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CNN IN THE MONEY

Will Supreme Court's Affirmative Action Ruling Impact Companies?; Fed Cuts Rates; Can Americans Make Ends Meet on Minimum Wage?

Aired June 28, 2003 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, CNN ANCHOR: They must have raised the budget. We have an announcer. Welcome to IN THE MONEY, I'm Jack Cafferty. Thanks for joining us. Here's a rundown of what's up in the next 60 minutes on this here little program.

The business of diversity, the nation's top companies watching the Supreme Court's recent decision on affirmative action as much as the colleges and universities were, we'll talk about what's at stake in the corporate world.

And, the Federal Reserve has cut interest rates yet again, Greenspan and company hoping that it will trigger another spending spree by consumers and businesses all designed to help the economy, but could we end up with even more mountains of additional debt? We'll take a look at the leveraging of America.

And, debt or no debt, you can make ends meet in America when you're earning just above minimum wage or can you? We're going to talk to a journalist who tried it for two years and then wrote about it.

Joining me in the studio for this important exercise in business journalism the usual suspects, CNN Financial Correspondent Susan Lisovicz, and my friend "Fortune" magazine editor-at-large Andy Serwer.

So, we got this national no call list. The president goes on TV to make a big to do over this thing on Friday and there are more loopholes in that thing than in a five-pound block of Swiss cheese.

ANDY SERWER, "FORTUNE" MAGAZINE: And guess who can still call the politicians.

CAFFERTY: Everybody.

SERWER: I mean this is a win-win. You know the president interrupts his busy schedule, does a little press here. I mean who could be against this? It's like apple pie. It's like hot dogs, a do not call list.

CAFFERTY: But a lot of people -- a lot of people are. SERWER: Politicians can still call you though.

CAFFERTY: Yes, but you know who's against it? We had the head of that telemarketing association on "AMERICAN MORNING" which is the other program I do five days a week, God I work hard here.

SERWER: Yes.

CAFFERTY: He was on, on Friday morning, saying that there will be two million people lose their jobs because of this piece of legislation. Now, that's not a good thing.

SUSAN LISOVICZ, CNN FINANCIAL NEWS CORRESPONDENT: There's just too much at stake for that industry, the telemarketing and, as you mentioned Andy, there are so many loopholes in this that they're not going to go away. The reason why they exist, despite all our harping, is the fact that a lot of people do listen to their calls and then buy products.

CAFFERTY: Hundreds of billions of dollars worth, right?

SERWER: Just hang up. Why do we need this legislation? Just hang up. If they call, just hang up. I mean what's the big deal. I just click them, click, right? I mean how hard is that? The president interrupts his busy day to do this whole deal. Just hang up on them.

LISOVICZ: Well, there is a campaign.

CAFFERTY: Naked politics, naked politics.

LISOVICZ: Something called a campaign.

CAFFERTY: I'm shocked yes, but you're right the politicians can still call you at dinner time.

SERWER: Charities can still call you.

CAFFERTY: There's something to look forward to.

SERWER: They can still call you. That may be OK.

CAFFERTY: On other things, this week's rulings by the Supreme Court on affirmative action sent a huge message to America's educational institutions. Joining us to talk a little about what that message was and a bit more about what the court may consist of in the next few years, depending on whether or not rumored resignations come about, is CNN Correspondent Louise Schiavone, Louise, thanks for being with us.

Kind of a split decision, it's OK to -- it's OK to keep minorities in line in order to achieve diversity, just don't use numbers to get there, is that kind of the way it worked out?

LOUISE SCHIAVONE, CNN CORRESPONDENT: That's sort of the way it worked out. It's more like affirmative diversity as opposed to affirmative action. Even before the Supreme Court heard the University of Michigan case, Jack, about 300 organizations, including five dozen major corporations, as well as unions and other schools, asked the justices to look favorably on the school's affirmative action program.

Among those corporations, Eli Lilly, Coca Cola, Intel Corporation, General Electric, American Airlines, Northwest Airlines, and the Ford Motor Company. They argued that race conscious administration practices pay off in diversity especially in the global marketplace.

When it was all over, the Supreme Court issued a mixed ruling, as you noted. The vote was 6-3 reversing an affirmative action point system employed at the University of Michigan undergraduate school.

Writing that decision for the majority, Chief Justice William Rehnquist declared the point system a violation of equal protection promised in the Constitution. But, by the same token, the justices left room for a broader affirmative action program at the University of Michigan Law School.

Writing the decision in the 5-4 vote on the law school piece, Justice Sandra Day O'Connor wrote that the Constitution "does not prohibit the law school's narrowly tailored use of race in admissions decisions.

The University of Michigan cases pertain specifically to admissions at public tax supported institutions, but the impact of this decision will ripple not only through the rest of academia but also the business world. On the one hand, it's good news for businesses that seek what is now gingerly called diversity, but bad news for any business that has established a specific quota system.

By the same token, it's also useful to remember that for all the progress that's been made in this field, only three of the Fortune 500 companies are headed by African-Americans, American Express with Chairman and CEO Kenneth Chenault; Merrill Lynch with Chairman and CEO Stanley O'Neal; and our own AOL Time Warner headed by Richard Parsons -- Jack.

CAFFERTY: Thanks Louise very much, Louise Schiavone joining us today from Washington, D.C.

SCHIAVONE: Thanks, Jack.

CAFFERTY: A lot of the biggest corporations in this country, companies like Microsoft and General Motors, supported the University of Michigan's affirmative action case that was before the Supreme Court of the United States, but why is corporate America so interested in racial diversity and what's in it for them? Sixty of these large corporations filed friends of the court briefs supporting the Supreme Court in its search for a decision on affirmative action.

Joining us now to talk about this is the author of the "Diversity Machine, the Drive to Change the White Male Workplace." Frederick Lynch also an associate professor of government at Claremont-McKenna College outside Los Angeles. Professor Lynch, nice to have you with us, thank you for joining us.

FREDERICK LYNCH, AUTHOR: Good to be with you.

CAFFERTY: Given the fact that there is no proof that racial diversity improves corporate productivity why did all the boards of directors of these big companies have their eyes on the Supreme Court for this case about the University of Michigan?

LYNCH: Well, I think you're talking about a combination of social engineering and religion really. We've had a major turnaround the last 20 years in this society with regard to the rationale for diversity.

The old rationale used to be affirmative action which was making up for past discrimination, mainly with regard to Blacks. But in the late '80s and early '90s a lot of people began to realize this wasn't selling in corporate board rooms. Corporations looked at this as sort of social work.

So, a coalition, a movement really, very clever consultants, CEOs, human resource people got together and said we've got to turn this around. Let's link it to changing demographics and globalization and changing demographics and globalization you really could deny this is what's going on and the idea is you're no longer making up for past discrimination but you must get right with the future.

You must have a workplace, in Bill Clinton's famous phrase, that looks like America because you want to have, again, your workers in tune with your customers, your managers in tune with the people they supervise.

And so, this sounded very convincing. It sounded very good. We're very concerned about managing inequality in this country and I don't think it's really sold all that deeply in corporate America but, to quote another president, or president's wife, "you just don't say no to diversity." (Unintelligible.)

SERWER: Well, professor, let me jump here and ask you, I mean are you against diversity in the workplace? Am I getting this right? I mean companies don't have quotas particularly. They're just looking to hire diverse workforces. What could be wrong with that?

LYNCH: Oh, I think there are several good things about it. I mean the pluses are the demographics are changing. That's very important. We are having more overseas workers, more overseas customers, and as the old saying goes, when in Rome do as the Romans do. You've got to know the culture of your customers and your overseas workers.

Also, the overseas workers are coming here via across the border, across the oceans and so forth. So, culture counts. It's very important in health care delivery, for example. The culture is very important in how people define health, illness, how they're going to respond to medication and so forth.

So, I'm in the middle on this. I think there are things to know. It is important to know the culture of your customers and we are expanding globally, so a little sociology never hurt anybody and I'm a sociologist even though I'm (unintelligible).

LISOVICZ: Professor, let me just challenge you on this though because it's more than just health care. I mean the companies that filed these friends of the court briefs are not altruistic. They're not in there just to do good. They're there to make a lot of money, companies like Alcoa and Coca Cola, GM, Intel. We're talking about really broad-based companies.

It's not only being in tune with the employee workforce. It's being in tune with the customers you serve and we have something in this country that is called the browning of America.

LYNCH: Yes.

LISOVICZ: Hispanics the largest minority group now, African- Americans also a huge population, and guess what, those people buy a lot of products.

LYNCH: Very important. I think from a customer service standpoint the diversity machine, as I call it, was on to something. They were really ahead of the game in seeing the changing demographics, both in this country and, again, the overseas marketing and managers of workforce.

I think when you orient it particularly towards customer service that's very important but one of the problems, though, there are a lot of sort of hidden assumptions that you get in here, is that you must have Hispanics to sell to Hispanics. You must have Asians to manage other Asians.

You get into what we call on campus identity politics and the point is anybody can be trained to be culturally sensitive, in other words a little sociology, as I said before, never hurt anybody. So, learning the habits and folkways and customs of the people you're dealing with is a good idea.

Part of the problem, though, is when you bring this inside the workplace and start insisting that you must have the same color, the same gender, selling to the same people.

Also, you get the idea that if you have a Latino on the board of directors he or she will bring you the Latino point of view and, you know, the mission of cultural diversity, I think, when it's defined properly is to break down stereotypes. The problem is you start sliding down this slippery slope of identity politics and, assuming that skin color is indicative of somebody's point of view.

SERWER: But, Frederick, what is the diversity machine you keep talking about? I mean is this some sort of invisible lobby?

LYNCH: It's what I call the little movement that made good. I started observing and interviewing and studying these people in the early 1990s when...

SERWER: You say you're sort of in the middle. I mean that's kind of a pejorative description, no?

LYNCH: It's a terrible description to be in an academe these days. You're either on the left in academe or not at all.

SERWER: No, I mean the diversity machine. I mean you're making fun of this. You're making light of it and then you're saying you're in the middle. I mean you know (unintelligible).

LYNCH: No, I think the diversity machine it's a very powerful lobby. It's again a coalition of CEOs, foundations, major people now who have really gotten multi-cultural discourse into mainstream America and the White House is very much attuned to the diversity machine.

You know, the president is delivering some of his radio addresses in Spanish. They're considering Alberto Gonzales as perhaps the next Supreme Court nominee. No, I think a lot of people have awakened to the idea of changing demographics.

The question is what do you do about it? Also, let me get in here I think there is remaining institutional discrimination against minorities and women. I think it varies enormously from one institution to another but we have to work on these things. The question is how do you work on these things?

CAFFERTY: Professor, we've got to leave it there. I appreciate very much you joining us and talking a little about these issues. We will revisit this topic with you at some point down the road. Thank you.

LYNCH: Good to be with you.

CAFFERTY: Professor Frederick Lynch, author of the "Diversity Machine, the Drive to Change the White Male Workplace," and associate professor of government at Claremont-McKenna College out there in southern California.

Still ahead as we continue IN THE MONEY, interest rates may be lower but the number of Americans with out of control debt is growing. We'll talk about whether this is a sign of impending doom or just part of a healthy economy.

Healthy is one thing doughnuts are not usually accused of being and Krispy Kreme is no exception; however, they taste terrific and it's one of the strongest products in the country. We'll find out why.

What would you life be like if you were making about $6 an hour? We'll talk with an award-winning journalist who tried it for two years and then wrote about her experiences in a best-selling book. Stick around, much more ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: In general, Americans are in debt. I think a lot of people are overextending themselves with mortgages and second mortgages and expensive cars, leases, so forth and so on.

(END VIDEO CLIP)

CAFFERTY: The biggest reason the Fed dropped interest rates this last week was to try to encourage corporations and consumers to spend more money and get the economy going again.

Many Americans have already spent way too much. Personal bankruptcy filings at record levels, more than one and a half million people filed for bankruptcy in just the first three months of this year.

Joining us now from Washington to talk about this growing debt, which is approaching $2 trillion, we're not talking about government debt, this is among the private citizenry, is Steve Rhode. He's the co-author of the book "Get out of Debt, Smart Solutions to Your Money Problems" and also the co-founder of an organization called Debt Counselors of America, Steve, nice to have you with us.

STEVE RHODE, DEBT COUNSELORS OF AMERICA: Oh, it's nice to be with you.

CAFFERTY: A quarter of a point cut in rates likely to trigger another big spending boom? Probably not but maybe that's a good thing. We're pretty deeply in debt already, aren't we?

RHODE: Well, we are very deep in debt and I'm not sure it's going to trigger much because over the past couple of years I've seen people all across the country borrowing heavily against their homes and continuing to fund their consumer debt.

LISOVICZ: You know, Steve, you know, it sort of reinforces the problem I guess in your view. Money is cheap. It's there to be had. What's the biggest problem? Is it people buying homes, buying cars, or the revolving credit?

RHODE: Well, our national surveys at Myvesta show us that people have, 50 percent of Americans say they have repeated and uncontrolled attempts to control or cut back their spending, and even though people have access to easy money, especially now when you have this refinancing boom, the problem is that most people actually end up engaging in unconscious self medicated spending, especially in troubled times. It's very predictable.

SERWER: You know, you talk Steve a little bit about budgeting and this is near and dear to my heart because my wife and I just sat down and did a budget for ourselves. It's really an eye-opening experience how much money is coming in, how much money you're spending, where the money goes. I mean how many people do this? How many people don't do this and how do you get started to sit down and really get a budget going?

RHODE: Well, that's an excellent question. You know, in fact, one of the worst things that you can do if you find yourself in trouble is actually start a budget because budgets are nothing more than a page of lies unless you know where your money is actually going. I mean you're really just guessing.

SERWER: I'm not lying.

RHODE: Well, I know you're not lying. You're right on track that's for sure. But what most people do is they feel the pressure, the stress of financial problems, so they sit down. They say, honey we need to make a budget, and they write down on a sheet of paper what they think their expenses are.

At the end of the month it doesn't add up like that and the first thing people do is they cut all the fun out of their life. That's just not sustainable. What I want people to do is track their spending for 30 days. Figure out where the money is really going and then make good educated decisions about where they want to cut back.

CAFFERTY: You know, we've been on a spending binge since World War II. That war ended. People came back from overseas. They started buying houses and new cars. We haven't stopped. We haven't looked back for 60 years. It is the richest country in the history of the world and spending and treating ourselves to stuff, things, is ingrained in the genetics of being in the U. S. of A.

I mean it's a lifestyle thing. What do you do about that the psychology of, I see that. I want that. I got to have it and I can have it now whether I have the money to pay for it or not.

RHODE: Well, you're right on target because people say all the time, Steve it's my credit card that got me in trouble. You know, no it's not. It's putting your credit card in your wallet and driving to the store that got you in trouble.

Now, we live in a society where we determine our status and class by what we have, what we wear, what we drive, where we live, that type of stuff, and what ends up happening is that we end up getting sucked into that and living lifestyles that we can't afford on borrowed money.

LISOVICZ: And, you know, it's not -- the banks are very free, the lending institutions are very free with the money because they have certain safeguards. They write off a certain amount of bad debt, isn't that correct?

RHODE: Well, that's right. You know, you can't rely though on whether or not you're approved for a loan if that's a smart thing for you to do because there are lenders out there that will max you out. It might be comfortable for them but it just might not be doable for you. The reason they call it personal finance is because it's personal.

SERWER: Steve, one thing I kind of take issue with, though, is you're saying that so many Americans don't shop around, you know, they don't shop to save a little bit of money here and there, you know, and I kind of -- a lot of people make the choice not to shop around because it takes too much time.

RHODE: Absolutely.

SERWER: I mean do you take that into account? I mean I'm not going to save 50 cents on a six-pack of soda, you know, across town. I don't have the time to do that.

RHODE: I completely agree with you but take a cell phone, for example. I have clients who pay $500 a month for a cell phone bill and one client in particular with a five-second call we got the bill down to $50 a month. I mean you have to be a little bit proactive.

Now, an interesting stat in our national surveys at Myvesta is that 18 to 24-year-olds, 64 percent of them say that they don't even look at their credit card statements.

CAFFERTY: That's because they don't have air sick bags in the house.

SERWER: Of their dad is paying for them.

CAFFERTY: When the stock market started to fall apart nobody read their 401(k) stuff for probably a year, year and a half.

LISOVICZ: (Unintelligible.)

CAFFERTY: Steve, we got to leave it there. I appreciate you coming on and talking with us. Thank you very much.

RHODE: No problem.

CAFFERTY: Steve Rhode, president and co-founder, Myvesta.org, and co-author of "Get out of Debt, Smart Solutions to your Money Problems."

Up next, the company puts the dough in doughnuts. Do we have writers on this show or what? Profits at Krispy Kreme are as sweet as the company's products. We'll look at the Krispy Kreme success story through the eyes of the man who wrote the cover story for this week's "Fortune" magazine, my friend Andy Serwer.

Also, deja vu all over again, tech stocks have been on a tear lately. We'll find out whether this is double bubble trouble ahead.

Plus, drop us a line. Tell us what you think or don't, inthemoney@cnn.com.

(COMMERCIAL BREAK)

LISOVICZ: Let's look at some of the top business stories of the week in our "Money Minute."

The latest economic data seems to confirm the Fed's worries about a weak economy. The government said economic growth in the first three months of this year was slower than originally thought. The GDP was revised down to a modest 1.4 percent. Wall Street is having mixed reactions to a planned merger in the volatile biotech sector. IDEC Pharmaceuticals is looking to buy rival Biogen in a deal worth more than $6.5 billion. Shares of both companies fell sharply on the news.

And the music industry is about to crack down on the biggest file-sharing ringleaders. The Recording Industry Association says it will file several hundred lawsuits in the next two months. U.S. copyright laws allow for damages of $750 to $150,000 for each song offered illegally on a person's computer.

SERWER: Krispy Kreme doughnuts is quickly becoming one of the most profitable franchises in America, both for snackers and stock buyer. Shares of Krispy Kreme have been hotter than doughnuts fresh out of the oven ever since the company went public three years ago.

It's a phenomena so compelling that I wrote it up as this week's "Fortune" magazine cover story and it's also our stock of the week. It really has been flying and despite the market's weakness over the past three years it continues to go up and up.

LISOVICZ: It's at a 52-week high and, Andy I must say that there are very few stories that you sink your teeth into like the Krispy Kreme cover story.

SERWER: Well, it was tough reporting. Tough reporting, I mean I went down to North Carolina and ate as many doughnuts as I could for 48 hours, right.

CAFFERTY: This company when they started out they understood exactly how to get their message out. When I worked at CNNFN, the financial network that's cousin to this one, every three months when Krispy Kreme would report its earnings, the newsroom would be flooded with fresh doughnuts from Krispy Kreme.

So, while you're eating the doughnut, if there was any question about whether you do the Krispy Kreme earnings or some story about the Goodyear Tire and Rubber Company, there were no snow tires in the newsroom. You did the Krispy Kreme story.

SERWER: Right.

CAFFERTY: So, they really understood how to market and there was an early indication of that there.

SERWER: They have no advertising budget.

LISOVICZ: That's what I was going to say.

SERWER: They just continue to do that stuff, Susan, right?

LISOVICZ: And I mean it's not a Johnny-come-lately. It's a 66, if I'm going to be quizzed on this story.

SERWER: Sixty-seven, I think. LISOVICZ: Sixty-seven-year-old company. It's just new to regions outside of the south where it originates. But you know what intrigued me and what I learned from your story is that it's not only the doughnuts that fuel the company's bottom line. They sell -- the company sells its ingredients, flour.

SERWER: Right.

LISOVICZ: And some of the equipment.

SERWER: That's right. I mean it's one of these companies that makes money by company-owned stores as well as by selling materials and flour and doughnut making machines to its franchises. But it's true, I mean for decades this company was a sleepy operation in the southeast.

For years they kind of had a tortured bunch of events happen to them and then eventually, finally they got their act together and, you know, people are wondering is this the next Starbucks? Is this the next McDonald's? And, you know, I kind of think this company has a pretty bright future ahead of it.

LISOVICZ: But you know, Andy, there is one question that you didn't address in your very lengthy article and that is you didn't interview enough police officers because if my memory serves correct they are frequently seen in Dunkin' Donuts and they are the ultimate aficionados.

SERWER: I did mention policemen and drug addicts, you know some of the few products.

CAFFERTY: They're not all in Dunkin' Donuts. There's four of them out there towing your car right now. What I want to know is how come you get the Krispy Kreme story and the entire writing staff of that distinguished magazine is worrying about things like IPOs and the biotech sector and you're down in some doughnut factory in the Carolinas?

SERWER: Well, I've been around, you know. I know what the good stock...

LISOVICZ: Yes, and you were hanging with the Stones, the Rolling Stones last time (unintelligible).

SERWER: Next story, though, Red Lobster.

CAFFERTY: Oh, that's a good one.

SERWER: What do you think? I mean, you know, that's what I'm going to do the food beat.

CAFFERTY: There you go.

LISOVICZ: Well, OK.

CAFFERTY: Cover story of this week's "Fortune" magazine, check it out.

LISOVICZ: And all we can say is share, remember share.

SERWER: (Unintelligible.)

LISOVICZ: Learn the Krispy Kreme lesson. Thank you, Andy.

Coming up, before you complain about your salary and expenses try living on minimum wage. We'll talk to an award-winning author who decided to find out what it's like.

And, do you have the guts to get back into tech stocks? They're much higher since the start of the year. We'll talk to an expert about the pros and cons.

(COMMERCIAL BREAK)

(NEWSBREAK)

CAFFERTY: A big and not that unexpected a response to our e-mail question of the week last week, which was: "Are your expenses rising, falling, or staying the same?"

Roberta from Tucson wrote this. "My expenses are constantly rising and my income stays the same. Eat less is the key, I guess. I need to lose weight anyway."

Another viewer wrote: "My health insurance up $38 a month, my cable bill is up $10 a month, gasoline is up, property taxes are up too. I'm nickeled and dimed to death."

We'll have a new e-mail question a bit later in the program. You'll want to stay tuned for that. The end of that last e-mail about being nickeled and dimed to death is a pretty good segue into our next segment of the program.

Rising costs certain a problem for many Americans but what about those who live day after day just above the poverty line? Minimum wage in this country $5.15 an hour and it hasn't been raised for six years.

Our next guest wanted to find out firsthand what making the bare minimum was like and what trying to survive on just a little bit of money was all about. She detailed her trials and tribulations in what became a "New York Times" best seller titled "Nickel and Dimed." Author Barbara Ehrenreich joins us now from Charlottesville, Virginia. Barbara, it's nice to have you with us. Thank you.

BARBARA EHRENREICH, AUTHOR, "NICKEL AND DIMED": Glad to be with you.

CAFFERTY: At the end of this experience what was the biggest misconception you had had before it started about living on something just slightly above minimum wage?

EHRENREICH: I think I thought it would be easier than it turned out to be. I had my little calculations before I went into this and I thought I could do it if I could hold the rent down to say $500 a month. I wasn't able to do that. What I found really was that there's a big mismatch between rents and wages out there.

SERWER: Barbara, you talk about that mismatch, so what do people do? What did your coworkers do to get by, number one, and number two you talk about wages should be raised, how would that happen? How would you do that?

EHRENREICH: Well, first let me say I was actually above the minimum wage. I averaged in all the different jobs I had $7.00 an hour, so I was working as a maid with a housecleaning service, a hotel housekeeper. I was a waitress, a nursing home aide, and a Wal-Mart floor clerk and it averaged $7.00 an hour.

So, people I was working with were making the same amount of money. One strategy for survival is that you live with other people who are making some money. I mean, you know, you have a spouse or a boyfriend or a roommate, somebody you just met maybe.

The other strategy is more than one job and this seemed to be very, very common, especially full time and half time or part time job, something like that. Then you can try to get it together.

But I did work with people who weren't managing by any means. I worked alongside people who were homeless and although they were full time workers. I worked alongside, and I think this was the really hardest thing to take, people who were not getting enough food in the working day because they didn't have any money and they didn't have any food at home. So, it's hard.

LISOVICZ: No question about it and, you know, because of this existence, this trial existence that you led it gave you a different perspective on welfare reform. A lot of people, a lot of voters really like that. They think that, you know, they say welfare really reinforces people to be on the dole but you have a different perspective as a result of your experience.

EHRENREICH: Yes, welfare reform basically said to women who had been receiving welfare, all right no more. You've got to get out into the workforce and you will be all right if you get out into the workforce. You'll be able to support your children. You'll rise out of poverty.

What we know from studies that have been done is they haven't risen out of poverty, of course, because they're going to very low wages. I don't think there's a problem with a work ethic among American workers.

Everyone I worked with, including people who had spent some time on welfare, really cared about their jobs, really put their heart into it. I just don't think there's a pay ethic on management's side when it comes to that level of employees.

CAFFERTY: You mentioned a whole variety of different things you did. What was your favorite? Is there anything you'd go back to where you had a little fun and met some people you enjoyed being around or were they all just drudgery?

EHRENREICH: Well, you were just talking about food, so I would say I kind of enjoyed being -- I kind of enjoyed waitressing. You get to control how much whipped cream goes on those sundaes.

CAFFERTY: Well, that's true.

EHRENREICH: And that's -- I liked the nursing home job except it was terribly understaffed and I was constantly terrified of, you know, killing some patient inadvertently, but I had like a feeling of actually, you know, helping people.

CAFFERTY: Yes.

EHRENREICH: So, it was -- this was not all grimness. There were things I enjoyed a lot.

SERWER: Barbara, I want to take you on the other side though. What was something that was really terrible? I mean did you have anything that was truly dreadful?

EHRENREICH: Yes. You know the worst job, and I was surprised by this, was the housecleaning job with one of these maid services, you know, that you could find in the phone book where you work in a team and you go from house to house.

That was the most physically damaging job, even young women who had been there like three months or so had some kind of injury because we had such extreme time pressure to clean those houses. We literally ran around them with our backpack vacuum cleaners on our back. That's pretty tough on your back and scrubbing the floors on our hands and knees. So, that was the worst, the dirtiest, and actually the lowest paid too.

LISOVICZ: You know, Barbara, I'm curious as to how you were treated by your managers, you know. We have, of course, what is called a jobless recovery. A lot of people underemployed, don't have jobs, and taking huge pay cuts just in order to get some money coming in. Were you treated well? Did you find that your work was respected?

EHRENREICH: No, I can't say that. I should mention that the conditions I'm describing apply to before the economic downturn. I was doing this between the years 1998 and 2000. Absolute, you know, peak of prosperity, so it couldn't have been better really, even though it was terrible at the time.

Now it is worse but still the attitude of management toward the entry level, low wage worker seems to be well, they almost look on you as if you're a criminal. You know, you've got to have the drug test. You got to take a lengthy personality test where they try to get you to confess that you are a thief, et cetera.

There's a lot of surveillance when you go to work, very few rights. They can search your purse at any time. So, you do feel like you've gone, (unintelligible) to the bottom really of the hierarchy when you get in these jobs.

SERWER: I'm sorry, just quickly, you talk about a lot of problems. What in your mind would be some solutions to these problems?

EHRENREICH: Well, you know, basically people need more money. They need to be able to earn more. I wish more employers would see the wisdom of treating people better, paying them better, and not having such high turnover for example.

I think we need certain benefits like health insurance for everybody. That shouldn't even be the employer's responsibility. That would make life a lot easier. There's a long, long list of things we know we should have been doing as a country years ago and remain undone.

CAFFERTY: Barbara, there is that old phrase you don't know what it's like until you walk in the other person's shoes. You've done that and I appreciate you spending some time to share your insights with us here on IN THE MONEY. Thank you.

EHRENREICH: My pleasure.

CAFFERTY: Barbara Ehrenreich, author of "Nickel and Dimed" on not getting by in America.

Next up, a surge in tech stocks may make a tempting offer for you if you're looking about getting into the stock market. We'll take a look at whether or not we're talking about double bubble trouble when it comes to techs.

How much would you pay for a good bottle of scotch, a really good bottle of scotch? There isn't any scotch anywhere worth what these guys think they're going to get for this. We'll tell you about it.

(COMMERCIAL BREAK)

LISOVICZ: It sure seems like old times in the stock market. Technology shares are surging once again with the tech heavy NASDAQ up more than 20 percent so far this year. The question now for investors is whether they should get in the game or stay on the sidelines.

Joining us to help answer that question is Arnie Berman. He's a technology strategist at the Soundview Technology Group. Welcome.

ARNIE BERMAN, SOUNDVIEW TECHNOLOGY GROUP: Hi, good to be here.

LISOVICZ: Well, you know, Arnie there's that old expression been down so long it's starting to look up to me. I mean let's face it, tech shares were completely collapsed over the last three years. Is it just a question of valuations that they're beginning to look cheap?

BERMAN: Well, I think the more aberrational prices that you saw were certainly what we experienced last October and even more recently in March than the kinds of prices that you're seeing today. What I find fascinating right now is the number of people that are suggesting that valuations are extended, that the stocks have surged too far, that it's time for a pullback, yet when you look back the stock prices today are barely, are almost back but not quite to where they were on September 10, 2001, the day before the attacks.

And, if you look at the context today versus the context then, virtually everything about the world today is better. Growth rates are again positive. Earnings revisions are stable. Valuations are lower. Cash flows are generally higher. They're growing faster. There are no longer, the estimates are no longer in free fall and certainly the interest rate context is better.

CAFFERTY: Wait a second, Arnie.

BERMAN: As are the overall risk premiums lower, so really in every way the situation is better than it was in September, '01, yet back then since NASDAQ had declined 38 percent in the four months leading up to September, '01...

CAFFERTY: Arnie.

BERMAN: The perception was that they were cheap.

CAFFERTY: I'm sorry. Let me interrupt. What do you mean things are better now than they were then? We got a recession that's barely over. We go not growth in the economy. We got people out of work, over 400,000 that are on unemployment. It's been there for weeks and weeks and months.

Forward guidance coming out of these companies when they report earnings all say basically the same thing there ain't nothing on the horizon. We can't see any dramatic upturn in business, revenue, sales or anything else.

We've got a government and a Federal Reserve concerned about deflation. We've got jobs being exported out of this country to every other place on the planet. What do you mean things are better?

BERMAN: A lot of the situation you describe, those things were all in front of us back in September, '01. When you look at the situation today what the market is suggesting is that things are better now and going to continue to get better in '04.

Back then, growth rates for the S&P 500 and for the technology companies was negative. These companies were shrinking. They're again growing. At that point, estimate revisions were all negative. At this point, there is stability.

In fact, if there's a word that we're all going to get sick and tired of hearing during report season in July, it will be word stability. Everybody is talking stability at this point and since we only have stability very few folks will be willing to say that it's going to get better.

SERWER: Arnie, Arnie, Arnie. I mean these stocks have run up though. I mean you may be right. Let's just say you're right but isn't this already priced in? I mean Yahoo is up three times since October, threefold and it's got a PE, a price earnings multiple of 137. Now, would you buy that stock right now?

BERMAN: Yahoo's OK. It certainly wouldn't be my best idea right now. One of the ways to look a Yahoo, though, because it's an interesting case study is Yahoo is essentially a play on advertising and ultimately in a good advertising environment they're leveraged that more core advertising will be over the web than it was the last cycle and more of the web advertising is going to be over the big portals that everybody goes to.

But in the context of an environment where advertising was shrinking, Yahoo was not going to realize any of that leverage. So, a lot of what's helped the stock is the fact that there is leverage to an improved economic environment in the tech sector and, frankly, that leverage I think is about to become one of the great virtues of investing in tech stocks, when for the last couple of years the cyclicality of tech was the thing that investors were most afraid of.

LISOVICZ: But, you know, Arnie just very quickly, I mean stability is one thing. We're talking about growth here. A lot of investors have been burned. When are we going to see growth in the tech sector; that is, companies spending on infrastructure where you see chip sales surging, the real infrastructure of technology starting to pick up?

BERMAN: Let's be clear about this that first of all when I say it's time to get back into tech stocks, I don't mean to say that we're going back to the late 1990s, that it's not as though these stocks are becoming one decision vehicles again where for the longest time it seemed like they were all buys and holds and then later on it was just sell and forget.

I think we're getting back to a normal environment which means that tech investing is difficult that valuations matter, product cycles matter, timing matters, financial statements matter, remembering to sell matters.

It's hard and that's the way I think it's looking to be going forward, and I think what you're seeing out there is that growth has turned positive. It's like to turn more positive into 2004 and that sort of acceleration has always been meaningful to the performance of the stocks in the past.

LISOVICZ: We'll have to leave it at that. Tread carefully in any case, right? Arnie Berman, technology strategist with Soundview Technology Group, thanks for joining us.

BERMAN: Thank you.

LISOVICZ: Just ahead, old scotch and new money. Whiskey maker Chivas Regal offering up some high-priced spirits but if you want a glass you might need a second mortgage. We'll explain after the break.

First, though, Andy's got the debut edition of "Fortune" Fundamentals.

(BEGIN VIDEO CLIP)

SERWER: Today we're talking bulls and bears. Just what is a bull market and what is a bear market? Well, the generally accepted definition of a bull market is when stocks are up 20 percent or more from a recent low. A bear market down 20 percent from a recent high.

So, just where are we today? Well, in fact, the market's been on a little bit of a tear lately. In fact, the Dow is up about 20 percent from its March lows. However, longer term going back to the spring of 2000, the Dow is down 20 percent still from its high back then.

So, it's all a matter of perspective. Longer term we're still in a bear market. Shorter term the bull is back and running.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

CAFFERTY: Buying a round of drinks can get pretty steep sometimes. Wait until you hear how much Chivas Regal is going to charge for one bottle of their special 50-year-old scotch.

And you can e-mail us your comments, the address, inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: If you're a connoisseur of fine liquor and you got a pocket full of money to burn this story is for you. Chivas selling s special scotch $10,000 a bottle, it's a special edition marking the 50th anniversary of Queen Elizabeth sitting on the throne in England. Her coronation would be the anniversary.

SERWER: Yes.

CAFFERTY: If you're interested, you'll want to move quickly though. There will only be ten bottles sold in the United States.

SERWER: Going, gone.

CAFFERTY: There you go. Time to recheck the mailbag. The segment that we did on the push to reduce employee obesity produced this response from Vicky who lives in Nebraska:

"Most heavy people I know are never sick. My skinny co-workers are sick just as much as the overweight ones if not more so. Saying overweight workers make health care costs go up is the most ridiculous accusation I have ever heard."

We got a lot of e-mails commenting on that story from Florida about a nosy neighbor who blew the whistle on a little girl's lemonade stand because she didn't have the proper permit. Rick in Colorado Springs wrote this: "Operating a lemonade stand without a permit, gosh, my town would have put her in foster care, arrested her parents, sentenced them both to five years, and then launched an investigation charging everyone who bought lemonade from the stand with conspiracy."

And, our segment offering tongue-in-cheek advice to prison bound CEOs produced this reaction from one viewer who wrote: "I hope President Bush will confiscate all the crooked CEOS' assets and pay back the people before the CEOs donate to his reelection fund."

The issue of campaign finance will be our lead story on tomorrow's edition of IN THE MONEY. We'll talk about whether political fund-raisers have become this nation's real presidential primaries.

Our e-mail question of the week is as follows: "If your currently looking for a job how long have you been looking and what kind of success and/or frustration have you met with?" You can mail in your answers at inthemoney@cnn.com.

We spoke at great length last week about a neighbor who turned in this little kid...

LISOVICZ: You did. You did in particular.

CAFFERTY: Well, I did, because quite frankly I got really -- I got a knot in my shorts about that deal. Not only was the neighbor out to punish a little kid. The cops came and gave her some kind of summons and forced her to shut down the lemonade stand.

LISOVICZ: But they later came back and bought some lemonade.

CAFFERTY: This was some town.

SERWER: You're reading this wrong. I feel badly for this woman, this poor snitch.

CAFFERTY: You do.

SERWER: The woman who turned in the little girl. I mean someone needs to enforce local ordinances. Someone needs to stand up for the local laws that made this country great and this woman is doing it.

LISOVICZ: You probably like the woman who...

SERWER: Get her off the street, she's selling.

LISOVICZ: (Unintelligible) Linda what was her name?

SERWER: Linda Tripp.

LISOVICZ: Linda Tripp (unintelligible).

SERWER: All these people, they're, yes, they're doing the right thing. CAFFERTY: They are doing the right thing.

LISOVICZ: But, look, my prediction from last weekend stands correct which is that this little girl's business would quadruple. She made an appearance on David Letterman. She probably has her own business manager, her publicist, an agent.

SERWER: They should put the snitch on David Letterman. They should put the other lady on. She's the hero of this story.

CAFFERTY: All right, Scrooge, that's enough.

LISOVICZ: She called the neighbor a crabby neighbor this little girl.

CAFFERTY: Well, good, that's a good one.

SERWER: She should sue her for that.

CAFFERTY: Crabby, nosy, intrusive.

SERWER: Snitchy.

CAFFERTY: Yes. That brings to a close this tour de force of business journalism for this Saturday afternoon. My thanks, as always, to my co-anchors, CNN Financial Correspondent Susan Lisovicz, and the old crab at the end of the table over there, "Fortune" magazine editor-at-large Andy Serwer.

Join us again tomorrow, 3:00 Eastern time. Have a great day. See you then.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



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