- This was a straight-up giveaway to the wealthy
A commonly-heard refrain from those lamenting inflation is that the government gave workers too much money during the pandemic and that ‘nobody wants to work anymore’.
Well workers weren’t the only ones who benefited from government largess. The enormous $800 billion Paycheck Protection Program — the largest and fastest of Washington bailouts — was a complete joke. It was touted as a ‘loan’ program and the media ate up that obvious lie. In truth it was a ‘forgivable loan’ program, which is just another way of saying ‘free money’. All businesses had to do was say the money was for payroll, benefits, utilities, rent or mortgage payments.
A study last week from the St Louis Fed delivered the predictable results:
- The cost per job saved for one year was $169,000 to $258,000, which was much higher than the average amount—$58,200—paid in wages and benefits to small-business employees in 2020
- Only about one-quarter of PPP funds supported jobs that otherwise would have disappeared
- The PPP’s benefits flowed disproportionately to wealthier households rather than to the rank-and-file workers that its funds were intended to reach
- The authors concluded that the PPP cost taxpayers roughly $4 for every $1 of wages and benefits received by workers in “saved” jobs. The “leakage”—$3 out of every $4 distributed through the program—went to small-business owners
- 72% of PPP funds were captured by households with incomes in the top 20% of the national distribution
The ‘small’ business caveat was also suspect, as it included companies with up to 500 employees.
The media’s job covering it was disgraceful. It’s a shame this new study has gotten such little traction.