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YOUR MONEY

U.S. Labor Force Participation Shrinks; Minimum Wage Increase Debated; Stray Dogs Big Problem for Detroit; New Wearable Police Camera Used by Police Department

Aired September 7, 2013 - 14:30   ET

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


JOHN BERMAN, CNN HOST: And 169,000 jobs added in August, but millions of Americans say they need two of those jobs just to pay the bills. I'm John Berman in for Christine Romans. This is "YOUR MONEY."

(BEGIN VIDEO CLIP)

(CHANTING)

BERMAN: Demonstrations across the country. Call it the "Do you want fries with that?" economy. The middle income jobs the U.S. lost in the recession are being replaced by low-wage jobs.

And it's not just fast food. Part-time work everywhere in this economy has exploded, nearly doubling since 2007. And 8 million Americans who would rather have a full-time job punching the clock part-time instead. Those jobs come with lower pay and fewer opportunities for advancement.

So, America, do you want fries with this economy?

(END VIDEO CLIP)

BERMAN: The economy added 169,000 jobs in August. The unemployment rate fell, but CNN business correspondent Alison Kosik joins me now with a look at why this is not a cause for celebration. Alison?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: John, you're right about that, because if you look at the headline number, it seems great, but you dig deeper and it's really not what it seems.

Let's start with the unemployment rate falling from 7.4 percent to 7.3 percent. The good news is it's the lowest rates since December of 2008. But here's the problem with it. The labor force participation rate fell to 63.2 percent. What that essentially means is that 312,000 Americans essentially got discouraged and gave up looking for work. And here's what's even worse. This is the lowest level for the labor force participation rate in 35 years. So that is sort of the bad news when you pull the curtain back and see what's behind those headline numbers, John.

BERMAN: All right, Alison. Those are the numbers. Every number, though, is a real person. The quality of jobs may, in fact, trump any measure of the quantity of jobs. We've seen fast food workers around the country walking off the job to demand higher wages. You were at some of these protests, and you had a look at some of the people behind the protests and behind the jobs numbers we're seeing.

KOSIK: And that's a really good point, because many of the workers I spoke to told me how hard it is to survive on minimum wage, especially if you're the bread winner trying to feed a family. I spoke with two fast-food workers who say they've had trouble just making ends meet even though they've got a job.

(BEGIN VIDEOTAPE)

SHENITA SIMON, FAST FOOD WORKER: My name is Shenita Simon. I work at KFC in Brooklyn and I make $8 an hour.

PAMELA POWELL, FAST FOOD WORKER: My name is Pamela Powell. I work at Great Reps and I make $9 an hour.

KOSIK: Tales of two people but one story. Pamela and Shenita are just two of the 3 million workers living on a fast food wage.

POWELL: Do I pay my light bills. I never can pay it all at once.

KOSIK: Pamela loves her job but says she has to prioritize.

POWELL: I've had lights put off, too. It's kind of hard without lights.

KOSIK: How do you make ends meet? Let's say you go to the grocery store?

SIMON: My husband will eat today or I eat tomorrow.

KOSIK: Pamela and Shenita both work less than 40 hours a week. Neither of them get benefits.

POWELL: It's hard to build a future if we don't know what it's going to bring you. Next week, you don't know what's going on this week, and it's kind of hard. That's a big struggle for me.

KOSIK: The average fast food worker makes just under $19,000 a year. The government's poverty threshold for a family of four -- $23,000. The National Restaurant Association tells us "These jobs teach invaluable skills and a strong work ethic that are useful for workers throughout their professional careers. We welcome a debate on fair wages, but it needs to be based on facts. And the facts show that the majority of workers who earn minimum wage in the United States are not employed in the restaurant industry."

As for Shenita and Pamela, they are hopeful.

POWELL: The fast food business, I love food. I like dealing with people, too.

SIMON: I'm not ever going to stop dreaming for my children. They want to be ballerinas. And yet we cannot pay for it right now, but we're going to give it to them one day.

(END VIDEOTAPE) KOSIK: And as you can bet, there are plenty of critics for the $15 minimum wage. Some say companies would force raising prices for consumers which could then hurt sales. And then other companies would say they would have to lay workers off. Some are even talking about relying more on automation to save money. And then others question that if you raise the salary of a fast food worker, do you also have to raise the salary of someone who went to college for four years and works at the bank around the corner? All those raises could lead to inflation, John.

BERMAN: Serious questions. We always have to remember this is about people trying to do the best for their families. Thanks, Alison. I appreciate it.

And 8 million Americans want to work full-time but can only find part- time work, so what is the solution? Christine Romans takes a look.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN ANCHOR: Robert Reich served as labor secretary under President Clinton. He also has a new movie "Inequality for All" which opens in theaters September 27.

Professor, I want you to see the responses I've been getting. Here is from someone named Bo Smith on Facebook. "Golly, it's so horrible that evil employers don't pay a living wage for a high school dropout and his or her 20 kids. Oh, the humanity." That's not the only one like that we've heard. We've heard again and again from people who say these jobs aren't worth more than what they're making because these jobs are for making a product that just gets cheaper and cheaper. What do you make of that?

ROBERT REICH, FORMER LABOR SECRETARY: Well, if we're going to have a minimum wage, and we decided we would have a minimum in 1935, then the real question is what is a decent minimum wage for a family to live on? It's just the question we ask with regard to workplace safety. What is the decent level of safety for workers? And look, if we had the same minimum wage that we had in the late 1960s and adjusted it for inflation in today's dollars, it would be well over $10 an hour.

ROMANS: You don't buy this argument that if you're paying $10 an hour then they'll just automate, anyway, they don't need workers, that they'll just find more efficient ways to do it?

REICH: No, because service is essence of a lot of these jobs. Somebody has got to flip the hamburgers and actually provide the service to people individually. The same argument can be made about a lot of low-wage workers. You need somebody in the retail stores. You need somebody actually providing the service. These are in-person service jobs.

ROMANS: Let's bring in Stephen Moore. He's an editorial writer for the "Wall Street Journal." Steven, the quality of jobs versus the quantity of jobs -- do employers need to pay more here? These are the jobs that are being created. These are the jobs we're getting in this recovery.

STEPHEN MOORE, EDITORIAL WRITER, "WALL STREET JOURNAL": That's the big problem, isn't it, Christine? I agree with Robert Reich. I want Americans to have high wages. I'm in favor of a high-wage economy.

The problem is the kind of workers -- the kind of jobs that we've been talking about, burger flippers, people working at McDonald's or Burger King or Popeye's, those were never meant to be the kinds of jobs you would raise a family on. And that's the tragedy of the story you just told in your little feature. You cannot raise a family on those kinds of wages.

My first job, Christine, when I was 17 years old was working at a fast-food restaurant, and, you know, you do learn a lot in your first job.

I believe that we should also make work pay. You know, Robert Reich, you know we have something called the earned income credit which allows people at the head of households who are in low-income jobs to have a supplement of their income paid for by the taxpayers. I believe that's a better way to help those workers than to require businesses to do it because then you're going to have a negative effect on the employment situation.

ROMANS: You mentioned your age, 17 years old, you worked in fast food. I was 16 when I started working at a pizza place. Robert Reich, I don't know what kind of food background you have in the service industry, but here's a point. These fast food workers, the average age, Robert Reich, is 29 years old. We profiled many of them who have student debt. They went to college. These aren't the stepping stone jobs they used to be. And the restaurant industry says, look, you can take these skills and use it in your professional life. For some people this is their professional life.

REICH: This is a big change in the American work force. And 20 or 30 years ago, a lot of fast-food workers, in fact, the majority, were teenagers working for pin money. Today they are adults. The average age, as, you say, late 20s. The typical fast food worker is bringing home at least half the family income.

Steve Moore is exactly right. It's too bad that's the case. But the advantage to the economy overall is that if we pay these people enough, if they get enough money through a higher minimum wage and an earned income tax credit that's larger, then they can turn around and buy more from other people. It helps the economy overall because it puts more money in the pockets of more people.

ROMANS: You did hear that right. Robert Reich just said you are exactly right.

MOORE: That's a first in TV. But I want to say something he's exactly wrong on, which was, Bob, when you said that these jobs will not be replaced by automation and machines and robots, I believe that you're wrong. In fact, this is a trend that's actually already happening, Christine. I went out to one of these casual -- what do they call them, the fast casual restaurants. You now order your food on an iPod, you don't have a server. If you go to these Burger Kings and McDonald's, that's the problem, Bob Reich, you never go to those restaurants. But when you go to those places now, you don't have a server who is actually pouring your drink. Now you go and you put your cup into the dispenser machine. So they're doing things already, Robert Reich, to reduce their labor costs --

ROMANS: We all want a high-wage economy. We all three agree about that. Steven Moore, Robert Reich, thank you.

(END VIDEOTAPE)

BERMAN: Detroit bankrupt, residents losing jobs, losing homes, and now losing their dogs. The story of thousands of strays roaming the Motor City next.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The state would say this is a one-week hold.

UNIDENTIFIED FEMALE: One week. In one week they could be euthanized.

UNIDENTIFIED MALE: That's quite possible.

(COMMERCIAL BREAK)

BERMAN: Detroit is bankrupt. The high number of stray dogs has been plaguing Detroit for decades, and it's getting worse as the economy there continues to falter. Our Poppy Harlow has the story.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: I just found her today.

POPPY HARLOW, CNN MONEY CORRESPONDENT: You just found this dog?

UNIDENTIFIED MALE: Yes.

HARLOW: A stray?

UNIDENTIFIED MALE: Yes, running up the street.

HARLOW: In America's biggest bankrupt city struggling just to keep the lights on, there's another problem, thousands upon thousands of dogs roaming Detroit's streets.

He's a stray. He's so thin. Most are pit bulling starving for food and affection.

UNIDENTIFIED MALE: Somebody moved out and left him behind. He was tied up in the backyard.

HARLOW: This is a young stray pit bull that was just brought in to the humane society, completely malnourished, injured, having a hard time walking, and unfortunately this is something they see here every single day. One of the biggest problems facing Detroit and the stray dogs is the fact that so many are not spayed or neutered, and so the problem persists.

DEBORAH MACDONALD, CHIEF INVESTIGATOR, MICHIGAN HUMANE SOCIETY: They're disposable in people's minds. You know, they don't vaccinate, they don't spay. They don't neuter.

HARLOW: It's been a vicious cycle for decades. This CNN video shows Detroit's strays back in 1997.

KRISTEN HUSTON, ALL ABOUT ANIMALS RESCUE: They're overbreeding. They're running the streets.

HARLOW: Kristin Huston is trying to curb the problem, educating owners to spay and neuter their dogs. She also provides free food to keep dogs in homes.

HUSTON: A lot of people have lost their homes, lost their jobs, and they just don't have the funds. They love their animals, but, you know, it's very hard to feed their own kids and their family.

HARLOW: So what are you going to do?

HUSTON: Exactly.

HARLOW: Howard Fullerton lost his home to foreclosure. He couldn't take his dog Cocoa with him.

UNIDENTIFIED MALE: She's been in our family for nine years.

HARLOW: He comes every day to feed her and hopes she won't be taken.

UNIDENTIFIED MALE: The heartbreaking time is when I come walk with her and leaves, she just cries and whines.

HARLOW: Are there more people or stray dogs on this street?

UNIDENTIFIED MALE: Right now there are more stray dogs. In all of the houses on this street, all of them are empty except one.

HARLOW: Tom McPhee is with the world animal awareness society. He took us to deserted homes to see the strays living there.

Would tearing down these abandoned homes help solve the problem?

TOM MCPHEE, FOUNDER, WORLD ANIMAL AWARENESS SOCIETY: Absolutely. People are just quickly absorbing animals, and then passing them onto other people. There's no sense of guardianship and responsibility of having an animal.

HARLOW: So we just found this dog in the backyard here, but the issue is that the house is burned out. It's obviously an abandoned home. There's trash everywhere. The house next door is burnt down, and we have no idea how long the dog has been here or if the dog even has an owner.

UNIDENTIFIED MALE: Morning, animal control.

HARLOW: Detroit animal control hit by staffing shortages is overwhelmed.

How long do you hold the dogs before they're euthanized?

HARRY WARD, MANAGER, DETROIT ANIMAL CONTROL: The state would say this is a one-week hold.

HARLOW: In one week they could be euthanized.

WARD: That's quite possible.

HARLOW: And 70 percent are euthanized.

MALACHI JACKSON, DETROIT ANIMAL CONTROL: This is one of the prime examples of a discarded animal that someone just discarded, let go.

HARLOW: Malachi Jackson has seen a lot, too much in his 19 years doing this.

How bad is the problem?

JACKSON: The problem is as bad as the economic problem I think. The whole society is pretty bad. You know, the people don't have jobs. They use animals to build revenue and protect their properties. Times are just tough.

HARLOW: Tough to say the least, and like so much else in Detroit, man's best friend is waiting to be rescued.

Poppy Harlow, CNN, Detroit.

(END VIDEOTAPE)

BERMAN: You know, as Poppy points out, when you have trouble keeping the traffic lights on, trouble picking up the trash, unfortunately sometimes the stray animals are not the priority. If you want to help or you know an animal lover who might, you can actually adopt these dogs. They'll fly them out to you. There is a number of organizations that you can support financially as well. Michiganhumane.org, allaboutanimalsrescue.org and WA2S.org. That's the organization that Tom McPhee from the piece founded.

Up next, a tiny piece of tech could bring a revolution in police work.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The savings that we will have will easily outweigh the cost of the equipment. I think you really have to ask yourself as a police chief, can you afford not to do something like this?

(END VIDEO CLIP)

BERMAN: Is this the answer to the difficult questions raised by the stop and frisk controversy?

(COMMERCIAL BREAK) BERMAN: Starting this week, a police department in southern California is making all of its patrol officers wear cameras as part of their uniforms. Now, this started out as an experiment, but it's been so successful that the cameras are now mandatory. Programs like this are being closely watched here in New York City after a judge recently ruled that the city's stop and frisk policing policy violates constitutional rights.

Zain Asher joins us with a look through the lens of those cameras.

ZAIN ASHER, CNN CORRESPONDENT: Hey, John. The Rialto police department started this out last year. They tested out wearable cameras on some of their police officers and noticed right away that complaints against officers and the use of force fell dramatically. The question is, should other police departments also follow suit? Take a listen.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Basically, this is the camera device.

ASHER: In Rialto, California, police officers are wearing tiny, portable cameras on their uniforms to monitor their dealings with the public.

UNIDENTIFIED MALE: It's tethered with a battery pack. The battery pack allows us to operate the camera. There were 54 officers involved in the experiment. It does all the audio and video recording. It is stored inside here internally. It cannot be manipulated, turned off, changed in any way.

ASHER: Now that stops, searches, and arrests are being filmed, Rialto's police chief says complaints against officers has dropped 88 percent from 24 complaints last year to only three. And use of force has also fallen by 60 percent.

CHIEF TONY FARRAR, RIALTO POLICE DEPARTMENT: When they get dispatched to a call or they're going to make a self-initiated contact, they turn the device on.

SERGEANT CHRIS HICE, RIALTO POLICE DEPARTMENT: How are you doing, sir? What happened to your wheel? Can I call you a tow truck or something?

I'm able to exit the vehicle, make contact with this person. I can hold this back and I can search through it. There is no manipulating what really occurred or what was really said. One day this piece of evidence will serve as most of my reporting in court.

ASHER: So would wearable police cameras limit racial profiling, and should they be implemented in a city as big as New York? People we spoke to were divided.

UNIDENTIFIED FEMALE: I think that it would help to change the relationship between the police and the people of New York City.

UNIDENTIFIED MALE: Tax dollars can go to so many other things, fixing so many other problems in society other than a camera.

FARRAR: The equipment, it was a little over $100,000 for the initial 70 cameras that we had. Think of the man hours that you can save, the time your investigators can save on investigating all of these cases. Quite frankly, money can be better spent by the officers being out on the street. The savings that we will have will easily outweigh the cost of the equipment.

I think you really have to ask yourself as a police chief, can you afford not to do something like this?

UNIDENTIFIED MALE: This is the future of law enforcement.

ASHER: The big question now is how do you implement wearable cameras in a city as complex as New York? There are 35,000 police officers here. And the police department is 300 times larger than that of Rialto, California. Obviously there are serious financial and policy problems.

Zain Asher, CNN, New York.

(END VIDEOTAPE)

BERMAN: See this building? You couldn't park your car under it, but you might use it to cook your breakfast. It's a real hot spot in London, literally. That's next.

(COMMERCIAL BREAK)

BERMAN: A lot of Americans are enjoying that new car smell. Auto sales surged in August, making the marking the best month in six years. The three big U.S. automakers are posting solid gains, but so are Japanese rivals, Toyota and Nissan. For more stories that matter to your money, give me 60 seconds on the clock. It's money time.

(BEGIN VIDEOTAPE)

BERMAN: Remember this phone? Microsoft is buying once dominant Nokia for $7.2 billion. The move will put Microsoft up against Apple and Google in the smartphone market.

It's official. Apple sent out invitations for the September 10 event. That's this Tuesday. Tech enthusiasts are expecting the company to announce a new iPhone.

Forget the time. Now you can check your e-mail on your watch. Samsung revealed its galaxy gear smart watch. The watch has apps, a camera, and even a heart monitor.

Can you hear me now? Verizon is taking full control of Verizon wireless, buying out partner Vodafone for $130 billion.

Careful where you park your car. A London skyscraper known as the walkie-talkie building is reflecting an intense beam of sunlight, so intense it melted part of a jaguar and was used to fry eggs.

(END VIDEOTAPE)

BERMAN: With the NFL season kicking off this week, it means the start of fantasy football. Head to CNN.com/yourmoney for the business behind the game. And 48 million Americans are managing teams this season. That means big bucks for the companies that help players get an edge on the competition. Christine Romans tackles the number on our blog.

That's it for YOUR MONEY. We're here every Saturday at 9:30 a.m. and 2:00 p.m. and Sunday at 3:00. Christine Romans will be back next weekend. Have a great weekend.