On my Commissioner Facebook Page, last 2 weeks I’ve been sharing stories from small businesses owners trying to navigate the shutdown. In many cases highlighting failures and inadequacies of various state and federal small business stimulus programs from the perspectives of actual self employed folks. Especially the most vulnerable who seem to fall through policy cracks. In many cases, weeks after the shutdown started many small business owners have still not seen a penny of relief.
Here is the most recent story. This time, the business is not in Lower Mac but nearby in an adjacent community and Southwest planning partner. It describes in practice one of the fundamental problems with the PPP program. Has to do with the government inadvertently creating disincentives to work, paired with the fact one of the requirements for PPP loan forgiveness is to keep employees on payroll. (I’ve edited it down slightly, and removed identifiers)
“I tried to stay open for a couple weeks, but lost more money staying open for takeout than if I would have closed. Been closed for a month, employees are receiving unemployment + $600/week now. If an employee regularly makes $16/hour or $640 a week now that same employee is getting $1,000/week on PA unemployment.
The only way I can get some relief from the PPP is to put my employees back on payroll… so now, what should have been a good thing, has become a bad thing.
My best case scenario after going backwards $50k in the last 5 weeks, is to get rent and utilities paid for 2-months. I’m not looking for anyone to feel bad for me, but everything the gov’t does is backwards.
It should have either been PPP or juiced up Unemployment, not both. Or some type of means testing to give people more based on their income. There will absolutely have to be more money available. Going in this I was in a good financial situation, I would imagine other businesses are really in a bad place right now.”
Above is the most recent version of the same or similar story I’ve heard many times now. For an actual small business lucky enough to get a PPP loan it has caused a whole other set of challenges.
Yes, the extra unemployment boost was necessary, but the way the $2.2 trillion (about to be more) CARES Act was drafted, it encourages employees to stay home. But when they stay home, it puts small business owners in a bind since one criteria for getting PPP debt forgiven is to keep employees on payroll. An internal federal study estimates that this scenario applies to millions of Americans.
To be clear, can you blame employees? They are making rationale financial decisions based on realities created by the government. In this case creating a disincentive to work when another government program requires employers to keep people on payroll to get debt forgiven. These are folks in some cases without the luxury of planning too far into the future. Some are worried about how they are going to pay next months bills.