It was better than it looked.
Assessments of the effectiveness of PPP and the UI expansions are beginning to tell us whether, how, and to what degree these programs fulfilled their policy objectives. A recent evaluationof PPP by MIT’s David Autor et al. found that while expensive ($169,300 per job-year saved) and tilted toward high earners ($365.9 billion, or 72 percent, of PPP benefits went to the top 20 percent of earners), the program was successful in stabilizing business and preventing bankruptcies. Ninety-four percent of small firms (those with 500 or fewer employees) took part in PPP, helping to limit long-term damage to the economy and the job market.
It is a similar story with the UI expansions directed to supporting workers during shutdowns. One study published in July 2020 found that the enhanced UI benefits successfully replaced household incomes and helped maintain macroeconomic demand levels during closures. A recent evaluation by my AEI colleagues Michael Strain and Glenn Hubbard and Georgetown University’s Harry Holzer looked at the program from the perspective of its impact on work and economic welfare. UI expansions, they concluded, did have the effect of discouraging workforce re-entry last summer (remember, discouraging work was a feature, not a bug, or perhaps a feature that became a bug) and the early withdrawal of benefits by certain states increased the number of households reporting economic difficulties.