Small businesses have been disproportionately affected by the COVID-19 pandemic. Motivated by an urgency to help businesses cope with the national and state quarantines, Congress united to pass the Paycheck Protection Program (PPP) in April 2020.
While the pandemic has affected everyone, some groups have suffered less than others. Fortunately for veteran-owned small businesses, the federal government moved quickly to support and ensure that they were financially stable and even allowed them to expand opportunities in areas such as science, technology, engineering and mathematics (STEM).
Given the decline in entrepreneurship rates among veterans, there’s reason to think that they would be more exposed to the adverse effects of the pandemic. This is coupled with research that veterans increasingly reside within cities with lower wage, employment, and per capita productivity growth.
Thanks to data recently made available through the Small Business Administration on the PPP for loans under $150,000, we found preliminary evidence further validating these efforts by investigating how veterans fared, relative to their counterparts. Among veterans in the same state, using the same lender, and with the same business type, veterans received 2.7 percent more loans and 3.2 percent larger loans than their counterparts. While the flurry of applications for PPP in April slowed initial processing, veterans still received roughly 1.4 percent more loans in April.
In fact, we found that take-up of the PPP was even higher in the information services sector with veterans receiving 13.5 percent more loans within a given state and day. We also found slightly higher rates of 2.7 percent, relative to counterparts, in the health care sector.
These results are good news for veterans who run small businesses because they show that veterans received a line of credit that allows them to press forward and modernize in the emerging economy. Technology is rapidly changing. Whereas overall real gross domestic product (GDP) grew by 1.5 percent per year between 2006 and 2016, the digital economy grew nearly four-times as fast at a rate of 5.6 percent per year. Moreover, sectors that experienced a greater influx of technology workers over the past three decades have exhibited greater GDP growth, particularly in the high-technology services sector.
Despite the expansion of the digital economy, growing empirical evidence and anecdotal examples points towards a skills gap among STEM occupations, reflected as well in a 2012 report by the U.S. Congress Joint Economic Committee. While there are mixed views among academics, the supply gap for STEM workers appears concentrated in the government and private sector, covering the majority of the economy (i.e., non-education). Moreover, the demand for STEM skills is likely to intensify in the presence of continued technological change.
In addition to working hard to help improve veteran health directly through the VA Mission Act, the Supporting Veterans in STEM Careers Act was recently enacted. It takes an important step in helping the United States address the supply gap for STEM workers by prioritizing investments and the identification of barriers to the integration of veterans in these fields. This provides additional wind in the sails of already important accomplishments among veterans in STEM jobs.
Whether veterans, or people more generally, thrive in their jobs is important. Our prior work shows that these latter aims at empowering veterans to live more productive lives in the workplace also feed into veteran physical well-being outcomes—health and socio-economic well-being are intimately connected.
At our newly-formed National Artificial Intelligence Institute (NAII), we are focused on leveraging artificial intelligence (AI) and big data capabilities to improve the health and well-being of veterans. The increasing availability of administrative data, combined with AI and veteran perspectives, can be used to understand the relationship between work experiences and health among veterans. For example, information on skills and prior work experience are inputs that researchers can use to personalize tips and recommendations for career progression and learning among veterans. Application of these methods would also help align those exiting the services with fulfilling and appropriate civilian jobs.
The recent deployment of the PPP has helped support veteran entrepreneurship during a particularly troubling time, especially in the technology sector, and ongoing policy efforts are helping to ensure that veterans play a key role in the emerging digital economy.
Christos Makridis is a Senior Research Adviser on the National Artificial Intelligence Institute (NAII). He holds doctorates in economics and management science & engineering from Stanford University and serves as a research professor at Arizona State University and a non-resident fellow at MIT Sloan, the Harvard Kennedy School of Government, and Baylor University. Gil Alterovitz is the Director of the NAII. He holds a doctorate in electrical and biomedical engineering from the Massachusetts Institute of Technology and is on faculty at Harvard Medical School.