Study Finds Paycheck Protection Program Helped Bosses more than Employees

February 1, 2022

In the early days of the pandemic, the federal government passed the $800 billion Paycheck Protection Program (PPP) in order to provide money for payroll expenses that had been lost during the nationwide shutdowns. The initiative offered companies with 500 or fewer workers low-interest loans of up to $10 million to cover about two months of payroll. With unemployment soaring at the time, the idea was to bring relief to struggling employees while simultaneously giving businesses more breathing room on their balance sheets.

According to new research from the Massachusetts Institute of Technology, however, PPP provided much more help for the latter than the former. The 10-person team of scholars who studied the program estimated that only a quarter of the money was spent on wages while the bulk went to bosses. “Jobs and businesses are two separate things,” said David Autor, MIT economist and leader of the study. “We tried to figure out, ‘Where did the money go?’ — and it turns out it didn’t primarily go to workers who would have lost jobs. It went to business owners and their shareholders and their creditors.”

With few restrictions on how the money could be spent, 72 percent of the program’s allotted cash ended up in the bank accounts of people who rank in the top 20 percent of national household income. Although some businesses received vital relief from PPP, the MIT study found that just 34 percent of the program’s money “went to paying workers who would have lost their jobs.” Put another way, for every dollar spent on employees, $3.13 ended up elsewhere. While it does not seem like another version of PPP will be revived by lawmakers any time soon, some restaurant owners are calling for another round of aid in the wake of the omicron variant’s negative effects on already struggling businesses. 


  1. What was the initial goal of the Payment Protection Program, and where did most of the money ultimately end up?
  2. Do you think programs like PPP should place more restrictions on how businesses can spend relief money? Why or why not?

Source: Stacy Cowley, “Little of the Paycheck Protection Program’s $800 Billion Protected Paychecks,” The New York Times, February 1, 2021.