The Number of PPP "Jobs Saved" Decreases, and Subsidy Cost Per Job Saved Increases, if Jobs Last Only for the Minimum Period Required for 100% Loan Forgiveness.

President Trump recently claimed that 30 million jobs would be saved as a result of the first phase of the PPP program ($349 Billion). 

Since then a second PPP phase was authorized at $310 billion for a total of $659 billion. 

I have extensively looked for any supporting documents or methodology for President Trump's "jobs saved" claim, but have found none. 

Last week the National Association of Realtors© produced a report HERE which provided a detailed methodology for calculating potential "jobs saved" by the PPP. NAR also includes state level calculations. 

While I see some significant problems with their estimates I am appreciative of their efforts to start a more comprehensive analysis of the impacts of the PPP on employment and unemployment.  

The NAR calculation is that in the US $531.2 Billion in PPP loans could possibly "save" 15 million jobs and in Oregon $7.023 Billion in PPP loans could possibly save 183,272 jobs. 

Observations:

1. NAR's estimates do not take into consideration that to qualify for 100% PPP loan forgiveness retention of employees is only required for 8 weeks, and NOT a full year.Retention for shorter periods will reduce the number of possible jobs saved.
2. NAR's estimates do not take into the consideration the (subsidy) cost per employee of 100% PPP loan forgiveness. That will vary based on the number of weeks that the employee is retained. 

Additional Calculations Show Big Reductions in NAR Estimates and Increased Cost Per Job Saved When the Period of Job Retention is Less than a Year, and Especially for the Minimum 8 Weeks Required by the PPP for 100% Loan Forgiveness.

The PDF file HERE and embedded below shows that If the retention period for employees is ONLY for the 8 weeks required for 100% loan forgiveness:

• For the US instead of 15 million jobs "saved", only 2.28 million jobs would be saved.
• In Oregon instead of 183,272 jobs "saved", only 28,274 jobs would be saved

AND 

• For the US instead of a (subsidy) cost per job saved of $35,841, that (subsidy) cost per job saved would jump to $232,968.
• In Oregon instead of a (subsidy) cost per job saved of $38,216, that (subsidy) cost per job saved would jump to $248,401.

(The PDF includes a graph that shows Oregon costs per job if the job is saved for 39, 26,  13, and 8 weeks ).



The share of PPP funds used for payroll will vary by loan recipient as will the length of time that those "saved jobs" will last. This will impact not only the calculation of overall subsidy cost and the cost per job but ALSO the unemployment rate AND the amount of unemployment benefits paid. 

Whatever that share of PPP funds used for payroll and the length of jobs "saved" it is clear that number of jobs saved and the cost per job will be substantially higher than found in the NAR estimate.
 
Originally created and posted on the Oregon Housing Blog.