The title of this blog post won't go down in the annals of provocative headline writing, for sure. But it's accurate. I toyed with other titles, like "If you're too wired to sleep, read this" or "Here's something more interesting that watching paint dry... barely."
Still, I hate to let a good PDF file go to waste, so here's a list someone sent me of the businesses in Salem that got PPP (Paycheck Protection Program) money from the federal government. The highlighted names of businesses in the list are ones that this person felt deserved attention.
One thing that struck me was how many businesses got PPP money. This is good, by and large, though there is reason to believe that much of the $517 billion handed out by the PPP program wasn't wisely spent. Here's how a recent Slate story, "The Paycheck Protection Program was a flop," starts out.
Since this spring, the federal government has handed out $517 billion through the Paycheck Protection Program, the main lifeline that Congress threw to small and midsize businesses to help them survive the coronavirus crisis. It’s a weighty amount of money, almost two-thirds of what Washington spent on the entire stimulus package it passed in 2009 to combat the Great Recession.
Unfortunately, it doesn’t seem to have bought us very much.
Hastily crafted as the economy began to collapse earlier this year, PPP was designed to keep businesses alive and Americans attached to their jobs while the country shut down to try and squelch the pandemic. It offers employers with 500 or fewer workers low-interest loans to cover their operating expenses, which the government will forgive if they avoid layoffs. (Somewhat larger companies can qualify if they are in the hospitality industry or meet the government’s previously established small-business size standards.) For most borrowers, it’s essentially free money that they can use to pay their bills and their staff.
This week, a team of economists led by the Massachusetts Institute of Technology’s David Autor released the most detailed evaluation yet of the program’s results—and their conclusions were not flattering. The researchers found that PPP only boosted overall employment among eligible businesses by between 2 to 4.5 percent and likely saved about 2.31 million jobs, at the cost of $224,000 each.
To put those numbers in perspective, consider that there were 31.8 million Americans on the unemployment rolls at the start of this month, and that 2.4 million people filed for benefits last week alone. The country appears to have spent a half-trillion dollars and put just a small dent in joblessness. What’s more, we only paid for a temporary fix. PPP only provided loans equal to about 10 weeks of payroll expenses; now that the money is running out, some businesses appear ready to start laying off workers again.
Another thing that caught my eye was that getting free money, basically, is popular across the entire ideological spectrum. Salem businesses run by conservatives got lots of PPP money. So did businesses run by progressives. Many churches got PPP money. So did many health care providers.
It's difficult to determine which businesses were most deserving of getting the PPP money without knowing their unique circumstances.
For example, D&O Garbage got money. They do a fine job picking up our trash and recycling, but I wonder how much the pandemic affected their business. Maybe some out-of-work people decided they'd take their trash to the dump themselves. Hard to tell. And I'm sure the Illahe Hills Country Club suffered during stay-at-home orders. However, seeing them on the list was a bit of a surprise.
When it comes to the number of jobs reportedly retained via a PPP grant, the Galt Foundation led with 500 jobs. Their focus is on creating employment opportunities for people with disabilities, so it's hard to quibble with them getting PPP money. Likewise for Garten Services, which claimed 335 jobs retained.
Capitol Racquet Sports, a.k.a. Courthouse Athletic Clubs, said 368 jobs were retained. Since athletic clubs have been hard hit by the pandemic, this seems believable.
The Seaman Restaurant Corporation claimed 364 jobs were retained. It's unclear what restaurants they operate in the Salem area. A Dun & Bradstreet corporate profile says "Seaman Restaurant Corporation has 250 total employees across all of its locations." Hmmmm. The claim of 364 jobs retained would deserve a closer look if anyone was looking into this, but almost certainly nobody will.
Here's another excerpt from the Slate story.
Unless you happen to be a deficit fanatic, there are much worse tragedies than the government frittering away a bit of cash in an attempt to shore up an economy in crisis. The country isn’t facing a fiscal crisis. The feds can still borrow for cheap. It’s OK if a few businesses receive aid they don’t absolutely need, if it also means getting help to those in peril.
What’s most frustrating about PPP is that it wasted money yet still failed to reach all of the mom and pop shops that needed assistance. Its complicated rules, meant to ensure that firms spend most of their loan proceeds paying workers, make it a poor fit for some businesses, especially ones that are entirely shut down and don’t want to recall their staff.
According to the Census Bureau, a quarter of small businesses never even applied for the program, and as of now, $130 billion of PPP’s total funding still remains untouched, even as many firms are shuttering permanently across the country.
Congress could have justifiably spent even more money to build a simpler program providing a backstop to all businesses. Or it could have designed something narrower targeting businesses whose revenues plummeted during the crisis. Instead, it built something that gave a lot of money to the businesses that needed it least while hanging some that needed it most out to dry.
You can follow this conversation by subscribing to the comment feed for this post.