Reuters reported that: “26.5 million Americans have sought unemployment benefits since mid-March…”
The first wave of PPP loans was for $349 billion. The loan amounts were set at 2.5 times a monthly salary and the general guideline is that two months of the 2.5 would be used for payroll. This is payroll designed to keep employees employed that would otherwise be laid off or furloughed. So, let’s do the math. Divide the $349 billion by 2.5 to get the approximation of the total that is going toward a monthly payroll (protecting that payroll) $139,600,000,000. Then let’s guess the average salary of the employee being retained (the forgiveness is capped at $100K annual), and the US BLS reports the average annual earnings to be 49,764. One could make the argument that most employees being retained as a result of the PPP earn less, but for the purposes of this exercise, let’s use $50K. That’s 4,166.67 per month. That means that the PPP was funding businesses to pay for 33,504,000 people. Add that to the 26.5 million who filed for unemployment (many have not yet been able to file successfully), and you end up with 60 Million people who are directly unemployed or essentially funded through small business facilitated “unemployment,” remaining employed via a PPP.
To be fair, we know that not every business would have laid off its entire staff had it not been funded, and many businesses who were funded should not have received funding at all, but three or four times more businesses who did not receive funding in the first rounds of PPP did need it for payroll support and so one can easily stand by the estimate of the “true” unemployment rate being considerably larger… perhaps 60 million.