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Raising the Minimum Wage Debated; Gun Violence Levels Compared Internationally; Ice Storms Hit Parts of U.S.; U.S. Veteran Released from North Korea; South Africa Mourns Nelson Mandela; Man Wrongly Convicted of Murder Released from Prison; Homeless Man Learns Computer Coding.
Aired December 7, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: -- retail salespeople who work their tails off and are still living at or barely above poverty.
(END VIDEO CLIP)
CHRISTINE ROMANS, CNN HOST: The president has called for raising the minimum wage to $9 an hour. He also supports a bill in Congress to raise it to $10.10. But fast foods workers say $15 an hour the living wage they need.
The question, a living wage, who pays? Could raising the minimum wage ultimately hurt the very workers it's meant to help? It's all in the eye of the beholder. First, look through the low wage workers eyes for a moment. The minimum wage hasn't risen since 2009. It's $7.25 today. That's, you know, about $15,000 a year if you look at the federal level. Workers say simply not enough to live on.
But look at it now through the eyes of the fast food CEO. If wages go up they will have to pass on the increased cost to consumers. Good- bye $1 menu, hello $1.25 menu. But the worker sees the big CEO salaries. Burger Ling's CEO $6.5 million. Yum brand CEO, that's Taco Cell, KFC, Pizza Hut, $11 million, McDonald's CEO, almost $14 million. But the CEO maybe, the business view is a little bit different. Automation - if workers get too expensive they can be replaced by machines. McDonald's uses order touch screens in Europe. Applebee's is putting a tablet at every single table.
Now, back to the worker. The worker says they deserve a living wage. This isn't just teenagers flipping burgers. The average age of a fast food worker is 29 years old. More than quarter of fast food workers are parents raising kids. But the other view, these jobs were never intended to raise a family on. The minimum wage is for unskilled entry level workers. There are bigger economic forces at play here. It's not the fault of the industry. Bottom line, the minimum wage, a loaded issue, an issue loaded with emotion and different points of view. Here's how one Wendy's worker put it.
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RYNETTA BENNETT, FAST FOOD WORKER ON STRIKE: I have been going to college, but this is one of the reasons why I'm out here today, because I'm trying to fight for my career and fight to go to college and better my life and be more successful.
(END VIDEO CLIP)
ROMANS: Diane Swonk is the chief economist for Mesirow Financial. Diana, on a human level I want all those people to make $15 an hour, I want them all to make $50 an hour.
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: We all want them to make a lot of money, of course.
ROMANS: There's a lot of reasons why you find yourself in some of these jobs. But on an economic level, what does it fix to raise the wages?
SWONK: Well, you know, there's a tenuous forces right now. A little bit of increase, some CEOs have to start considering it because the union movement originally came out of the Great Depression when people were so miserable they figured what do I have to lose to fighting back and unionizing? And what many of these workers -- what many of these CEOs risk and the companies risk is unionization. Of course, the unions have been also pushing this a little bit as well. They're not all the workers that are out there protesting. Some are union plants.
ROMANS: They are getting more effective over the past year a and half or so.
SWONK: They have been. Let's face it, their message resonates. When you're working full time and below the poverty level, that's really tough. On the other side of it, we know when you raise the cost of workers you also reduce the number of workers you hire. We also lose it to robotics, and there may even be more losses than we expect.
ROMANS: What is that called, technological unemployment or something, where something else comes up? And I've heard this from people from inside these industries where they say, look, with a little more investment we can automate a lot of these jobs.
ROMANS: Then where do those workers go, Diane?
SWONK: Exactly. This is the real problem. You still can't get away from in-home health care. You need someone actually physically there. You're not going to have a robot do that. So there are places they go, but they don't pay any better. Those are very low wage jobs and very low skill jobs. In fact, I would argue automation has hollowed out much of the middle class as well because many tax preparers, people like that, you don't need them anymore because you can use your computer to do it. Now we're moving into the low wage sector and that's a sector that had been growing. This month, not as much, good news as we got better jobs this month. ROMANS: And 203,000 jobs created. Unemployment rate, the best it's been since November 2008. And you're on track really here for 2 million jobs, you know, 2 million jobs this year. That's not bad. In fact, it's the best we've seen since 2005. Also, you know, car sales were good, too. If you're confident enough to buy a car that tells me the economy is turning. I think it's a turning point for people who have -- who have a job or are nearly unemployed. Nothing has changed for people unemployed here.
SWONK: No, it hasn't. And in fact that's why that group of people have a much lower confidence in the economy. They're feeling left behind. And they are left behind.
ROMANS: The retailers are not buying as much stuff because you're seeing the low wage paycheck to paycheck worker is holding back. Somebody who has a job, savings, is not under water, they're starting to move forward again. You don't want to be that one American, two economies. That's dangerous.
SWONK: You look at things, too. We have almost 32 percent of young adults 18 to 34 living with their parents now. They're either unemployed or underemployed. Those kinds of things hold back vehicle sales in a more broad based way. They hold back housing activity in a more broad based way along with the overhang of student debt. So you've got a lot of issues sort of when you start pulling this apart that you still see. It's like seeing a garden beginning to sprout and then looking under it and seeing all those nasty worms and stuff underneath. That's what we're seeing here, that duality. And it's not a duality that we want in our economy.
ROMANS: It's also like a baseball player on steroids with a big asterisk. That's important for next year, will the Fed taper.
SWONK: I think it is going to taper, but the Fed wants to make clear that it's doing a switch. We're tapering but we're still stimulating. We're going to keep the zero rates for much longer. I think until 2016. The idea is they want to leave that punch bowl out there until more people are dancing on the floor. And they wouldn't even mind if a couple of people got a little tipsy on the side because they want to catch up. They want to do for the economy what's not been done yet, and that is take some of those marginalized workers and bring them back into the party.
ROMANS: Diane, thank you so much, nice to see you.
SWONK: Good to see you.
ROMANS: Now, here's a tip about tips. The best ones come from jobs that promote sex, gambling, and booze. I'm not kidding. This is pay scale data. Exotic dancers are number one on pay scales list, $25.40 an hour in tips, gaming dealers, $12.80. Next on the list, wine steward, $10.10 an hour, bartenders, $9.50 an hour on tips. I'm in the wrong business.
For more stories that matter to your money, give me 60 seconds on the clock. It's "Money Time." (BEGIN VIDEOTAPE)
ROMANS: The one time poster boy for corporate greed could soon be out or parole. Former Tyco CEO Dennis Kozlowski was convicted in 2005 for stealing hundreds of millions of dollars from his company. Among his lavish expense, a $6,000 shower curtain and a $2 million Roman toga party.
Ready to binge on the new Netflix series "Turbo Fast?" Not so fast. The streaming giant is releasing the original children's series five episodes at a time around the holidays. This isn't the end of Binge watching. All 12 episodes of "House of Cards" season two will come out on Valentine's Day.
Forget smart phones, how about a smart bra? Microsoft is working on a brassiere that detects stress so you can avoid stress related overheating.
Norman Rockwell's "Saying Grace" sold for $46 million at Sotheby's in New York. It set an auction record for a single American painting.
And Billy Joel is in a New York state of mind. The piano man will perform at Madison Square Garden once a month. Don't go changing, Billy.
ROMANS: Coming up, the Obama care fix that isn't really a fix. But first, as the anniversary of the Newtown shooting approaches, America still without any new federal laws to fight violence. Fareed Zakaria is looking around the world for solutions. He's going to join me next.
ROMANS: Nearly one year ago, 26 murdered at Sandy Hook Elementary School in Newtown, Connecticut, and 20 of those gunned down were six and seven-year-old children.
(BEGIN VIDEO CLIP)
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: This was a red line by anybody's account. These were babies. This was a biblical slaughter of innocence.
(END VIDEO CLIP)
ROMANS: It appeared this would be a turning point in the gun reform debates.
(BEGIN VIDEO CLIP)
BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: I will use all the powers of this office to help advance from preventing any more like this. We won't prevent them all, but that can't be an excuse not to try. Ultimately if this effort is going to succeed it's going to retire the help of the American people.
(END VIDEO CLIP)
ROMANS: One year later nothing has changed politically, but it's hardly been business as usual for the gun industry. In the wake of shooting gun and ammunition sales soared. It was a topic we made sure to hit hard when I sat down recently be Bill Simon, Wal-Mart's U.S. CEO.
ROMANS: December 14th will be the one-year anniversary of the Sandy Hook shooting. At the time I was very interested in how many these gun sales are affecting your bottom line. We know in some stores you ran out of the AR-15 weapon. Do you have any regrets selling that wildly popular firearm?
BILL SIMON, U.S. CEO, WAL-MART: Of course, like every American, we're concerned about the violence that exists in the country. We've been selling firearms, sporting weapons, for a long time. But we are very responsible in our sales of firearms. It's something that we're focused on.
In the debate in the country about whether they should be legal or not legal is not one that we get to participate in on a day-to-day basis. That's an issue that Congress has to deal with. But I would tell you that if they're sold in the U.S., we want them sold through formal channels rather than gun shows.
(END VIDEO CLIP)
ROMANS: Gun makers like Smith & Wesson have seen shares soaring since that dip immediately following the shooting. The company says it's operating at maximum production capacity. A new CNN/ORC poll shows public support for stricter gun laws seem to be fading -- 49 percent of Americans say they support stricter gun control laws. That's down 55 percent in January just weeks after the Newtown shooting.
Fareed Zakaria's primetime special "Global Lessons On Guns" airs tomorrow night at 7:00 p.m. What did you learn about how those countries handle gun violence? And can any of that, Fareed, translate into solutions for this country?
FAREED ZAKARIA, CNN HOST, "FAREED ZAKARIA, GPS": You know, it was interesting, because looking at those different countries you see different aspects of what we think are the problem. So you've heard, I've heard, lots of politicians say the real problem is our violent popular culture, particularly violent video games. So we actually went to the country that is more obsessed with violent video games than the United States, and that's Japan. We tried to look at whether you could find any connection between violent popular culture, violent video games and gun violence.
Well, it turns out Japan has a stunningly low rate of gun violence, maybe 25 times lower than ours. And why? They have pretty strict gun control. They have, in fact, they have one of the world's most strict gun control laws. Despite having crazy violent video games, it doesn't transfer. When we went to follow the Japanese mob, and it turns out the Japanese mob doesn't use guns. They have the guns but they feel like it's too much of a hassle when you use them because the police really bust you when you do that.
Or we went to Switzerland where they all own guns but, again, very low gun violence because there's a lot of registration, a lot of background checks. So each one handle it a different way. Nobody has the approach we have, which is essentially completely laissez-faire.
ROMANS: I know you wrote your column in the "Washington Post" about the PISA ranking, and we throw this word around, PISA, rankings. This is a global assessment comparing the performance of 15-year-old students in developing countries around the world. The results, not great. It shows that best were average, at worst, we're falling behind. We've fallen since 2009, American kids. Is this fixable?
ZAKARIA: It is fixable. I'll give you a simple example. The Shanghai 15-year-old is two years ahead in mathematics as the Massachusetts 15-year-old. Massachusetts is the best performing --
ROMANS: The two best performing places in both places.
ZAKARIA: Yes. Shanghai is two years ahead on math on that test. Here's why. If you calculate -- I did this calculation. If you calculate how much time the Shanghai kids spends in school over 15 years, by the time they get to 15, they have spent two full academic years more than any kid in America.
ZAKARIA: So is it any surprise that when they take a math -- anything we do, Christine, whether it's sports, music, the more you do it, the better you get.
ROMANS: That's a very good point.
Speaking of, I don't know, the more you do it, the better you get, Nelson Mandela, someone who was consistent and such a leader. U.S. markets observed moments of silence for him on Friday. You know, he visited the floor of the exchange in 2002. And I remember he went and met so many people, the shoeshine guy. He went out of his way to meet everyone. He also, you know, he worked with some of the biggest names in corporate America to change the way the business gets done in South Africa. He reportedly went to Coca-Cola during his visit in the U.S. in the '90s, rejected the company to sponsor his trip because it did still business in South Africa. How important was his influence in how companies behaved on the national stage?
ZAKARIA: It was quite important because he did something which surprised people. Remember, the ANC was a radical, revolutionary organization. It drew a lot of support from communist countries, from revolutionary movements, Castro, Gadhafi, Arafat. So when he went into power everyone thought he was going to this kind of left wing maniac. He was very pro-business. He was very pro markets because he understood the future of South Africa depended on the white business class staying there, being productive. Interestingly, 27 years in prison he came out of an old left wing background, he understood modern economics. He didn't bust the budget spending money on blacks.
Because of that corporations trusted him. They understood that he didn't want to nationalize anything. He's asking us to behave ethically. I think it's a very good model for the future for third world leaders, particularly, to look at. You can, you know, as long as you understand the power of the market, you can also understand that you can ask businesspeople to behave honorably.
ROMANS: Fareed Zakaria, your primetime special "Global Lessons on Guns" tomorrow night 7:00 p.m. right here on CNN. Thank you.
Coming up, Elton John, Shania Twain, Celine Dion, the next music icon to join these legends in Vegas, it might surprise you. That's next.
ROMANS: So just who is on the way to Vegas to make some serious, serious cash? Britney Spears is turning 32 this week, all grown up. She's joining other legends in Sin City for a fat paycheck. Take a look at the business being this pop icon.
ROMANS: Britney Spears is back to work with a brand new album "Britney Jean." And she's headed to Vegas, not to get married this time but to make money -- a two-year Planet Hollywood residency, earning a reported $15 million a year, or $300,000 a show, more money for a woman who topped Forbes list of highest earning female musicians last year, bringing in $58 million.
She's come a long way from Mouseketeer, then teen pop icon. Her first single became one of the bestselling singles ever, and her first album, the best-selling debut in history, 30 million copies worldwide. Her second album sold 25 million copies, and Britney was all grown up. Two more albums, and a big screen debut, that film "Crossroads" brought in more than $60 million worldwide.
With success came personal struggles and a professional pause playing out in front of flash bulbs. Her dad taking control of her finances, he still controls the money today. But fans wanted more. Spears gave it to them with her comeback album "Blackout." The follow-up "Circus" was her first number one single since her "Baby, One More Time" days. The "Circus" tour earned more than $130 million worldwide. In 2011 "Femme Fatale" was her sixth album to reach number one. As a judge on the "X Factor" last season --
BRITNEY SPEARS, SINGER: I want to let you on stage.
ROMANS: -- she earned $15 million for those opinions. And with fame came endorsements. A perfume empire with Elizabeth Arden, deals over the years with Candy's, Hasbro, Toyota, and Pepsi. All at just 32 she's worth more than $200 million. The business of being Britney Spears is -
UNIDENTIFIED FEMALE: Crazy.
(END VIDEO CLIP)
ROMANS: All grown up or just getting started? Spears has already sold 90 million records worldwide. If you want to see her in Vegas, hurry. Tickets, we're told, are going fast.
Coming up, as hackers hit the web's most popular sites, what you can do to protect yourself and why the Obamacare Web site fix just creates more problems. That's next.
ROMANS: Time to change your passwords. Cyber security researchers at Trust Waves say hackers gained access to nearly 2 million accounts, popular sites like Facebook, G-Mail, Twitter, Yahoo! The firm says there's no hard evidence the hackers accessed the user accounts, but a researcher telling CNN Money they probably did. Experts recommend changing your passwords to something hard to hack and updating your antivirus software.
CNN Money has some very valuable information on how to protect yourself. Check out "How Not To Get Hacked" on "CNN Money."
Fallouts can occur anywhere in the digital world, but the Obamacare fiasco is downright absurd. The administration says the healthcare.gov website is fixed so logon and apply if, if you're one of the first 50,000 people on the site. If not, get in line. And the government is going to send you an e-mail telling you a better time to sign up.
So imagine doing holiday shopping on a site like Amazon. You mow what you want, but you can't buy it until other people complete their purchases. Would you stick around and wait for Amazon to send you an e-mail waiting on you to come back and buy something? How about your fantasy football team. You want to see how you're fairing on a Sunday afternoon, right? No, come back at midnight and the site will show you the score or maybe send you an e-mail about when you can find out.
It kind of reminds me of this, remember this? Logging on, verifying user name and password, connecting, that's what this feels like. What's the big deal? A little patience never hurt anyone, right? Wrong. Obamacare is different. It won't work if young Americans don't sign up. Technology gives young people the luxury of instant everything. They've got news, they've got texts, pictures, videos, shopping, games, all at their fingertips.
The good news about the Obamacare website is a complete misnomer. Yes, it's better than it was, but it's nowhere near writ should be for a Web site in 2013, especially for the very people you need to get in there and get involved. And then there's this -- a recent Gallup poll shows 37 percent of Americans age 18 to 29 say they are not particular with the healthcare law. Compare to around a quarter to the older age groups. The fine is just $95 or one percent of a family's income for not having insurance next year. Some experts say it's going to take a couple years to get younger Americans enrolled. Hopefully by that time the website will be fixed, for real, really fixed.
That's it for this week's "YOUR MONEY." We'll see you back here at 9:30 eastern and 2:00 p.m. eastern as well. See you there.