PITTSBURGH — A record 745,000 Americans filed for jobless benefits for the first time last week.
With so many people seeking financial help, the city of Pittsburgh is trying a new approach: handing out money.
Pittsburgh is one of 30 cities across the country participating in a pilot program that provides free money to certain families who are struggling.
“The best way to break the cycles of poverty is to give people money,” said Mayor Bill Peduto (D-Pittsburgh).
One-hundred low-income African American women, who are working and have families, will receive $500 every month for two years. No tax dollars will be used. All the money will come from donations.
The founder of Twitter has already chipped in $600,000.
“We’re looking at local foundations and local corporations to be able to help to raise the additional $2.5 million,” said Peduto.
He says a similar program in Stockton, California produced dramatic results.
Researchers compared families who received monthly payouts to families who didn’t.
The results showed families receiving the free money spent it on essentials, like food, utilities and gas.
Less than 1% went to cigarettes and alcohol.
“A lot of people said it would be a disincentive to work. That was proven wrong. People are actually working more with the money, not less,” Peduto said.
According to the mayor, participating families will be compared to a control group that doesn’t receive the free money. He hopes the results will ultimately lead to major reforms in Congress.
“There’s about 35 mayors who are very anxious to be able to create that model to be able to go to Washington and to show now it’s your turn.”
Peduto says he needs to raise about 3 million dollars for the program, which will be launched as soon as he gets the commitments.