The Paycheck Protection Program and Our Nation’s Workers

By Zach Brown

As our nation continues to work our way through the COVID-19 pandemic, it is important to maintain a watchful eye on the government’s actions in providing relief the American people. In particular, although the Paycheck Protection Program (PPP) came at an important time, during one of the highest peaks of the pandemic, an evaluation of the program revealed that the money did not all go to people in need.

Unfortunately, the program’s implementation left much to be desired. A recent research report by Public Citizen and allies in the COVID Oversight Coalition[1] examined some of the shortcomings of the PPP aid program. And while the Paycheck Protection Program was intended to benefit small businesses that needed the funds to ensure that they could continue to pay their workers in the midst of economic downturn, many times the program’s benefits were given to rather large companies (many of which still laid off quite a bit of their workers). Add to this the fact that over 14,000 private equity-backed companies received over $1.2 billion in aid through the program, although it was intended for small businesses.

And during a recent webinar we not only received an effective summary highlighting some of the report’s biggest takeaways, but also heard firsthand from workers who shared their personal experiences as workers at companies that received PPP loans.

 

A National Bureau of Economic Research report estimated that of the $800 billion disbursed in funding, only around 23% to 34% of the funds went directly to workers who would have been fired or laid off otherwise. The report highlights four case studies that illustrate some of the issues with this program’s implementation.

First, the report details that while the Paycheck Protection Program aided many hotels in the industry, many hotel workers did not receive security in employment as result. Despite billions in PPP relief going to the hotel industry, research shows that hotels terminated over one million workers in 2020 and 2021 combined.

In the second case study, the report takes a deeper look at Giti Tire Manufacturing in South Carolina. While it received over $9.8 million in PPP funds, Giti did not bring back all of the furloughed workers. One worker, Ray Durmon, described his experience, “When COVID hit they sent me home with the rest of them with the understanding that I would be coming back. Then I found out I was fired.”

In the third case study, the report details that some fast food franchises took advantage of the PPP program, yet failed to protect their workers’ health. These labor issues ranged from allegations of a lack of adherence to COVID protocols, to wage theft, to abusive management.

Lastly, the report details how private equity companies whose holdings received PPP money either directly lobbied the government on COVID issues or did so through their portfolio companies. These portfolio companies received more than $300 in PPP funds.

For more details on how to get involved and the full scoop on the pitfalls of the Paycheck Protection Program, we encourage you to check out the full report.

Public Citizen will continue to fight for workers across the country and push to hold our government accountable. If we truly want to protect workers during the COVID-19 pandemic and beyond, it is going to take more action on the part of our government to ensure that companies are doing their part.

[1] Other organizations in the COVID Oversight Coalition were Americans for Financial Reform Education Fund, Fight for $15, Good Jobs First, Project on Government Oversight, Unite Here! Local 11 and United Steelworkers.