A paycheck protection program was designed to help employees of small business sectors. The program took off just before the pandemic hit every sector of the economy badly. The Dallas Morning News reports that the program was aimed to provide forgivable loans to these businesses. It enabled the employers to still keep their employees on the payroll during the covid crisis. The scheme came to an end in May 2021.
Where The Money Went
But a survey showed that only one-third of the amount was actually utilized to keep the workers going during the Covid period. The distribution of only $800 billion was disbursed to prevent people from losing jobs.
The data was collected from the payroll processor. The top ten economists from MIT who analyzed the data found that most of the money was utilized by business owners, shareholders, creditors, and suppliers. Only 23%-34% of cash had actually reached the workers so that they wouldn’t be out of a job and depended on the Government to aid.
Research further states that people in the lowest-paid jobs lost their jobs very easily in the pandemic situation. Three quarters were able to get the PPP loans issued in the year 2020 to people who had an average household income of $255,000 in the year 2019.
How The Program Was Flawed
The support rendered by the program gave the household $100,000 per annum. However, subsidies were far better with higher-paid workers. It was calculated that the top fifth household income was better off with an aggregate income of 52%.
The flaws in the program were right in the face as the administration couldn’t better target the program. The underlying problem lay in the woeful state of the US Government infrastructure while implementing the program. Moreover, fewer than 500 employers received the benefits. The intention was good and ensured that workers in need would have the cash flow to run their houses during the pandemic.