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Press Release

Did the Paycheck Protection Program Help Drive the Great Resignation?

According to the popular narrative, the high worker quits rate during the recovery from the COVID-19 recession, sometimes called “the Great Resignation,” resulted from workers’ general dissatisfaction with their jobs and a desire for better work-life balance and other amenities.

A new Economic Commentary from the Federal Reserve Bank of Cleveland offers a potential alternative explanation: that the availability of Paycheck Protection Program funding, which was targeted exclusively to small businesses, might have kept workers in their jobs early in the pandemic, potentially leading to a delayed build-up of labor market churn, including higher job quits, as the recovery took hold.    

Researchers Murat Tasci, of the Cleveland Fed, and Ayşegül Şahin, of the University of Texas at Austin, found that small businesses with fewer than 250 workers had much higher quits rates than large businesses of over 1,000 employees, “and were primarily responsible for the excess quits seen during the subsequent recovery from the pandemic recession.”

“Industries receiving larger PPP loans experienced elevated quits even 12 months after the PPP disbursement, suggesting that the availability of PPP funds might have prevented some “usual” reallocation from happening early on and thus subsequently created a pent-up demand for labor market reallocation,” Tasci and Şahin wrote.

Read the Economic Commentary: The Great Resignation and the Paycheck Protection Program

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell,, 513.218.1892