trump's Swift Action Provided Relief."

Democrats on the subcommittee argued that the program, which had passed with bipartisan support, needed more oversight, but credited it with helping "millions of small businesses and non-profit organizations stay afloat during the coronavirus crisis." Then-Treasury Secretary Steve Mnuchin repeatedly defended the program to the media and Congress. The GOP report title introduces the PPP as a "Resounding Success." 

A more accurate description would have been "Expensive Failure."

A recent study of the program's effects from the National Bureau of Economic Research (NBER) finds that the majority of the funds spent by the program went to business owners and shareholders rather than to workers themselves. Ultimately, "only 23 to 34 percent of the program's funds went directly to workers who would have otherwise lost their jobs." The jobs it did keep in place were preserved at very high cost—somewhere between $170,000 and $257,000 a year, far more than the typical earnings of affected workers, which are closer to $58,000 per year. 

While the PPP was able to save some jobs, albeit, at a very high cost, the overall result of the program was precisely the opposite of what was intended. The purpose of the program was to preserve the jobs of wage workers, not to funnel money to business owners. As David Autor, a Massachusetts Institute of Technology economist and the lead researcher behind the paper, told The New York Times recently, "it turns out [the money] didn't primarily go to workers who would have lost jobs. It went to business owners and their shareholders and their creditors." The program, he added, was "highly regressive." 

The authors suggest several reasons for the program's unintended results. It was designed in haste at the beginning of the pandemic when many—including lawmakers and policymakers—believed that it would be a relatively short affair, and the economy would fully bounce back by summer. Initially, the PPP promised loan refundability to businesses that kept workers on their payrolls for eight weeks, essentially converting those loans into grants. But, as the pandemic dragged on and the program was topped up with additional funds, the requirements slipped, and the PPP eventually turned into something more like an all-purpose federally funded slush fund for small business owners. 

The PPP was poorly designed and produced poor results accordingly. While it's useful to analyze and learn from the flaws of a program like this, I'm not sure that the proper response is to just try to design better programs in the future.

There were a variety of reasons for the poor design of the program, but in the end, it all boils down to a single, unsolvable problem: No one, especially lawmakers in Congress, truly understood how the pandemic would unfold in real-time and what its effect on the economy would be. So the PPP, along with the rest of the COVID-era relief programs, was cobbled together in a slapdash manner based on partisan agendas, poor projections, incomplete information, and wishful thinking.

That's simply not the recipe for well-designed relief programs, which is why the Obama-era stimulus package suffered from many of the same sort of flaws and failures. Rapidly constructed massive emergency relief programs are always going to be subject to these sorts of pressures and likely to result in these sorts of failures.

That's not a cause for policy nihilism. Instead, it's a reason for policy makers to act with greater caution and humility, especially in the face of a novel emergency. Rather than throwing money at poorly constructed mega-programs like the PPP and ARRA, smaller, more targeted programs—like Operation Warp Speed, which was probably the biggest success of the pandemic but cost just a few billion dollars—are much more likely to result in something that resembles a resounding success. 

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  1. Unpossible. All government programs work perfectly.

    1. The government programs that don't work perfectly are being sabotaged by Kulaks, hoarders, wreckers and backsliders.

      1. Or just need more funding.

        1. I make 85 dollars each hour for working an online job at home. KLA I never thought I could do it but my best friend makes 10000 bucks every month working this job and she recommended me to learn more about it. The potential with this is endless.
          For more detail ….

        2. *and* need more funding (extracted from you, one way or another).

    2. Joe Biden announced Job opportunity for everyone! Work from comfort of your home open this web site....... VISIT HERE FOR FULL DETAIL.

  2. Two business I know of here used them to 1. open another location and 2. after upgrading their business shutting it down and selling it for real estate profit in the boom that happened here in the market. Both did not mainly use it to help employees.

    1. So they employed no people in the second location and no contractors were employed in the upgrades? Wow, they found an infinite cash hack.

      This is the problem with marxists, they see nothing but increasing payroll as helping employees when the entire infrastructure is needed to keep that payroll viable. Don't pay your creditors and you might not have premises to operate or product to sell, but it's fine because we pay employees to do nothing.

      1. Amen! Only socialists separate capitalists and workers like that. TFA author and MT-Man are ignorant at best, socialists at heart.

      2. "They pretend to pay us and we pretend to work."

      3. They don't really believe that shit, at least not the ones at the top of the totem pole. They never put their money where there mouths are, when it comes to allocation of private wealth.

  3. A real journalist would have done research into which political party got the most donations from the business owners who got the gifts.

    1. Republicans? Remember, this was a Trump program.

    2. Not happening.

      Its " fingers in ears shoutung NANANANANA IDOWANNANO!!"

      "Even apart from the rest of the pandemic relief spending, it was, all on its own, a massive economic rescue program."

      Bullpuckey. It was not economic rescue.

      This is Broken Window -esque claptrap.

      Just a huge number of windows were broken, and a huge pile of money wasted on them.

      Thats not economic activity. Its a wash.

  4. Sorry, I don't get the message. Yes, the program was a boondoggle, all government programs are a boondoggle, and this one had corruption and fraud written all over it.

    But you can't separate business owners and business employees like that. The stated reason for doling out the money is that businesses are losing customers and can't stay in business. If only the employees get the money, and the business owners still get no money from having no customers, those businesses will still go bankrupt or at least lose investors and the finances that keep businesses open.

    Only a damned socialist could write such a stupid article that glorifies workers and denigrates capitalists.

    1. Most business owners are also the hardest working workers. One reason I never wanted to be a business owner is that I worked in enough small shops to know it meant more work that I was willing to put in. As one ex boss told me, the secret to running a business is being hungry all the time.

      1. Even when times were good I was taking home less money than my employees because I was shoveling it all back into the biz.

    2. Exactly, it seems like most businesses used the money to cover their operating expenses (of which payroll is about a third, so right in the range of what went to employees)

      It seems like the expectation was that businesses would close down, but keep mailing their employees a check every week, which would have made this nothing more than a fudge to keep "official" unemployment numbers down

      1. I have friends who owned businesses here and closed them. One was forced to sell at a discount to get out from under it after 30 years. The other just... closed.

        Those people were closed down by state and local restrictions and 30 and 20 years, respectively, of their lives in their businesses lost at severe discounts to what they'd have gotten if they had sold pre pandemic.

        I also know a guy who had a small business and used his money to buy a truck. So there's all kinds. But lets not pretend that a small business owner, say with a restaurant that kept getting shut down, suffered any less 2 years ago than a waiter who got laid off. That wasn't just a wage, that was a wage and their entire life savings/retirement investment lost.

    3. Yeah, I would have preferred a program closer to 0 billion dollars than 800 billion dollars, but with 95% of the pandemic response efforts aimed at making it difficult for small businesses to stay in operation, maybe funneling some of the loot to those most affected by government intervention wasn't the worst idea of the past 2 years.

    4. ( Marx applauds.. )

  5. It's not a cause for policy nihilism? When is taking money from some people (or their future money) and giving it to others a good policy? It's always wrong.

  6. Bullshit! Trump was the most fiscally conservative president ever! How dare you accuse him of wasting money!

    1. It wasn't "our" money he wasted. Remember, Mexico paid for half of it, and China the other half. I'm sure there are receipts for it somewhere.

      1. You mean it was all borrowed money with Mexico and China buying the bonds? How dare you accuse Trump of deficit spending! He balanced the budget! Most libertarian president ever!

        1. Ideas!

      2. And the NY Times is complaining it went to capitalists and not workers....

    2. Sarc is suck a pathetic piece of shit. So obsessed with demonizing Trump, and protecting his precious democrats.

  7. Given this went on in the face of government dictated bans on commerce of all sorts, what would the authors have considered a success? There are bills that go into a business beyond payroll, were the owners just supposed to eat those losses for an undetermined timeframe?

    Did the program keep the businesses afloat despite the mandated shutdown or not? You know, tiding them through the government hysteria so the employees could continue working there despite the months of no production or sales and the multiple costs that go into all that idled capacity.

    1. That was essentially the plan. The idea was that the emergency would be over in three months. And we did achieve our goal: flattening the curve. But the pandemic didn't end and numbers kept spiking all the way through summer, and by then the Karens had taken control of everything and the new goal was, to quote Randi Weinstein, "zero transmission".

      p.s. Actually flattening the curve didn't work long term because hospital capacity was never expanded. We have exactly as many hospital beds today as in March 2020. We had a blip very early on, but even today with fewer hospitalizations and shorter stays, we're still running out of beds. In every way we've failed.

      1. We didn’t fail, they failed.

      2. Here in Washington we only have 78% of the beds we had in March 2020.

        1. Hey, Brandyshit is *still* trying to justify his raging case of TDS. And failing.

    2. "There are bills that go into a business beyond payroll, were the owners just supposed to eat those losses for an undetermined timeframe?"


      Its called " being responsible for business profit and loss using SAVINGS AND PROFITS plowed back during down times to stay afloat."

      This was just a rewrite of Ibamabidens TBTF bank debachle, rewritten as " TNTF" - too numerous to fail.

      Thus this was not business loans, its WELFARE.

    3. "Given this went on in the face of government dictated bans on commerce of all sorts, what would the authors have considered a success? There are bills that go into a business beyond payroll, were the owners just supposed to eat those losses for an undetermined timeframe?"

      Not shutting down businesses to begin with.

  8. Shocked face

    1. A TRue shocked face doesnt include rolling your eyes in this pathetically predictible outcome.

  9. I don't know if Suderman knows this or not, but many business owners are also the employee. So "business owners" collecting the handout actually did keep them employed if their source of income shut down. I guess Capitalism is hard for some people to understand. You start a business, you're the president and the head bottle washer, all rolled into one. The government shut down the world, then used some of the money they take from us every year to keep us going for a bit, but yeah, we're all evil capitalist pigs for having a small business and being told to shut down, then getting an offset payment for our trouble. I would have rather had the government deal with the health emergency and leave the economy alone, but that wasn't an option we got...

    1. Yep, he was no better at overseeing a planned economy than droolin' Joe.
      Just better at a whole lot of other things than droolin' Joe; want something fucked up? Give it to droolin' Joe and wait a short time.

  10. A local small bank Mamager basically told me they processed some 4200 (?) PPP loans.
    .So basucalky, " every business got one"

    Biggest welfare fraud in history.
    .Broken Window:

    The loans did nothing to generate INCOME with which to REPAY the PPP Loan therefore the loans WONT BE REPAID.

    Rephrased per Nutsy Pelosi:

    " welfare is good for the economy."

    1. Most of it has been forgiven.

  11. I work for a small business - When the pandemic first hit people/businesses stopped paying their bills. It literally stopped. In normal times cash that comes in pretty quickly goes right back out the door - to payroll, material costs etc. The loan saved lots of employee's jobs (and maybe the business) ie in the short term since there wasn't enough cash coming in but it still needed to go out - receivables ballooned. However all that caught up 6-8 months later. The loan could have been paid back then.
    In the unknowable future of early covid - if the loan had to be paid back the owner would have probably have just laid off half the company instead of signing a personal guarantee to take the loan. Also part of the reason for the program was to save the unemployment system

    1. So the solution was to avoid locking down the businesses, not to make some disastrous band-aid fix.

    2. ...showing the typical Employees total lack of understanding of business and economics....

      1. If income immediately goes out, the business is not viable a/ o is being grossly mis- managed. Theres no profits banked up to deal with downturns. Thats called
      ' operating on a shoestring' or " in the red."

      Perpetual debt is not business.

      2. " receivables balooned." Obviously.

      3. "if the loan had to be paid back the owner would have probably have just laid off half the company"

      IF the loan had to be paid back? Its not a LOAN if its not paid back! Its WELFARE.

      4. Pay creditors/ suppliers or employees. Thats called " Rob Peter to pay Paul."

      Keeping employers on but not PRODUCING ANYTHING is not business. Again, welfare.

      But its a fallacy to pretend it went to pay employees- it really went to the business to pay creditors, just thru Smoke and Mirrors. The money the business saved by not paying employees went to paying rent and other expenses which if not paid, could have forced closure.

      This is the same Smoke and Mirrors obfuscation as " pay extra money to the Electric Company to help your low income neighbor."

      A lie. Its not GOING to the neighbor, its KEPT by the Utility to pay down debt caused by deadbeats.

      And NONE of this is Economics. According to the Broken Window Fallacy, a loss is just shuffled around, and that aint economics!

      The root problem is mismanaged businesses. Many are not necessary or viable. Such things tend to wipe out non- performers. Its the Law of the Jungle...

      1. ps the PPP had to pretend to pay employees since it couldnt be constructed to pay creditors, and was a fantastic VOTE BUYING TOOL.

        Paying creditors doesnt accomplish that in the Media.

      2. You're missing the point... pay the unemployed via PPP and keep them employed, or pay the unemployed employment insurance. Those were the realistic options at the time. Yeah, massive fraud & waste ensued. Still better than the bread lines, civil unrest & mass business failures that would've occurred.

      3. Home run

  12. "...There were a variety of reasons for the poor design of the program, but in the end, it all boils down to a single, unsolvable problem:..."

    You CAN NOT plan an economy! PERIOD.

    1. Every person in this country knew this was exactly how this idiotic program would play out. Without real time oversight and a subsequent audit of each business that received this cluster fuck money, it was bound to be a corrupt venture that did almost nothing for actual employees. Give the fucking money to the people if you want them to have it you fucking idiots.

      1. ...especially those getting the loans knowing they can never pay them back.

        Now I assume theyre coming due and the FuckJoeBiden Administration has to shut down the Covid Shutdown Circus else they'll be left looking stupid with a replay of the Ibama- Obiden GM loan failure where the idiots got repaid 20%.

      2. Or, as Trump proposed, give them a tax holiday and let them KEEP their money!

  13. The Government's Pandemic _______________________ was a resounding failure.

  14. PPP saved 12 jobs at my company. We did almost no business for two months early in the pandemic and would've shut our doors. Yeah, too many companies & people got funds they didn't need - that wasn't us. They should've factored corporate savings and borrowing capacity into the decision-process. Companies with ample resources to weather the storm should've received less or no aid, but don't throw the baby out with the bathwater.

    1. So, punish the people who run their business in a conservative fashion?

    2. youre advocating drowning the baby.

      Somehow you miss " compounding economic disaster"

  15. While the program was indeed disappointing in the statistical analysis there is another point to be made. Most, though not all, of the money at least went to SMALL businesses instead of giant corporations which is why the economy had a nice bump until the baleful influence of the Biden Crime Family took hold.

    1. Walmart was allowed to stay open, bob’s corner store was not.

    2. Quite a load of BS there.

      Youre ignoring " went to and cant/ wont be repaid" and ignoring Obamas giveaway to big corps that never paid it back

  16. You mean you can't just hand money to the "job creators" and have it trickle down?

    I'm shocked! Shocked I say! Well, not that shocked.

    It was always only piss that trickled onto the heads of the labor class.

  17. I know "a guy" who runs a marginal general contractor business. He usually just gets jobs and then subcontracts to professionals who work at larger companies (like electricians or carpenters) who did the jobs on the side. He was contacted by some guy who lives in China and told him he could apply for him for PPP grant for his cut. I'm sure this is more of the rule than the exception. I do wonder how many billions found their way to China or Peru or hell Nigeria. Or some kid in Iceland figured out how to abuse the system. Graft, corruption, and dishonesty. America is pretty much done. China is laughing their ass off.

    1. There is one good chance to stop it. Just get rid of the democrats that are real far left Marxist true believers and dismantle their party. Then things can get fixed.

  18. I am a small business advisor and helped businesses with this program. At least 60% of the funds had to be used for payroll. The remaining amount could only be used for utilities, rent, or mortgage payments.

    This report assumes most of the jobs receiving funds would not have been cut had there been no PPP. This is a big assumption. Nobody knows how many jobs would have been lost.

    It also assumes small business owners are not as important as employees. Many small businesses were illegally shut down by the government shutting off the incomes of these businesses. Providing partial payment of just 3 of their many bills hardly seems unreasonable.

    Further, the paper concludes that the government should have tighter control of the financial information of employees and small businesses so in the future a PPP program can be more targeted to the most needy. This is the last thing a libertarian would want!!!

    This paper was written with the obvious reason to justify more centralized top-down control.

    Clearly the PPP was messy as all government programs but to discredit it by minimizing the value of small business is wrong.

    1. and another deceptive evasive comment.

      You too are ignoring the fact it was NOT govts place to bail anyone out, its systematic vote buying, and ignoring massive fraud.

    2. And a local car dealership owner cut employees 40% and used the money to upgrade the dealerships then sold for a nice chunk of change. This was idiotic. The solution was NOT to shut anything down

  19. The US government has been a resounding failure for at the least 6 decades if not more. Yet people keep voting for the same Democrats and Republicans and the same incumbents, every election cycle. Most third parties and independents can't even get on the ballots. If they do, combined they are lucky to get 2% of the vote.
    You see if you vote Democrat or Republican, you are part of the problem.

    1. Gallagher said the voters are the problem- they keep voting for corrupt politicians.

      Its a false initial assumption that anyone HAS to vote for anything. Thats the Civic Duty bullshit intended to brainwash people into reinstalling corruption.

  20. That's not a cause for policy nihilism

    Of course it is. Haven't you learned a goddamned thing from every massive pork barrel program in history, for fuck's sake?


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