PPP Stimulus Program Saved 2 Million Jobs, Study Finds

The much-maligned $518 billion Paycheck Protection Program (PPP) saved an estimated 2.3 million jobs through May, according to a new study co-authored by economists from ADP Research Institute, the Federal Reserve Board of Governors, and MIT.

The study found that the PPP increased the level of employment at small firms by between 2 percent and 4.5 percent, which comes out to a boost of private employment in the United States by a midpoint of 2.3 million jobs saved, the study's authors said.

"Using the Paycheck Protection Program size eligibility threshold which was 500 employees for most firms, our research showed that the Paycheck Protection Program increased U.S. employment by approximately 1.4 million to 3.2 million jobs through the first week of June," Ahu Yildirmaz, co-head of ADP Research Institute, told Newsweek.

The new research comes as lawmakers on Capitol Hill are considering a new injection of funds for Americans, perhaps as early as this summer. The Democratic-controlled House passed the $3 trillion HEROES Act in May, while Republican leadership voiced their support of stimulus money in some form this week. "We do envision direct checks again," Senate Majority Leader Mitch McConnell said Tuesday.

But the discussion over new business loans—and the effect of the initial burst of funds on the economy—comes as time is running out on the $600 weekly unemployment checks set to expire this weekend, which Republicans are "overwhelmingly" opposed to extending, McConnell said Tuesday, citing its generosity and lack of incentive for people to return to work.

The PPP program itself, which has provided almost 5 million loans to Americans, has not been without controversy. The program has come under criticism over whether its funds were inaccessible to small minority-owned businesses or companies in rural areas. There has also been confusion surrounding loan forgiveness rules and controversy over large corporations receiving funds through the program aimed at small businesses.

But using ADP administrative data—one of the world's largest payroll processing firms— the study found that while the PPP program was unable to perfectly target in terms of small businesses and regions with the most immediate need, "it was delivered to a substantial number of small and mid-size firms, many of which were likely facing acute liquidity needs." The study found that 70 percent of eligible companies applied for and received a PPP loan.

The study determined rising employment at eligible small businesses by comparing their data to employment at ineligible firms following the passage of the $2 trillion CARES Act.

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The U.S. economy continues to bleed fresh jobs in the aftermath of COVID-19 shutdowns, even as it reopens and as the Paycheck Protection Program (PPP) and other federal initiatives mitigate some of the downturn's harshest impacts. Kerem Yucel / AFP/Getty