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Interview With Eric Schmidt Of Google; Facebook May Have Hit Its Stride In Stock Market; How To Strengthen Your Negotiating Skills; Home Prices On The Rise; Who Will Replace Ben Bernanke?
Aired August 4, 2013 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN HOST: Glasses that can see, cars that drive themselves, balloons that provide Internet access to the most remote corners of the Earth. And, of course, the search engine so popular it's a verb, Google.
I sat down with Google's executive chairman, Eric Schmidt. Not surprisingly, he was showing off the company's latest foray into your digital lives -- a new phone that listens to you. We were joined by Motorola CEO Dennis Woodside. This is the first new phone to come out of Motorola since Google bought that company.
Look, we know Google is changing the world, but I wanted to know how the chairman of this massive company would change the present course here at home.
Of course, it has 11.5 million Americans out of work, 14 percent underemployed, and most frustrating, this all comes at a time when leaders in technology like Eric Schmidt says they've got the jobs, they just can't find U.S. workers capable of filling them.
ERIC SCHMIDT, EXECUTIVE CHAIRMAN, GOOGLE: The core problem in America is the educational system is still not producing quite the right people.
There is plenty of jobs for sophisticated manufacturing, people who have some kind of technical training, either some form of vocational training that's high-end, learning how to run numerical-controlled milling machines -- these sorts of things, and they are all in short supply.
The American renaissance in manufacturing, in oil and gas production, in energy, and technology, it's being held back by the lack of Americans who can do this. The way you fix this is by fixing education. More competition, more choices, more access to the Internet and so forth.
ROMANS: At what point will it ever be just not on the margin that we are making high-tech things in the United States, but there really will be a manufacturing resurgence of especially in tech -- consumer tech -- of big, big numbers of jobs? SCHMIDT: It's going to be hard for the very high volume commodity stuff to get done in the U.S., because frankly, it's easier to be done in much, much lower wages. But those are not the high value jobs anyway.
SCHMIDT: We're losing low value jobs and we're gaining high value jobs. That's the great story about American jobs. It's completely dependent upon education and more investment in these industries. We can do this.
ROMANS: Tell me a little bit about the immigration part of the debate, because you've also said, here we have the trend in America where we bring the best and brightest from around the world, we educate them in these amazing universities, and then we say, OK, thanks. See you later.
SCHMIDT: We don't call them aliens. We call them customers. The fact of the matter is America is such a large native market that adding more customers, right, makes all of us better, it's more people to buy things, more people to build things, more people to invent things. It's more people to actually man the factories and bring in these skills.
It's particularly stupid -- sorry -- particularly stupid for the American government to require us to fully educate people with PhDs, ship them out of the country where they can create competitors in other countries that take American jobs away.
ROMANS: One of the things, you have to do both things. You have to keep people with great skills and great educations who can start businesses here. But you also have to do a better job making sure you are raising people in this country with those skills, we're not doing both of those things.
SCHMIDT: The easiest thing for us to do now is to keep all of these high-tech people who have been trained in American universities in America so they don't create competitors in other countries, and they create jobs and corporations here. They can do that in a second. It just takes a change in law.
ROMANS: Switching gears. I want to ask you about sort of privacy and information. We have a phone that you're talking will be I guess technically always on. We have Google, which basically maybe knows what I am going to ask before I ask for it. It finishes my search request and knows everything going on in my household.
How has the privacy story changed what you're trying -- should I be concerned about how much you know about me?
SCHMIDT: We've had this question for more than a decade at Google and our answer is always the same. You have control over the information that we have about you, you can actually have it deleted. You can also search anonymously. You get to choose not to give us this information. But if you give it to us, we can do a better job of getting services for you.
And I think that's the right answer. These computer systems naturally collect this data, but we've also forget it after a while and we've written down why and how. And that's true with Moto X as well. You -- the consumer opts into the service. They don't have to have the service, which we call touchless control.
But if they want to have that hands free experience, they train the phone so it listens to them, listens for their trigger word and then responds to what they are asking.
ROMANS: So much to the story is the negatives of too much information and the privacy of your information. But at the same time, some of the things that we do, Google, for example, the CDC, you can work with the CDC to see search results for flu symptoms.
I mean, there is also a broader good for being able to analyze vast amounts of information even if you don't know who that information is from.
SCHMIDT: I think good judgment matters. First, if you don't want to participate, you don't have to. But if you, you do get the benefit of taking a look at what is going on in the world, and your searches get better, we can finish some of your searches and so forth. You still know a lot about what you are doing that Google doesn't know, and it's fine. We help you, but our job is to make you more productive.
ROMANS: Let me ask you a question that I always ask people that had a company that just exploded. Google now a verb, obviously. Google in every home. Google knows -- you know, Google is Google.
Will there ever be another business move -- what is the next act?
SCHMIDT: Well, we hope the next act of Google is Google. And Google is going from essentially search to trying to help you. Think of it as, if we can, again, with your permission, if we can anticipate the things you might want to know or some of the questions you may have, we just make you smarter.
So, we want to go from sort of you telling us what you want to know to us suggesting things that you might want to know that might make your life better.
ROMANS: One of the things Google knows about you: the shape of your hands. Motorola's product managers say this phone's shape is based on 20 years of research about hands. Yes, 20 years of hand research, and how it feels.
And the heads up to the tech geeks out there like me, I got the inside scoop on the new Moto X as well. So, for that part of the interview, more about the phone, visit our blog, CNN.com/YourMoney.
Google is hoping to make money off this phone, of course. But what about you? As companies like Google, Facebook and Apple shape our future? Could you be cashing in as well?
And later, you've seen him make hardcore deals at the store in Detroit.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I will give you the whole package, everything including two chain saws, four nail guns, that golf clubs and a crowbar, 800 bucks altogether
UNIDENTIFIED MALE: Sounds good.
UNIDENTIFIED MALE: Thank you very much. I will have my guys write you up.
(END VIDEO CLIP)
ROMANS: And that's the deal. Coming up, Les Gold joins me on the streets of New York for a lesson to try and get the best price on everything.
If you have not already asked your boss for a raise, watch this before you do it.
(BEGIN VIDEO CLIP, "STAR TREK")
ROMANS (voice-over): When Captain Kirk flipped open his communicator to connect with the starship Enterprise from, what, 45 years ago --
(END VIDEO CLIP, "STAR TREK")
ROMANS: -- no one imagined we would all be doing this today without thinking about it. That's what technology does. It disrupts our normal pattern of behavior. What was unthinkable becomes the new normal.
Facebook, Google, Apple -- these are the disruptive tech giants of this generation. They have changed the way we communicate, learn, search and share. And they have built massive businesses and economic ecosystems around them.
Investors who bet on the disruptive power of technology, they have been on an interesting ride so far this year. The tech heavy NASDAQ index is up 20 percent in 2013. Google's shares have outpaced those gains, Google up 25 percent. Apple has had a sour year, down 15 percent. And Facebook may have finally hit its stride.
Let me bring in Zain Asher.
Zain, there is a lot of buzz about Facebook, even some naysayers maybe have now changed their mind.
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Exactly, Christine. Yes, quite a comeback for Facebook. You know, those concerned that it doesn't know how to monetize users' shift to mobile really caught the company off guard.
And we saw last year, the stock really did sort of move like a roller coaster. But then we got second quarter earnings. We saw revenue was up. But most importantly, revenue from mobile advertising was up and that was really key. Take a listen.
ASHER (voice-over): After slightly more than 14 months, investors who bought Facebook stock at the debut price of $38 a share have broken even.
It was supposed to be a home run, a "can't miss" investment for the lucky few who were able to get in on the ground floor.
MARK ZUCKERBERG, FOUNDER, FACEBOOK: Visit us in a moment.
ASHER (voice-over): But within days, the stock had sunk.
But since then, Mark Zuckerberg has gotten married, dipped his toe into politics and philanthropy, signing Bill Gates' and Warren Buffett's giving pledge to one day give away more than half of his fortune, which is growing right along with Facebook's share price.
The Facebook comeback accelerated last week after its second quarter earnings report exceeded all expectations. Shares have surged about 40 percent since the release. Since the IPO, the company has worked to move ads from the side of its page and into the news feed, making them more mobile-friendly.
DAVE KERPEN, CEO, LIKEABLE MEDIA: So, people are seeing the ads the same way that they see their friends' updates: And that's what's gotten a lot of great responses for advertisers.
ASHER: How effective the ads are depends on Facebook's 1.1 billion users, 819 million of whom now use the mobile app every month.
A year ago, Facebook was getting less than 15 percent of its ad revenue from those mobile users. Today, it's 41 percent, enough to turn one of Facebook's biggest naysayers into a Facebook shareholder.
MATTHEW MCCALL, PRESIDENT, PENN FINANCIAL GROUP: I was probably one of the harshest critics of the IPO and of the stock. And I was telling people to stay clear of the stock. However, as the company changed, as they move to making money off mobile ads, it then became a very attractive stock. It actually became extremely different company.
ASHER (voice-over): Other new developments, including plans for a gaming platform and video ads both announced this week have kept the momentum going.
MCCALL: It's a stock I want to continue to watch. Growth is accelerating and it really is one of the leaders of social networking.
(END VIDEOTAPE) ASHER: It's interesting, it only hit $38 a share on Wednesday very, very briefly, and then it pulled back and closed the day at $36.80. So there was a feeling that some people have been waiting an entire year to break even, may have, may have decided to sell.
ROMANS: This is one reason why real people shouldn't buy IPOs, right? Because look, the first year is when a company proves itself, shows its books, you don't know what is under the hood until you've seen the car drive a little on the freeway, right?
And that's something that Matt McCall has pointed out a long time ago. Look, there are some people who got in on the IPO, didn't get the IPO price but something much higher, and there are --
ROMANS: Yes, right. But there are some people who got in over the course of the year and those people are up. And those people are holding Facebook right now.
ASHER: September, it was $17 a share. That's when the stock really fell out of --
ROMANS: Yes, if you brought it at $38, you were crying last September.
All right. Thanks, Zain.
Coming up, "Hardcore Pawn's" Les Gold hits the streets with me, the streets of New York.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I'll take 20 dollars.
ROMANS: Twenty dollars.
UNIDENTIFIED MALE: Wow, $20? How much would you take for three of them?
UNIDENTIFIED MALE: Sixty.
UNIDENTIFIED MALE: No deal? No deal?
UNIDENTIFIED MALE: No deals on the T-shirts.
(END VIDEO CLIP)
ROMANS: No deals on the T-shirts. I have three of them right here, one, two, three; we did not pay $60 for them. We didn't pay $40. And that wasn't even our best deal.
Up next, the secret to getting the best price on everything.
(COMMERCIAL BREAK) ROMANS: Are you a good negotiator? Aside from buying a car or maybe bargaining at a flea market, negotiating is something many don't have much experience with, but it's something everyone can use to save money. Les Gold of "Hardcore Pawn" on TruTV, he showed me his negotiating skills firsthand, and pay attention, strong negotiating chops can get you deals everywhere and can help you get a raise at work.
ROMANS: All right. I'm here in New York's SoHo, and I am here with Les Gold, the man who knows how to make a deal and how to get a deal, the man who knows how to negotiate. He is going to teach me some real street economics.
LES GOLD, HARDCORE PAWN: I'll show you.
ROMANS: All right. We've got some money -- I have real money from CNN, thank you CNN for this real money, and we are going to go and learn how to spend it.
GOLD: Let's go.
ROMANS: Hi, how are you? How are you? I am Christine. Nice to meet you.
GOLD: We're sorry. We don't mean to bother you while you are on the phone.
How much would you take for the bracelet, cash?
UNIDENTIFIED FEMALE: Twenty.
GOLD: That's it? You won't take $10?
UNIDENTIFIED FEMALE: No.
GOLD: Fourteen bucks, $14.50.
UNIDENTIFIED FEMALE: OK. I'll give it to you for $15.
UNIDENTIFIED FEMALE: (Inaudible).
UNIDENTIFIED FEMALE: OK.
GOLD: There you go. There you go. Gracias.
And the value of anything is how much money you're going to reach into your pocket for and pay. If I was going to buy you a gift today, what present would you like?
ROMANS: Let's say, OK, let's say this necklace. GOLD: How much are those?
UNIDENTIFIED MALE: Forty dollars.
GOLD: Why? What are they made of?
UNIDENTIFIED MALE: That's a metal, gold plated.
GOLD: Twenty is the best deal? You wouldn't take 10?
UNIDENTIFIED MALE: You give me 15 and you take it.
GOLD: I will give you 10 bucks and I will take it right now.
UNIDENTIFIED MALE: Fifteen.
GOLD: It's not worth it. Ten bucks? Twelve? You are making a mistake.
Thirteen bucks right now.
UNIDENTIFIED MALE: OK.
ROMANS: Thank you. Nice to see you. Thanks a lot.
GOLD: Thank you very much.
Know when to walk away from a deal.
ROMANS: What I saw you in there was confidence, though. That you were confident, you asked a few questions and you were ready to walk away. Sometimes in negotiating, it's hard to be confident.
GOLD: That's the key, and that's what I always stress in my book. Be confident. Make sure you understand, that emotion; I was not in love with it, it was a nice piece, but be able to walk away.
ROMANS: You have this in your blood.
For somebody who doesn't have it in their blood, you know, how do you become a better negotiator when you go to your boss, for example, and you are asking for a raise?
GOLD: Don't be afraid.
ROMANS: Do you give the first number or does the boss give the first number?
ROMANS: You do?
GOLD: You need to give the first number, because how can a boss judge? You have to have an understanding. Nobody is going to give you anything unless you ask for it.
What I don't have is waffles. How much for the waffles?
UNIDENTIFIED MALE: Eight dollars.
GOLD: Eight dollars for a waffle, why?
UNIDENTIFIED MALE: (INAUDIBLE)
GOLD: What's the best deal we can get?
UNIDENTIFIED MALE: Six of them? I can go to $35.
GOLD: How about $25?
UNIDENTIFIED MALE: Thirty.
UNIDENTIFIED MALE: Twenty-eight-fifty.
GOLD: I'm not that hungry.
UNIDENTIFIED MALE: Twenty-six.
ROMANS: All right. Here it is.
All right. We've got a little bit of money left.
ROMANS: Got a little bit of money left. Starting to rain.
GOLD: Show me what you like.
ROMANS: Well, T-shirt.
GOLD: T-shirts, how much are your T-shirts?
UNIDENTIFIED MALE: They're American apparel. Made here in America. They're silk screened by a friend of ours in Brooklyn, so it's all American made so they're $20.
GOLD: Wow, $20. How much would you take for three of them?
UNIDENTIFIED MALE: Sixty.
GOLD: No deal? No deal. Even if we pay cash?
UNIDENTIFIED MALE: No deals on the T-shirts.
GOLD: Why? UNNIDENTIFIED MALE: They're made by a friend of his.
GOLD: Can your friend make more?
UNIDENTIFIED MALE: He can, yes.
UNIDENTIFIED MALE: If you want three --
GOLD: I'll take three.
UNIDENTIFIED MALE: We could do $45.
UNIDENTIFIED MALE: Still a lot of money. How about $35, $35 for three?
I'm not talking to you.
UNIDENTIFIED MALE: He's the negotiator.
UNIDENTIFEID MALE: How about $40?
GOLD: How about 35 bucks, I'll take three of them.
UNIDENTIFIED MALE: We can do $40.
GOLD: Split it with you, $37.50.
UNIDENTIFIED MALE: All right, $37.50.
GOLD: You got a deal. We got three of them.
ROMANS: Perfect. Sold.
GOLD: Thank you, guys.
ROMANS: Thanks, guys.
ROMANS: If we had paid the starting prices for everything we bought, it would have cost us $128, but we paid only 68 bucks.
"Hardcore Pawn" airs Tuesday at 9:00 pm on TruTV. It's part of TimeWarner, just like CNN.
If you want more advice from Les, his new book is called "For What It's Worth: Business Wisdom from a Pawnbroker." It's got some solid tips on building a business, facing your fears and, of course, negotiating.
OK, it's a hot summer, but I'm not going to talk about temperature. I'm going to show you where the hottest housing markets in the country are. That's next.
(COMMERCIAL BREAK) ROMANS: A hundred sixty-two thousand jobs added in July. Economists had predicted a higher number, and revisions show 26,000 fewer jobs created in May and June. The unemployment rate dropped to 7.4 percent. That sounds good, but it's because 37,000 people dropped out of the labor force.
The U.S. economy lost about 9 million jobs during the recession and has gained back now about 7 million. But we know the jobs that are coming back aren't the same as the ones we lost.
Look at the sectors with the greatest growth. It's so interesting. You can see retail jobs, leisure and hospitality.
Some of these jobs are jobs that do not create the kinds of wages and that give the kinds of hours that we're used to.
The labor force participation rate now the lowest since 1978. What does that mean? It means that people who are actually engaged in the labor market, the people who are working or looking for work is the lowest share since 1978. That's something we have to fix.
The jobs report was the big headline this week, but there were some other important stories that matter to your money. Let's put 60 seconds on the clock. It's "Money Time."
ROMANS (voice-over): Americans today are working less than their parents, though not necessarily by choice. The big reason: the rise of part-time jobs. Americans work 34 hours a week, four hours less than their parents. Back in the 1860s, a manufacturing worker logged 62 hours a week.
Hey, today in China, that's almost exactly what an Apple worker puts in to make your iPhones and iPads. A labor watchdog says Apple's subcontractors don't always pay the workers for their overtime. Apple is sending a team to China to look into labor conditions and those overtime claims.
China Labor Watch says workers report all that unpaid overtime to make a budget-friendly iPhone, Apple blogs buzzing over this iPhone 5C case.
New York's soda ban has gone flat. A court upheld an earlier ruling preventing Mayor Michael Bloomberg's ban on huge sugary drinks from going into effect, but Americans might be breaking that soda habit anyway. New sales numbers from Coca-Cola, Pepsi and Dr. Pepper show soda sales down last quarter.
ROMANS: One area of the economy that's definitely not flat, housing. Take a look at this. It is a good time to sell because home prices are rising. Over the past year, the 20-city Case Shiller index is up a whopping 12 percent, the biggest gain in seven years, going back to March 2006. Here are the hottest markets where we're seeing the biggest increases. Prices are up 20 percent to 25 percent in some of these towns, and you can see. Look at Las Vegas, up 23 percent. Phoenix, up 20 percent. Atlanta, up 20 percent.
Now, these are some of the cities with the biggest real estate bubble pops. Remember, all real estate is local. When you look at New York, prices there up more like 3 percent, so some big variations throughout the country. It definitely depends on where you live.
Let's take a look at this. This is another really interesting point because you are not back where you started. A lot of people saying, wait, this housing recovery is not really benefiting me.
Well, you're right. If you bought a house anytime between 2004 or '05, '06, '07, '08, you are still 20 percent to 30 percent below the peak.
Mortgage rates have been climbing recently, 4.39 percent on the 30- year fixed rate. But what's really interesting here, the average since World War II is 6.5 percent. So, rates are still historically low. They should slowly continue to climb the next year or two years. This is still a good time to refinance, if you can, and still a good time to buy.
Coming up, the economy is adding jobs, but a lot of them don't pay very well. Fast food workers say they can't afford to live where they work. Workers in several cities walked off the job this week, demanding better pay. We're going to talk solutions, next.
ROMANS: Record highs in the stock market, the biggest jump in home prices in seven years. But Americans walking off the job, protesting what they call poverty wages.
I'm Christine Romans and this is YOUR MONEY.
Are we one America with two economies?
ROMANS (voice-over): America is the land of opportunity, right?
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You can choose policies that invest in our middle class and create new jobs and grow this economy so that everybody has a chance to succeed.
ROMANS (voice-over): That was 2008. Four-and-a-half years later, the president's supporters are wishing for a little less hope and a little more change.
OBAMA: Doing nothing doesn't help the middle class.
ROMANS (voice-over): So what's the president doing? Four speeches in seven days. OBAMA: If folks in Washington really want a grand bargain, how about a grand bargain for middle class jobs?
ROMANS (voice-over): But while Washington waits for a bargain, millions of American workers feel they're getting a raw deal.
Fast food workers across the country who say they can't afford to live where they work, walking off the job to demand higher wages. Now the economy is adding jobs, but those new jobs pay less than the ones we lost during the recession. The president worries the growing income gap will fray America's social fabric.
Even the good news isn't as good as it seems: Amazon adding 5,000 warehouse jobs. The company's warehouse workers take home just $24,000 a year, barely above the poverty line. America may still be the land of opportunity, but those opportunities pay less and less.
ROMANS: In Brazil, in Greece, in France, we've seen protesters take to the streets in those countries demanding economic reform, demanding workers' rights, financial fairness, in short, a better life.
Could we see that kind of fervor here in the United States?
It's not exactly Arab Spring; don't get me wrong. But fast food workers in several cities walked off the job this week to demand better pay.
University of Chicago School of Business Economics professor Austan Goolsbee is the former chairman of the President's Council of economic advisers.
Eduardo Porter is a columnist for "The New York Times."
Austan, could we be witnessing the beginning of a movement, or is this moment destined to fade, just like Occupy Wall Street did before it?
AUSTAN GOOLSBEE, FORMER CHAIRMAN, PRESIDENT'S COUNCIL OF ECONOMIC ADVISERS: I think this is probably more likely to fade.
You know, Occupy Wall Street was more in the spirit of the protests in Europe and the Arab Spring, which are major, gut-wrenching changes, huge recessions, huge austerity, those things leading to mass protest.
I think in this case you're seeing some of the natural tensions that arise as you're coming out of a recession. The economy starts getting better, workers start saying we want to see our wages go up more, and there's going to be a little tension among the employers.
ROMANS: Even when I look at this week's job report, I see bartenders, I see waitresses, I see home health aides, I see job growth -- fast food workers. Austan, I'm seeing these kinds of jobs grow. These are the low, low-paying jobs. These are not ladder jobs. What's happening here, and could you really see a tipping point when people say, look, we're not creating good jobs?
GOOLSBEE: Well, you know, just be a little careful. Yes, that is true, we've seen a lot of temp jobs, we've seen a lot of part-time jobs, though that is somewhat natural as you come out of a deep downturn.
Overall incomes in the country, if all that was happening was good jobs being lost and bad jobs being created, you would see incomes falling pretty significantly. And overall incomes are basically flat.
Now, we do need to get incomes up for consumer spending to come back to anything like normal levels. But, you know, with the growth rate as slow as it's been, it's really hard to see substantial improvements in the job market. That's just a reality.
ROMANS: All right, Eduardo, income equality is widening. Let's look at these numbers. The CBO says from 1979 to 2007 average household income for the nation's top 1 percent more than tripled, middle class incomes grew by less than 40 percent.
Could this be a permanent structural facet to the economy that no president, not President Obama or anyone before or after him can reverse?
EDUARDO PORTER, COLUMNIST, "THE NEW YORK TIMES": I think this is going to take a very long time to change because this has been a long time development. This trend is, I don't know, 30 years old.
I wanted to speak to what Austan said a moment ago, though. Even though we can expect jobs and incomes to rise as we emerge from the recession, wages right now are lower than they were. The worker in the middle is earning less per week than he or she was 10 years ago.
So I would argue that there is a cyclical factor that, as we emerge from the recession, we should see an improvement.
There is also a longer term phenomena that have been keeping wages down, and you can see this in all sorts of statistics. If you look at the wage share, what part of the national income goes to wages, that's at its lowest point since we started measuring this stuff in 1929. And by contrast, the share going to profits is at a record high, again since 1929.
So these are very long-term trends.
ROMANS: And they are.
So we need jobs, Austan, that pay $25 or $30 an hour. That's all we need. We need more of those.
How does the president do it?
GOOLSBEE: The first thing is the economy does it. The president doesn't do it. But I think the things that you've heard coming out of the administration this week, in my opinion, are how you do it, and that is you got to lay the skill base for the American workforce -- that's the principal backbone of income growth, not just in the U.S. but around the world -- is increased skills.
Two, I think you have to invest in the economic infrastructure of the country, it's crazy not to. It's severely lighting the growth of our -- of our business. And you got to emphasize free market and entrepreneurship because that's always -- and with innovation has always been the big driver of higher incomes.
ROMANS: All right, guys. Let's take a look now where jobs are being created. As we told, 152,000 Americans scored new jobs in July. But a lot of those positions will barely fill the bill as well.
Unemployment's still a problem. Underemployment and low wages are crippling the middle class.
I want to show you where we are here, the jobs that were lost during the recession. They were mostly midwage work, right here. Companies large and small cutting back payrolls. What kinds of jobs are coming back? Wow, look at that. You see all of this midwage work going right there, right there to low wage positions.
Hourly rates of $7.69 an hour to $13.83. This is according to the National Employment Law Project. This is from 2010 to the second quarter of last year.
Here is the median hourly wages for top five occupations with the most hires during the recovery. These are the people being hired during the recovery. Look at the wages here, $10, $9, $11, $7, $10. This is the job growth that has come about in the recovery.
So what about the next few years? The government says these jobs will be in high demand through 2020. But most put a family of four under the poverty line, the poverty line $23,550 if it's their only income.
Right here, take a look at this, registered nurses again, that's a bright spot, but it takes extra schooling and testing to become an R.N. There's an investment in that career.
So are we becoming the United States of low wages, or is this just a rough step on the path to renewed prosperity?
Eduardo, is education the solution to this low wage problem. Is it that simple?
PORTER: Yes and no. Education is a necessary condition. We need to improve our education and expand our education. We used to be the nation with the highest level of college-educated kids, and we have now slipped down those ranks and we need to get back up there.
But there is also a question of what kind of education. When we start investing in education, we invest very, very little in educating very young kids from say 0 to 3 years old, and research has proven that that is absolutely crucial for their future development. And so I think we need to rethink how much we invest in education. ROMANS: We just can't fix the economy unless you fix education. We all agree with that. We can talk about early childhood, K through 12, college.
But I sat down with Google Chairman, Eric Schmidt, you guys, this week, and he actually says that education is what's holding the economy hostage right now.
(BEGIN VIDEO CLIP)
SCHMIDT: The American renaissance in manufacturing, in oil and gas production, in energy and technology, is being held back by the lack of Americans who can do this. The way you fix this is by fixing education.
(END VIDEO CLIP)
ROMANS: Here's an example of this growing skills mismatch he's talking about. Career builder and computer -- or it says computer and IT jobs grew 13 percent from 2003 to 2012. Jobs grew 13 percent.
But degrees earned in those areas fell 11 percent during the same period.
Austan, is the education fix up to the government? Is that up to the private sector? Here I was with Eric Schmidt on the eve of a jobs report that was going to show more low-wage jobs, and all of these tech entrepreneurs are telling me we cannot find people, we cannot find qualified workers.
GOOLSBEE: You got two issues going there. The first is there are certain sectors where the skills mismatch is an issue. But that is not the overwhelming reason that we have high unemployment in the United States. The overwhelming reason thus far has been we had a horrible recession and there's not enough demand.
Now, normally once you're a few years into an expansion, the people remaining in the unemployment pool don't have the skills to match to the industries where they're growing.
But let's remember, there is a data set that measures job vacancies as well as how many unemployed people there are, and there are still more than three unemployed people for every job vacancy. So thus far it's only in particular sectors where this mismatch is true.
I think, to your question about is that government or private sector, I think the answer is both.
And if you look at the community college system in the U.S., it's actually one of the unsung heroes of our training and education system. And it's a shame that we aren't investing more in that because that's a place where they're trying to link employers to people who are trying to get jobs, and the government is involved but in facilitating that partnership.
ROMANS: Guys, we could talk about this for hours, it's so fascinating. Eduardo Porter, Austan Goolsbee, it's nice to see both of you. Have a great weekend.
All right, when you're watching TV like right now, right this very moment, you probably don't think someone could be on the other side watching you back. An alarming security flaw in Samsung's smart TVs makes this scenario possible. CNNMoney's Laurie Segall has more.
LAURIE SEGALL, CNN MONEY TECHNOLOGY CORRESPONDENT: Hey, Christine.
Well, smart TVs are in living rooms across the country and we're only seeing more and they're becoming increasingly popular.
But here at this hacker convention called Black Hat in Las Vegas, we've spoken to a lot of folks, and they say that there are major vulnerabilities. Check it out.
SEGALL: What's really eye opening here is you watch your TV but with this hack, your TV can watch you. Show us how that works.
JOSH YAVOR, SECURITY ENGINEER, ISEC PARTNERS: One of the things we were able to do with the smart TV platform was abuse the browser to the extent that we could actually gain access to the camera that's built into the TV. What we can prove here is that, with a little bit of extra code, we can turn the camera on in your browser.
YAVOR: And while this is evident to you right here because we've designed it that way, this is something we can do invisibly and actually have the camera running behind the Web page that you're looking at.
SEGALL: So what this means is I could be sitting here watching TV from my bedroom, and you could be anywhere in the world looking at this image of me watching.
YAVOR: Yes. I could be sitting at a laptop in a cafe in Paris, and as long as I have a network connection, I would be able to get into your TV and access the camera.
AARON GRATTAFIORI, PRINCIPAL SECURITY CONSULTANT, ISEC PARTNERS: The scary thing about it is that it doesn't actually give any indication that the camera and on and there is no LED that shows up when the camera is on. So we could actually be watching you and you would never even know.
SEGALL: What is a smart TV, and why is it a playground, essentially, for hackers?
GRATTAFIORI: Right. It's a computer. So instead of being a tube and some other electronics, now it has a Web browser and it has a lot of devices of running Linux. YAVOR: But the real danger is when people start using smart TVs for things like online banking, we can take a popular bank address and translate that into a different IP address that directs to a site that we control. So it may look like your bank's login, but you're actually entering a user name and password that goes to us instead of your bank.
SEGALL (voice-over): In a statement to CNNMoney, Samsung says it takes consumer privacy very seriously.
The camera can be turned into the bezel on the TV so that the lens is covered or disabled by pushing the camera inside the bezel. The TV owner can also unplug the TV from the home network when the smart TV features are not in use.
"As an added precaution we also recommend that customers use encrypted wireless access points when using connected devices."
SEGALL: For those of us who are a little freaked out and may don't trust all these updates, what's the easiest fix?
YAVOR: One of the things you can do with the smart TV, which you can also do with your laptops, is just cover up the camera. Put a little Post-It Note over it or a piece of tape, and next time you want to Skype with your family, just take it off.
SEGALL: And Christine, Samsung says they fixed this, but as a customer, it's not exactly that comforting when you think that a hacker had to go out and find this vulnerability in order for Samsung to wake up a little bit. Christine?
ROMANS: Coming up, it's the biggest guessing game in Washington right now. Who will replace this man? It's the Fed chief, Ben Bernanke. His term ends in January. The white hot politics over who should replace him, next.
ROMANS: He or she is the most important person in the world when it comes to your money. I'm talking about the chairman of the Federal Reserve. Ben Bernanke's second term wraps up at the end of January.
So who will Obama pick out to replace him? Maggie Lake breaks down the big name battle.
MAGGIE LAKE, CNN CORRESPONDENT (voice-over): It is the guessing game in Washington this summer.
Will it be Janet Yellin or Larry Summers to fill in one of the most important and demanding jobs?
The battle on both sides to influence the White House on the next Federal Reserve chairman has been intense and highly unusual.
RYAN LIZZA, WASHINGTON CORRESPONDENT, "THE NEW YORKER": In the old days, if you campaigned for it or if people on your behalf campaigned for it, it looked bad. This whisper campaign on behalf of Summers and on behalf of Yellin is really something new in Washington.
LAKE (voice-over): On Capitol Hill some Democrats have sent a letter to President Obama, urging him to pick Yellin. But Summers has supporters in high places, too. Former Treasury Secretaries Tim Geithner and Bob Rubin are both reportedly until his corner.
One thing is certain, Bernanke's shoes will be big ones to fill. Wall Street loves the tens of billions of stimulus he pumps into the economy each month.
Summers has been skeptical about continuing stimulus, while Yellin is believed to be in favor.
STEPHEN OLINER, AMERICAN ENTERPRISE INSTITUTE: Yellin would be seen as complete continuity with Bernanke. She's been at Bernanke's side for the past two years as the vice chair. They coordinate policy together.
LAKE (voice-over): As second in command, Yellin has deep respect inside the Federal Reserve. She's no stranger to politics, serving as chairman of the White House Council of Economic Advisers under Bill Clinton.
And while she's not as well known on the international stage, Yellin would be the first woman to lead the Fed.
Summers, on the other hand, is a world-renowned economic superstar. He was director of the National Economic Council under President Obama and a former Treasury Secretary under Clinton. He was also part of the team that "TIME" magazine called "The Committee to Save the World" during a financial crisis in the late '90s. But he does have baggage.
LIZZA: Summers is a controversial person. He is abrasive and brilliant.
LAKE (voice-over): Some say his brash style may not fit well in the Fed's consensus-building culture. He is also faulted for supporting financial deregulation which many economists feel helped trigger the most recent financial crisis.
The debate over Yellin and Summers is crucial to the financial markets, but it could last a while. President Obama is not expected to announce his choice for the Fed until the fall -- Maggie Lake, CNN, New York.
ROMANS: And the president has made it clear to Democratic lawmakers that he hasn't decided who will replace Ben Bernanke just yet. He had separate closed door meetings with House and Senate Democrats on Wednesday. He defended Larry Summers as a possible pick. He also mentioned a third name he's considering for the position, Donald Cohn.
Cohn, a former Fed vice chair, is now a senior fellow with the Brookings Institute. He spent 40 years at the Fed and was an adviser to Ben Bernanke during the financial crisis of 2008.
I want to bring in my good friend John Berman, co-host of "EARLY START."
John, this is not a political position, the chairman of the Federal Reserve. This is not a political job, but the politics, white hot politics in Washington right now about who is going to get that job.
JOHN BERMAN, CNN ANCHOR: We've never seen anything like this. The Federal Reserve chair is usually filled by someone who is one of the most boring people in D.C. Now we have, as you say, this white hot battle with lobbying like we've never seen before. Ryan Lizza called it a whisper. It's more like a shouting campaign.
You have senators writing letters, you have editorial boards weighing in months before a decision will be made. And now, most remarkably, you have the president out loud, in front of members of Congress, defending someone that he hasn't even picked yet. It is really staggering here.
Until now, it's really been a one-sided debate with critics of Larry Summers and supporters of Janet Yellin, them being the most loud and vociferous, because most of Larry Summers' supporters are White House insiders who don't talk to the press very much.
ROMANS: Part of this whisper campaign or shouting campaign, now you're hearing people talking about the gender and also the gender of Larry Summers. There actually was this whisper about how don't count out Larry Summers just because he's a man, because so many people think that the president really needs to promote a high-profile woman to this job.
BERMAN: That's right. It's one of the high profile positions left in Washington that the president hasn't appointed yet. He's often been accused of running a men's club there, so obviously picking a woman would be a huge move for him.
One of the big issues, as one political scientist pointed out, is that Larry Summers is an acquired taste. But the problem, as this professor pointed, is that it's a taste that not many people have acquired.
He has been abrasive. He has made a lot of enemies over the years during his work in government at the time he was president of Harvard University.
There are people who haven't approved of his comments about women. So he has all of that baggage.
And there is a very real policy debate about monetary policy where some people see Janet Yellin more in line with the current policies of Ben Bernanke than Larry Summers.
ROMANS: Larry Summers has said he thinks these current Fed policies are adding to the income inequality. Maggie in her piece called him brash. I have been on the receiving end of some of the brashness before, as has any reporter who has covered him. He is brash.
ROMANS: Brilliant, but brash, but he seems to have the ear of the president at this point.
John Berman, thank you so much, John.
So what do women think about Larry Summers as a possible replacement for Ben Bernanke? The controversial comments about gender he made at Harvard in 2005 continue to follow him. (Inaudible) surveyed the top female economists of the U.S. to see who they support. Check our blog at CNN.com/yourmoney to find out what they say. We'll see you back here next week on YOUR MONEY. Until then, have a great weekend.