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Crisis of American Middle Class Analyzed; Swearing at Work Examined
Aired June 8, 2013 - 13:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: Happy birthday economic recovery. You're now four years old. But too many Americans aren't joining in the celebration.
I'm Christine Romans. This is YOUR MONEY.
June 2009 marked the end of the great recession. Four years later the gulf is growing between those who are doing well in this economy and there are those doing well and those still struggling to get by. Maintaining a foothold in the middle class is no longer guaranteed.
It is time for some repositioning, America.
ROMANS (voice-over): It's one America but two economies.
UNIDENTIFIED REPORTER: A milestone day for the U.S. stock markets, the Dow Jones --
ROMANS: For the stock market it is the best of times. But for America's middle class, not so much. Household incomes down $4,000 since the year 2000, because in today's economy the American dream sometimes feels like a pipe dream. Higher paying jobs that once built up this country's middle class are disappearing, stagnant wages and low paying jobs the new normal in America with one third of Americans now making less than $24,000 a year.
While all of that may boost Wall Street's bottom line, it only squeezes U.S. workers. So how do you get ahead in today's economy?
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You will need more than just a high school education to succeed in this economy.
ROMANS: Still good advice for members of America's future middle class, but not all college majors are created equal. Degrees in engineering and health care are in high demand. But fields that once helped transform this country through innovation and creativity, architecture, anthropology, film, increasingly just add to America's jobless lines. As America repositions itself following the great recession, what does your future hold?
(END VIDEOTAPE) ROMANS: Arianna Huffington is editor in chief of Huffington Post Media Group, and Fareed Zakaria is of course the host of CNN's "Fareed Zakaria GPS." Fareed, too many graduates coming out of school with a mountain of debt, and they might not really have a major that's going to be rewarded. Some degree categories, there is 50 percent unemployment for these kids. Is America eating its young?
FAREED ZAKARIA, HOST, "FAREED ZAKARIA GPS": I think it is, and I think there are two sets of solutions to it. One, the kids have to get smart. They have to realize if you are getting degrees with all due respect in social psychology and stuff like that, you are not going to be as employable as if you do it in engineering or any technical discipline. They really have to focus on the skills they need and that may not always be a four-year degree. It may be a two year degree.
The piece we're doing, which is destroying the gateway to the middle class, is what we're doing with affordable education. State universities used to be gateways, you used pay almost nothing to go to universities like Berkeley and Michigan. Now you pay tens of thousands of dollars and all of that is producing student debt. That makes -- the whole idea of these state universities is they provided people who really didn't have the opportunities, couldn't game the system, didn't know how to get into the Ivy League with a path into good-paying jobs and that. We, the public part of that bargain, has collapsed.
ROMANS: For a long time we have had this mirage in America a thriving middle class meant kids to go to college, first or second generation of their family ever, and they could find themselves there and take five years and could have a major maybe the economy wasn't going to reward, because in the '90s we created 24 million jobs in this country. Those days are over when you talked to politicians and CEOs and leaders. What do they want their kids to be when they grow up?
ARIANNA HUFFINGTON, EDITOR IN CHIEF, HUFFINGTON POST MEDIA GROUP: Clearly not what's happening to the majority of kids, because even the kids with jobs often have jobs that are not relevant to what they got their degrees in. I mean, my daughter graduated from a great college, Yale, last year, and a lot of her friends are waitressing. This is even with an Ivy League degree.
Then the burden of debt is something incredibly significant. We have about $30,000 of debt per kid. The amount of student debt now is a million one, a trillion one. It is more than credit card debt, more than auto loan debt.
ROMANS: So what that means for the economy and why we focus and repositioning America, we have to focus on the young people, because they will buy a house later. They may be less likely to get a mortgage. They're going to buy a car later. They'll have household creation. They may get married later. The millennials could change the pattern of the American economy because of these factors.
ZAKARIA: The first thing, the most danger thing think that may happen is they may not get a job. If you look to what happened in a place like Europe, cyclical unemployment becomes structural unemployment. I mean if you have been unemployed for two or three years, you are less attractive to some employer looking around. When they look around at people they tend to look for people that have five years of good experience at work or somebody fresh out of college or with a diploma because those people are cheap.
If you have been out three years, four years, five years, and you don't have either, you have neither the experience nor do you have the fact that you are fresh out of college, sort of feeling of novelty, you may not get that job, and then you become permanently structurally unemployed. You also lose work habits. People don't think about this, but the act of going to work every day makes you better at it. Like anything in life, the more you do it, the better you get at it. It is a huge problem and you could end up with people who as in Europe have been unemployed for a decade, two decades.
ROMANS: We learn this week 4.4 million people are long-term unemployed. We saw the government labor market statistics. That's kind of a stagnant number.
HUFFINGTON: But also half of them are young. That's the interesting thing. It is not just the tragedy of being long-term unemployed but half of them being young. And it breaks with the natural cycle of things. If you play by the rules and do everything right and you graduate with a good degree and then you can't get a job. That's why I think one of the interesting phenomena is how many young people now are doing it, are going into their own careers, doing their own start- up or creating their own start-up.
ROMANS: I think entrepreneurism should be taught in every college. A lot of them won't work for the same company for 20 years. They'll work for a lot of different companies or have to make it for themselves. I think it is something a lot of universities are trying to embrace.
Don't go away. We have more to talk about. Stay right there, because the world's two biggest economies are coming face-to-face. President Obama meeting with China's new president. How does America reposition itself as China's influence grows?
And then what do Beyonce, John Legend, Madonna, and Fareed Zakaria's wife have in common? The answer is next.
ROMANS: Earlier we talked about a birthday, the U.S. economic recovery just turned four years old. Now let's talk about an anniversary -- 24 years ago this week Chinese soldiers gunned down unarmed protesters in Tiananmen Square. The iconic image of that crackdown, a lone man facing down a tank, who can forget that?
Much has changed in those 24 years. There is a rising middle class with real money to spend. Much has stayed the same, though, too. Economic reform has been divorced from political reform. Fareed and Arianna are still with us. They say China will overtake the U.S. economy by 2016. That's the back drop when the president meets with China's new president. How does America reposition itself when we have central bickering and they have central planning?
ZAKARIA: China has been amazing at industrializing itself better than any country in the world. But when you see that 2016 figure, that's on the basis of something called purchasing power parody. It is too technical to get into. The simple fact, China has a $6 trillion economy in dollars. Ours is $15 trillion. Because of their size they will catch up for sure and actually not by 2016, much later.
The point is China is not a superpower yet. The military spending is a quarter of ours. And most importantly they don't have that broad mentality of thinking to themselves what is good for the world? How do we provide stability in Asia? How do we provide stability in the Persian Gulf? How do we keep the sea lanes open? They're not doing that stuff.
So we should recognize they are rising. We should be respectful. We should try to get them to help us uphold this open world economy and this open world system. But, you know, for now and for a long time for the future the United States remains the guarantor of peace and stability in the world and we need China to come in.
HUFFINGTON: But there is one area where we are clearly lacking, and that's infrastructure building. I mean, the other week we had a bridge collapse which went beyond the bridge collapse. It is symbolic for the president. Remember, he would stand in front of bridges and talk about the need to rebuild our infrastructure. But it is not happening. And that is actually critical. Public investment is necessary right now, and it is not happening, and there is no real focus on it in Washington.
ZAKARIA: And ties into the earlier part of our discussion. The single biggest way you can produce jobs, real jobs in this economy, would be an ambitious plan along the lines of what Arianna is saying, build out our infrastructure, revamp the airports, the ports, we need our ports to be better to be able to take the new big ships that will go through the Panama Canal. That will produce real jobs, high-paying jobs. You can't globalize the stuff. You can't outsource the building of infrastructure.
ROMANS: It sounds wonderful, but they can't agree on whether to drink coke or Pepsi in Washington. They can't agree on anything.
HUFFINGTON: It has to be a priority. A lot of the hardest things that happened in this country, whether it was civil rights act or any major shift, does not just happen without at least one leader, in this case the president, just staying on top of it day in and day out.
ZAKARIA: There is one rare thought which is there is a new book called the "Metropolitan Revolution" and points out politics is broken in Washington and at the level of the cities, actually a lot is happening. Look at Rahm Emanuel trying to create a public/private infrastructure fund which will repair Chicago's infrastructure. Chicago's water pipes are 100 years old. They have 25 percent leakage. Some of them are made out of wood. You have to fix that.
ROMANS: You have such low treasury bill rates. Interest rates are still so, so low. To borrow that money, you can't talk about borrowing money in Washington.
Before the break we asked what these people had in common. All four took action to advance the role of women in the global economy this week, Beyonce, John Legend, Madonna, and Mrs. Zakaria spoke at the "Huffington Post" first ever women's conference. Tell me about how women can drive the real economic recovery?
HUFFINGTON: The point of the conference was to redefine success, that women need to lead the way, to redefine success beyond money and power, because now the American workplace is fueled by burnout, 24/7 work, sleep deprivation. And the results --
ROMANS: Have you been talking to my staff?
HUFFINGTON: And to your husband. It is not good for our well-being, 75 percent of health care costs in America are because of chronic preventable diseases. It is not sustainable. It is not good for wisdom. It is not good for the decisions our leaders make. The former prime minister of Israel just gave this advice to future leaders, get more sleep.
I know it sounds prosaic, but the truth is if you're sleep-deprived, if you're not connected with your own center of wisdom you will not make wise decisions. We have incredibly smart people running governments, running businesses, making terrible decisions.
ROMANS: So the takeaway from today is get more sleep and do a big infrastructure build. That is what your takeaway from this program.
So nice to see both of you. Thank you. You can see more of Fareed on his show every Sunday 10:00 a.m. and 1:00 p.m. eastern, this week in the wake of President Obama's summit with Xi Jinping. Fareed will talk to the American who perhaps has spent more time with president Xi than any other, Henry Kissinger.
In "1984" George Orwell imagined a world where the government spies on its citizens with hidden microphones and tele-screens. He published that novel 54 years ago this weekend. Today evidence the U.S. government is looking at your phone records, online communications, maybe your credit card transactions. The tradeoff between your liberty and your security, that's next.
ROMANS: Your liberty versus your security -- since September 11th the two are in heated conflict, and that came into sharp focus this week. We now know the government obtained a secret warrant in April ordering Verizon's business services division to turn over data on every call. It is the extension of a top secret program that's been going on for years. The Obama administration says the national security agency is just compiling data.
(BEGIN VIDEO CLIP)
OBAMA: Nobody is listening to your telephone calls. That's not what this program is about.
(END VIDEO CLIP)
ROMANS: But it looks like this data mining, the collection of vast amounts of information, went beyond simply phone calls. Reports followed that the government is tapping directly into the servers of nine leading Internet companies, including Microsoft, Yahoo!, Google, Facebook, AOL, Skype, and Apple. Several of these companies deny they handed over information and the government but now admits for the past six years it has been collecting information on foreigners overseas from the nation's largest Internet companies.
And now a report that the data mining may have also included credit card transactions. That's according to reporting in the "Wall Street Journal." Tom Fuentes is CNN's law enforcement analyst and former FBI assistant director. He joins us through Skype. And, tom, I really want to ask you first, unpack this for me. What is data mining? What are they doing with all of this information they're collecting?
TOM FUENTES, FORMER FBI ASSISTANT DIRECTOR: Well, data mining basically is like coal mining. They're getting shovelfuls of information and putting it in a big bucket, and it is sitting there until they have a reason to try to look for a particular nugget and analyze it in terms of a given phone number, who that number calls or is receiving calls from once there is a suspicion about the number or about the person that subscribes to that number.
So right now what we're talking about, it sounds like the phone companies, at least Verizon in this case, is turning over probably 80 to 100 million phone calls per day to NSA and they're going into NSA's computer system for storage. Later if there is a particular number that comes up as suspicious or an individual that comes under investigation for a possible being involved with terrorism, let's say, then they can go to that number and analyze all of the calls to and from that number.
ROMANS: And they might need a court order to do that.
FUENTES: They already obtained the information as far as the bulk information in the first place. So already you have all three branches of the government involved, the FBI and NSA from executive, Congress of course passed the law and says they think it is legal, and then you have a FISA court judge in Washington issuing the court order to the phone company to say turn those records over to NSA.
ROMANS: You can imagine a situation, for example, the Boston bombings, and I am not saying I know this is related to the Boston bombings. It may not be. It may be. In that situation it could be that the government wants to make sure it has access to all of that information while it is trying to follow the threads for a major terrorism or even any terrorism investigation.
FUENTES: Right. Instead of having to go to 15 different companies or 20 or 100 separate phone companies with subpoenas for that information and then find out that that information may have been purged already and no longer in the system, this way it is one-stop shopping for the counterterrorism analysts to say, OK, all of the information is in the computer system of NSA and can be accessed at a much later date.
So if you have one like Tamerlan Tsarnaev from the Boston bombing, you can say we want to go back on his cell phones two years, three years, and look at every call he made, every call to him. Where did they come from? Where did they go to? How long were those calls?
Is this government surveillance of American citizens? That's what someone from the Cato institute, a civil libertarian told me, this is your government conducting surveillance on you and your activities.
FUENTES: I wouldn't go so far. It is not that specific. If Verizon, let's say, turns over 80 million phone calls a day and there is a few hundred or maybe even 1,000 analysts, they're not looking at every phone call. They're not looking at phone numbers and going, oh, so- and-so is having an affair or so-and-so is getting ready to rob a bank. They don't know the content and they really don't know the people involved unless they have already come up under suspicion.
ROMANS: Tom, nice to see you this weekend. Thank you.
Coming up, whoops, you said a four letter word at the office. Well, they got away with it. So is it ever OK to swear at work? What does it say about you?
ROMANS: Four star CEOS, Oscar winners, politicians, they have all put money it is in office swear jar. But cursing on the job, it can hurt your career.
UNIDENTIFIED MALE: You -- don't watch us play throughout the year.
ROMANS: You hear it in sports. Sometimes there are fines. In corporate America there are reprimands. Potty mouth just earned the CEO of Scott's Miracle-Gro a unanimous reprimand from the board. We don't know what he said, but he apologized for, quote, "colorful language" in this statement.
Of course politicians have been known to drop f bombs at work after the passage of health reform, Vice President Joe Biden whispered one in the president's ear. And in 2000 George Bush colorfully described a "New York Times" reporter.
Melissa Leo let the f-bomb fly when she accepted an Oscar and Yahoo's former CEO Carol Barth was farm usually foul mouthed.
UNIDENTIFIED FEMALE: Excuse me, I knew that would slip out one of these times.
ROMANS: Even the e-mail antics of some Goldman Sachs execs got them in trouble.
UNIDENTIFIED MALE: Boy, that timber wolf was one -- deal.
ROMANS: So is it ever OK to swear at work?
UNIDENTIFIED MALE: An occasional f-bomb is not going to become a Supreme Court case. The reality is it is where the conduct is ongoing or pervasive, and under most company's policies these days offensive language including swearing is prohibited.
ROMANS: And your boss is listening. A career builder survey finds 57 percent of employers would be less likely to promote someone who swears in the office. Still, 51 percent of workers admit to doing it, and even people paid to watch their words like broadcast legend Sue Simmons and Ernie Anastas have sometimes let them slip.
UNIDENTIFIED MALE: It takes a tough man to make a tender forecast, Nick.
ROMANS: Of course newsrooms are notorious for naughty language.
UNIDENTIFIED MALE: Everybody calm the -- down.
UNIDENTIFIED MALE: The culture does play into how the conduct is viewed in the workplace. For example, in the construction industry it is much more common, and many financial services companies on the trading floor, you know, people using the f-bomb is pretty common.
ROMANS: But in most workplaces, watch your -- mouth.
ROMANS: And it is interesting, some people say, look, sometimes there are situations there is not a word that is better than a curse word. Others say it lacks imagination and it shows immaturity at work. Got a potty mouth boss? Career builder says 25 percent of employers admit it swearing at their workers. It's a damn shame.
Thank you for joining the conversation this week on YOUR MONEY. We're here every Saturday. Until then find me on Facebook and Twitter. My handle is @ChristineRomans.