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CNN IN THE MONEY
Is Selective Service is Making a Comeback?
Aired November 8, 2003 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty.
Coming up on today's edition of IN THE MONEY, "It ain't over till it's over," said Yogi Berra. Bringing peace to Iraq turning out to be a long, tough job. We'll look at whether America has the stomach to stay in it for the long haul.
Plus, Uncle Sam has your number. The draft isn't back yet. We're going to find out, though, what Selective Service might mean for the campaign in Iraq and the kids here at home.
Who's behind the news? Author Bernard Goldberg says it's mostly a bunch of left-winging elitists. We'll ask him for some proof on that question.
Joining me today, a couple of people who know something about almost everything, "Fortune" magazine editor-at-large Andy Serwer, and in for Susan Lisocvicz, Marion Asnes, the senior editor for "MONEY" magazine and an old friend of the broadcast.
Well, the Tums have to be handed out in the Democratic presidential candidate with abandon here, since Friday at 8:30, when the jobs report came out indicating that the economy continues to grow and, in fact, taking away perhaps the strongest issue the Democrats had to campaign for the White House on.
ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE" MAGAZINE: Well, you know, it's too early to declare victory, I think, for the White House.
CAFFERTY: I understand.
SERWER: And the president got in trouble with that "Mission Accomplished" banner, correct?
CAFFERTY: True, that's true. Good point.
SERWER: On the other hand, it sure is looking like the economy is approving. I think Marion, it's unassailable at this point that at this point the economy is picking up steam. MARION ASNES, "MONEY" MAGAZINE: Absolutely. You know, not only did we have a good October report for people coming in and getting jobs, but there are also revisions to the September and August reports.
So it's not just good jobs now. It's a quarter of a million jobs added to the economy over the past three months. And that really is a remarkable turnaround, and it's what people have been hoping for. They've been hoping for people to be able to go back to work, to sustain the spending increases that started this summer when we got the tax cuts back.
CAFFERTY: Let me ask you this: does Iraq really matter, if the economy is up and running and creating 100,000 jobs, 200,000 jobs a month? Can the Democrats win the White House if the economy is in full recovery mode?
ASNES: Well, I really think you have to ask all the people out there who have friends and relatives who are in Iraq right now. If Iraq seems to be going better then, then, I mean, it's a walk in the park for Bush. But if Iraq continues to be the kind of difficult situation that it is now, where you have all of these questions of missions not being accomplished, and real questions about competence in the Bush White House and the planning of this war, that's another story.
CAFFERTY: Andy, what drives the election, the war or the economy?
SERWER: Well, obviously, I think it's both. But I think that Iraq is a tricky situation, and I really don't think it's going to be in a place next fall where it's going to be a great thing for the White House to point to.
CAFFERTY: All right.
To paraphrase Defense Secretary Rumsfeld, it's already been a long, hard slog in Iraq for thousands of U.S. troops. And with no end in sight, there are growing concerns now for the morale of America's fighting men and women.
For a look at how the troops are holding up, we're joined from Baghdad by CNN's Ben Wedeman. Ben, nice to have you with us. We're reading there may be some rotation coming as early as, what, the first of the year?
BEN WEDEMAN, CNN CAIRO BUREAU CHIEF: Yes, as early as that. In fact, I was with the 82nd Airborne Division out near Fallujah, and they were just getting word that their tour of duty would be extended from six months to 12 months. And one of their senior commanders described the morale effective as a sucking chest wound.
Many of the troops are beginning to get a little frustrated with the situation here. They feel that they don't always get the kind of cooperation they would like from Iraqis, from the Iraqi police and the other Iraqi horse authorities that they're depending on to sort of eventually take on more of the responsibilities.
We also heard some of the troops in Fallujah, for instance, complaining that the focus of their operations is too much on what they described as the big guys. Sort of the ringleaders, the commanders of the insurgency, and they would like to go down at street level and go after what they describe as the little guys, the guys who lay the IEDs, the guys who are firing mortars in their directions and RPGs.
So there seems to be a lot of discussion among the troops on how they would like to do things differently. And, as I said, a lot of frustration that maybe their mission in Iraq is, A., turning out to be much longer than they expected, and, B, turning out to be much more difficult than they ever imagined -- Jack.
CAFFERTY: What about the effect, Ben, of the two helicopters down in the last week? How does that play with for the forces? Does it tend to steal their resolve that, you know, we're going to work harder to get this done, or does it tend to lead to their sense of frustration and perhaps contribute to the idea that it's a hopeless quest they're involved in?
WEDEMAN: Well, I mean, the initial reaction is usually one of shock. I mean, so many men were killed in Sunday's helicopter downing, and today, six more. And this is something that really does shock these men. By and large, they understood when they came over here it wasn't going to be easy. In a sense, they do get angry.
We were with the 82nd in Fallujah, and they were the unit that lost those 16 men. And they, in a sense, were more angry than before. They wanted to hit back harder at the insurgency. But as I said, they're frustrated because they're not quite sure their methods are working, but it doesn't to seem to have been a real strong blow in terms of their determination to carry on with their mission -- Jack.
CAFFERTY: Ben, thank you. CNN's Ben Wedeman joining us live from Baghdad.
The question of whether the United States has the resolve to stick it out in Iraq is growing louder as time goes by an the casualties rise. In fact, with a shadowy enemy and no get-out date in sight, we're hearing Iraq compared more and more with Vietnam.
Stanley Karnow is a Pulitzer Prize-winning author and journalist whose books include, "Vietnam: A History." He joins us from Washington, D.C. for a look at how the two conflicts compare and the public reaction to both.
Mr. Karnow, nice to have you with us. Are there vald comparisons between what's happening in Iraq and the war in Vietnam?
STANLEY KARNOW, AUTHOR, "VIETNAM: A HISTORY": Well, there are differences and similarities. First of all, you know, we were driven out of Vietnam in the years afterward, and everybody said, let's not get involved in another Vietnam. Another Vietnam became a buzzword. So in various other situations, like Bosnia, Somalia and so forth, the public was extremely antsy about getting involved.
The big difference here is, the war in Vietnam started off as a guerrilla war and then turned into a conventional war. Here, we start off as a conventional war, and it's become a guerrilla war. And even though the term "quagmire" was probably wrongly used at the very begin, it's certainly valid today.
There are two factors I think are very important: casualties and duration. In Vietnam, the public began to turn off against the war because of casualties rising. And the second thing is, it went on and on and on without any end in sight.
Now, complicating all of those things was the fact that the administration, the Johnson administration, and later Nixon, were always telling us that everything was going great. That we could see the light at the end of the tunnel, victories just around the corner, when in fact they knew the situation was very bad.
We're getting the same kind of rhetoric today. When something terrible happens, the president says, this is a great sign of progress. I think the public begins to become aware of the phoniness and the emptiness of that kind of rhetoric.
SERWER: Let me jump in for a minute, Stanley. And its great to the have you on the program, because I really enjoyed your book on Vietnam. I read that years ago. It was a terrific, terrific book.
Maybe a more apt analogy would be the situations the Russians encountered in Afghanistan given they were fighting a sort of ideological war? Do you think that might be a more apt comparison?
KARNOW: Well, we could make comparisons of all kinds. You want to use that comparison, fine. If you want to use the Vietnam one, you want to use the Korea one.
I mean, nobody talk answer Korea today. But don't forget that Korea was one of the most unpopular wars. And Eisenhower went to Korea, ran on a platform of, I will get us out of Korea, and actually went there. It was a marvelous stunt, and we did get out, but, I mean, in Korea it ended up as a stalemate. In Vietnam, we ended up as a defeat.
You can find analogies of all kinds. We can go back to the Peloponnesian wars if you're looking for analogies.
ASNES: OK. Well, you know, you mentioned the Korean War. And I wanted to go back to that, because in the Korean War it was a U.N. effort. And it seems to me that, as the Bush administration tries somehow to disengage from this war a little bit and keep Americans happy about people coming home, that they are turning more to the U.N., and they're getting the royal brush-off.
What do you think it's going to take for this to become more of an international effort? What do we have to do in Korea?
KARNOW: Well, we tried very hard. First of all, in Korea, the U.N. was a fig leaf that was slapped on it after President Truman decided to intervene. And those days were different.
We had tremendous influence in the U.N. that we don't have today. The diplomacy of this situation has been absolutely awful. Granted that we do have opposition, very cranky opposition from Germany and France and so forth making it very difficult to get any kind of concurrence in the U.N., but this is essentially an American operation. And many other countries, some are participating, but many don't want to get involved.
CAFFERTY: Let me ask you a theoretical question. We were talking about this at the beginning of the program. We've got an election coming up in a year, there are signs the economy is beginning to strengthen. I'm curious as to your thoughts, is Iraq capable of being an issue that drives President Bush from the White House, if the economy continues to improve as it has for the last two, three months?
KARNOW: One thing I learned a long time ago is never to make any predictions about politics. I don't see on the horizon right now anybody in the Democratic camp who's challenging, who's strong enough to challenge President Bush. But, you know, there's an old phrase, overnight is a lifetime in politics.
KARNOW: Who knows what's going to happen. But I think that unless there's some kind of miracle that changes the situation in Iraq, it's going to be -- it's going to weigh heavily on his campaign.
CAFFERTY: I think you may have answered the question, or at least approached an answer. I appreciate very much your being on the program with us today. Stanley Karnow is a Pulitzer Prize-winning author and historian.
Thank you, sir, for joining us. I appreciate it.
Coming up on IN THE MONEY, feel a draft? Find out whether the Selective Service is making a comeback as the u.s. military struggles to cope with its staffing needs in iraq and elsewhere.
And grabbing a piece of corporate America's hide. Find out how an animal rights group is buying a place in the boardroom.
Stay with us.
CAFFERTY: My, how time flies. Thirty years since there was a draft in this country. I remember it well, but with Iraq still unsteady and potential problems looming in places like Iran, Syria, North Korea, the need for more soldiers is growing by the day. And now some experts say it's only a matter of time before the draft makes a comeback.
For more about that, Dave Lindorff joins us. He's a freelance journalist who's researched and written about the return of the Selective Service System for the online journal salon.com. Dave, nice to have you with us.
DAVE LINDORFF, CONTRIBUTOR, SALON.COM: Thanks for having me on.
CAFFERTY: How close is this thing to happening? The Department of Defense, I'm reading in various accounts, is looking at getting the draft boards up and running again. That's step one. It's a big step, but it looks like the machinery's starting to move forward.
LINDORFF: Yes. They were down about 16 percent in terms of vacancies on those boards, so they couldn't really function. And they put out a call on a Web site that circulates in military families called Defend America, asking for volunteers for those draft boards. So there's a -- they also told last summer a lot of board members to go out and find new people to join them on the boards.
SERWER: Well, Dave, do we really need a draft, though? I mean, yes, the unemployment rate is falling a little bit, 6 percent, kind of mediocre historically. But for people who are coming out of high school unskilled, isn't there still enough people to fill the ranks?
LINDORFF: Well, there had been. Up until now, they met their recruitment goals. But you've got to look at the demands that are being put on the services now.
Remember, in the Vietnam War, we had an Army that was twice as large, and we were trying to put 500,000 people on a war footing, and that required quite a significant draft. Now we have half that size of an Army, actually less half that size, and we currently are trying to keep 130,000 people on duty just in Iraq. And if things get worse, which I think is the scenario that they're looking at when they do contingency planning for a draft, you know, you pretty quickly get to numbers that they simply can't come up with.
I think what we're seeing here with the call-up of the Marines and Reserves to go back into Iraq is being presented as kind of a desperate move now in "The Times" today, because they simply don't have the bodies to go in there next year.
ASNES: There has been a proposal to reinstate the draft floating around Congress for quite some time, hasn't there? Who would ever support such an idea? It has to be terribly unpopular.
LINDORFF: I can't see them doing it in an election year. I think that the work they're doing now is really because, if they need it, they'll have to be able to move to it quickly after the election. And you basically could see a situation come November, if they keep tamping down the numbers for now as long as they can during a campaign, to suddenly get those troops in there if things are turning worse.
And so they have to have the machinery ready. It takes six months to go from the actual start of a call-up to getting the first guys delivered to boot camp.
CAFFERTY: You know, the argument against the draft, one of them -- actually there are two main ones I can think of. One, the nature of war fighting has changed to a highly sophisticated technology- driven battlefield that the soldiers in Vietnam couldn't relate to at all. And the other one is that the nature of war fighting by itself dictates that inductees possess something beyond rudimentary high school skill, that the volunteer force is a bunch of brighter than average bears who are able to operate the computers and the lasers and all of the things that figure into today's war fighting, and that a draft slimp will not provide qualified people to do this kind of thing.
Are those arguments part of this discussion?
LINDORFF: I think what we're finding out is that that's the myth. The new McNamara is Rumsfeld, who's been pushing this idea of a super high-tech Army with very few actual people on the ground, and we're finding out that doesn't work.
Take a look at the helicopter shoot-down. That tragic event occurred because a basic rule of helicopter landing sites was ignored. And that is that you secure the area, because helicopters are so vulnerable going up and down. That site was not secured, because they did not have the personnel on the ground to simply secure the perimeter.
And the other thing is that we're talking now about a low- intensity conflict and occupation, which requires bodies. If you don't have the bodies to do the occupation on a -- you know, through, you know, selective use of force, you have to use overwhelming force, and then you end up killing lots of civilians and angering more people. And that's what we're doing now.
CAFFERTY: All right, Dave. We're going to have to leave it there. Interesting stuff.
Dave Lindorff, who is a correspondent for salon.com. Thanks for joining us. I appreciate it.
LINDORFF: Thanks for having me.
CAFFERTY: All right.
Talk about a hot button political issue. That would be interesting to see if this should happen before the election.
Time to step back for a minute, earn a couple of dollars for the home office. When we come back, bounty hunting goes online. Microsoft puting a price on the PCs of hackers everywhere. We'll tell you how much the software giant is offering.
And young adults who still earn like kids. We'll tell you about a generation that some say is being left behind as time goes by.
Stay with us.
SERWER: Now it's time to check the top stories of the week in our "Money Minute."
There could be a break in the ongoing Enron investigation. Former Enron CEO Ken Lay has now agreed to hand over the personal documents investigators for the SEC have been trying to see for about two years. Lay had said the documents violated his right against self-incrimination. The judge who signed off on the agreement says the SEC can use the documents for any law enforcement purpose.
And if at first you don't succeed, reindict. The Feds are going to give prosecuting Frank Quattrone another try. Quattrone is the former CSFB banker who many investors accuse of pumping tech stocks. His first trial ended with a hung jury.
Microsoft is putting some big money where its mouth is when it comes to fighting computer hackers. The software king is setting up a $5 million reward program to help identify and convict people who release worms, viruses and other destructive programs on the Internet. Topping Microsoft's most-wanted list, the folks behind the so-called So Big and Blaster viruses that hit millions of computers this year.
Shaving King Gillette reported -- that was a pun -- reported stronger third-quarter profits up 17.5 percent from last year. And those extra millions will come in handy as Gillette is battling in court to stop rival Schick from releasing its new Quattro razor. Gillette say the Quattro is a blatant rip-off of its Mach 3 razor and is suing Schick for patent infringement.
Gillette has been trading in a very tight range, as they say, this year. Right now, it's close to its year high, and that's why Gillette is our stock of the week.
So what do you think, guys? One of the blue, blue chips out there, but it really has not gone anywhere for a few years, has it?
CAFFERTY: I think that's a story you read very carefully, number one. And number two, the question I have is, how many blades is going to be enough blades? I mean, are we going to have like a razor that has 28 blades?
ASNES: It's going to have fins. Right? It's going to have fins.
SERWER: Four, five and six, right?
ASNES: You know, I just can't get over that idea that it's going to be patent infringement for a razor blade? I mean, it's a good thing they're not in the blue jeans business. Imagine what they'd be complaining about.
SERWER: Well, you know, Gillette really does pride itself, the old company out of Boston, all of these technological advances in razors, also toothbrushes, Oral B. I mean they really kind of put science in it. And they have been sort of the leaders in those fields.
But the stock was $60 in 1999. It went down to $30. And it's just been going across.
Warren Buffett was on the board of this company for years and years. Then he stepped off. James Kiltz (ph) is running the place now, but it hasn't seemed to really taken off quite yet.
CAFFERTY: I wonder what they have to do, maybe bring back the Friday night fights at the sgarden? Remember?
SERWER: Oh, against the nicks (ph) and cuts (ph)?
SERWER: You know, the other thing that's actually tough for this company right now...
ASNES: That was bad.
SERWER: That was bad -- is the battery business. They own Duracell. And that has just been a really, really tough business.
Kind of an albatross around this company's neck. So, so competitive. And you don't have a lot of pricing. But they've got some top-line products, and it's just one of those things that keeps on ticking, I guess.
CAFFERTY: It's been at $30 a long time, right? You buy it now thinking it's going to be at $30 for a long time, maybe it's not going below $30, and the only place to go is up?
SERWER: But you know it's one of those stocks that's still expensive. You know, it still has a price earnings multiple, it's high. But I think you're probably right. It might get a little upside soon.
ASNES: Well, now how are they effected by -- you know, they're a real multi-national. And so one of the things that people would have to watch out when they're looking at a stock like Gillette is the changing currency situation.
SERWER: That has been good for them. But the dollar strengthened (UNINTELLIGIBLE). But the dollar has been a good thing for them lately.
CAFFERTY: All right. Gillette, stock of the week.
Coming up, best-selling author, former TV news reporter, Bernard Goldberg, takes aim at what he calls the liberal media elite. He takes them to task in a new book called "Arrogance."
And they're growing, but their earning power is not. Find out why more and more young Americans are missing a shot at prosperity as IN THE MONEY rolls on.
CAFFERTY: When it comes to bias in the media, everybody plays the blame game. Conservatives say most TV networks and newspapers have a liberal bent. Liberals slam some cable networks and radio stations for their conservative agenda.
One of the most vocal players in the debate joins us today. Former CBS correspondent and author Bernard Goldberg, who's here to talk about his new book "Arrogance: Rescuing America From the Media Elite." Bernard's a veteran of CBS News.
Nice to see you. Welcome. He joins us this morning from Miami.
Does it matter, Bernard? I mean we have Rush Limbaugh and Fox News that are on the right. We've got these other liberal cabals that you claim are on the left. And somewhere in between, we have a whole a cauldron of voices coming at us. I mean, can't somebody find whatever it is they want to listen to out there, and is there really anything wrong with having an ideological spectrum like that?
BERNARD GOLDBERG, HBO CORRESPONDENT, "REAL SPORTS": Yes, they can find anything they want to listen to. And there's nothing wrong with having an ideological spectrum. That's a straw man (ph), Jack, with all due respect.
CAFFERTY: Well, so what's your point?
GOLDBERG: My point is that it's the mainstream media. It's ABC, NBC, CBS and PBS that get about 35 million people every night. And Fox, that you seem so concerned about, which kilts to the right, gets about a million and a half on their newscast tonight. When Fox gets 35 million and CBS gets one million, then I'll worry about some other kind of bias.
CAFFERTY: But isn't that exactly the trend that's happening? Aren't the viewerships of the network newscasts declining? And haven't they been for some time? And aren't the viewerships of the cable news networks, which are a comparatively new phenomenon, growing?
GOLDBERG: Oh, yes. That's absolutely true. And I think one of the many reasons that the network viewersship is declining -- yes, one of the reasons is there used to be just three places you could get your world and national news. And now there are 500 channels.
But one of the reasons certainly is this perceived liberal bias on the part of the media elite. And the point I'm making in "Arrogance" -- I'm not out to prove again that there's a liberal bias in the news. Either you believe that or you don't.
What I'm trying to do now is show how entrenched these biases are. How the elites, whether they're in Hollywood with this Reagan movie, or the news elites in the East Coast, have a...
ASNES: OK. Now, wait a minute. I've got to break in here.
GOLDBERG: What I'm saying is that they live in a very comfortable bubble. They live in a comfortable bubble. And inside this bubble the media elites will hardly ever run into anybody who disagrees with them.
And that's not healthy for journalists. And as the people on the West Coast just discovered, it's not too healthy for them either.
ASNES: Now can I break in?
GOLDBERG: Absolutely. It's your show.
ASNES: Great. OK. Now, first of all, the Reagan docudrama is not on the air as news. And the reasons for that, if you ask me, is because it's lousy. OK?
Leslie Moonves went out there and he saw something that was unconscionably bad. So whether you're on the right or on the left, there's no reason to put it on the air. He was smart enough. He had the media elite journalistic ethics to say, this stinks, let's pull the plug.
GOLDBERG: Right now, the current thing today is that many people on the left, and maybe you included, are arguing that it's a kind of censorship. I know we don't literally mean censorship. The government didn't tell CBS to do it.
CBS made a business decision not to run the movie. So it's not technically censorship. But there's a lot of talk about a chill factor, and "The New York Times" is saying it's a Soviet-style chill.
Let me ask a question. Does anybody remember the liberal America being too upset when Dr. Laura made a comment that gays found offensive and her TV show was canceled? I don't remember a big uproar on the left over that.
If somebody in Hollywood made a movie about George Wallace and it was incredibly favorable and they put words into this mouth that he never said, but put words in his mouth to make him look good, and the network buckled and canceled it, do you think liberals would say -- they'd say that was right. So I think there's a bit of hypocrisy on the left about the Reagan thing.
About your comment about how you have discussions and arguments all the time in the newsroom, well, I'm glad to hear that. But you know what? When it comes to big issues like abortion, race, gay rights, there aren't nearly enough big arguments in newsrooms.
SERWER: Bernard, can I jump in for a second here?
SERWER: Absent "The New York Times," I want to talk about newspapers for a second. Absent "The New York Times," aren't the overwhelming -- isn't the overwhelming majority of newspapers in this country conservative, number one? And number two, has Al Franken read your book yet and commented on it?
GOLDBERG: Well, saying absent the "The New York Times" is like saying besides that, Mrs. Lincoln. SERWER: No, that's not true. That's not true, Bernard, because you know there's a whole lot of other newspapers out there. You compare the readership of "The New York Times" to the readerships of the other newspapers, and it compares very well...
GOLDBERG: No, but my point is...
SERWER: ... in terms of numbers.
GOLDBERG: My point is that the media elites, certainly in New York City and Washington, don't know which way is up until they read "The New York Times." "The New York Times" isn't important. You're absolutely right about this in terms of circulation.
I mean, 99 percent of the American people never read "The New York Times." But the people in New York who decide what gets on the CBS Evening News, NBC and CBS and ABC, and probably CNN, do read "The New York Times." So it has tremendous influence.
And the part that bothers me about that isn't that it's a liberal paper. That's absolutely fine with me. But it's that the ideology filters into every other section of the newspaper.
Can I literally read you just one sentence? This is in a food piece, a piece about food in "The New York Times."
Talking about monkfish. Right? Monkfish. The writer says, "Apparently it sits on the bottom of the ocean, opens its Godzilla jaws and waits for poor unsuspecting fishies to swim right into it, not unlike the latest recipients of President George W. Bush's capital gains cuts."
The problem with "The New York Times"...
SERWER: Paul Krugman (ph) wrote that recipe, right?
GOLDBERG: He might as well have. It's like one of the best newspapers and one of the worst newspapers, because you find ideology in the strangest places. You find it in stories about food, you find it in stories about sports. You find it in movie reviews.
And then the media elites, who really don't come up with too many original ideas -- that I know for a fact. I was with CBS News for 28 years -- they read "The New York Times," they determine what's important and what's not important, what's mainstream and what's not mainstream, and then the news gets tilted inevitably to the left.
CAFFERTY: Bernard, I enjoy reading your stuff. One of the points you make is that perhaps East and West Coast media types ought to spend a little time out in the hinterlands learning what the real American way of life is all about.
GOLDBERG: Exactly. Who could argue against that?
CAFFERTY: No. And I've worked in both places, and it is a different landscape and it is a different population. And they do have different ideas about things than we have in these big cities like New York.
I'm out of time. I've got to stop here. Thanks for coming on the program. I appreciate it.
GOLDBERG: Thank you. Appreciate it.
CAFFERTY: Bernard Goldberg. The book's called "Arrogance." Good stuff.
Heading your way on IN THE MONEY, as we continue, the young and the restless will tell you how new statistics show that American kids are falling behind in the job market.
Also coming up, PETA makes the fur fly. Well, what's new about that? Find out how the animal rights group is using cash and cunning to bring its message to the boardroom.
We shall continue.
SERWER: CEOs like Bill Gates, Richard Branson and Gordon Bethune dropped out of college to build lucrative careers at a young age. But a new report says today's teenagers and young adults don't stand a chance at the same success.
Joining us from Boston is the author of "Leaving Young Workers Behind," Andrew Sum. He is a professor of economics and director of the Center for Labor Market Studies at Northeastern University.
ANDREW SUM, PROFESSOR OF ECONOMICS, NORTHEASTERN UNIVERSITY: Thank you.
SERWER: Can you talk a little bit about your research and the subject of your report?
SUM: Sure. The research that we've been conducting over the last few years has focused on the labor market experiences and problems faced by the nation's teens and young adults. Both recently during the last few years and also looking at their experiences over the long haul to try to determine which groups of young men and women are faring well in the labor market and which ones are not.
One of the primary findings of our research, however, has been the devastating effects at both the national recession of 2001 and the jobless recovery since then, up till now, has had on the employment opportunities for young adults. Those groups that have been most adversely affected by the detraction of the labor markets have been first, teenagers, and secondly, young adults, 20 to 24.
They're employment rates have been far more adversely affected than those of older adults. For example, the employment rate of the nation's teens is down nine percentage points from where it was at the peak of the boom, while that for young adults, 20 to 24, is down nearly five percent. In contrast, older adults have been only marginally affected by this.
ASNES: OK. I want to ask you a question. So now you're saying -- how many 24-year-olds are there out there who have never had a job? I mean, that's what you're saying, that you've got all of these people who go through teenagerhood and well into their 20s and they have not had a job. Does that include things like McDonald's? Is it nothing?
SUM: The labor market for young adults is a very fluid one. So it is often the case that young adults will hold short-term jobs, lose those jobs, and then look for work again.
The number of young people who have not had a job is not particularly large. However, what is disturbing is the large numbers of young people who are both neither working nor in school. And it is the size of that group which is so large which is not a good sign for the economy, because all longitudinal research shows those young people spend more time in their late teens and early young adulthood out of school and out of work will come to dominate the ranks of the working poor and the dependent poor in their later adult years.
CAFFERTY: Well, they don't become high-spending consumers, which is two-thirds of what drives this economy, right? So the implications are considerable if you look forward.
SUM: The implications are particularly severe in both -- not only terms of their earning power, which will critically influencing their spending power, but we've also argued that, for those of us who are taxpayers as well, should be interested in their fate as well.
Remember, they're also taxpayers. And the lower incomes will generate a lower set of tax revenues over their work life. And in addition, they are bigger drainers on the rest of us in terms of increased cash transfers. So it's in the interest of all of us to have more young adults fully working.
ASNES: Is this the group that used to be called the underclass? I remember back in the '80s, everybody was talking about a group that was essentially uneducateable, unemployable, and so they ended up in the underground economy. Is that what's happening here?
SUM: I hate to use the word "underclass" to describe all of the young people that we're talking about. While it is clear that there is a subset of these young people who live in high-poverty neighborhoods and have many of the characteristics of what in the '80s were called underclass, a large number of these young adults live in just moderate-income, middle-income communities that have been shut out of the labor market of the last three years.
ASNES: So then this has to do, to an extent, with the fact that there are so many fewer unskilled jobs in this country?
SUM: Partly it has to do with that. But I would argue, primarily it has to do with two other factors.
One is that the number of adult competitors for available jobs is far greater today than it was in the late '90s or at the height of the boom. There are many more adults 25 or older who are willing to take entry jobs that these people have taken.
Secondly, they also face enormous competitions from the large numbers of immigrant workers who arrived here from 1990. And even in the last three years, we estimate that another 2.5 million immigrants came to the labor market.
There are large numbers of these entry-level jobs which are being competitive with immigrants at a time when there's a limited supply of jobs available. So it's both increased supply in competition with young adults, plus the reduced demand, except for the last three months, where we just have not had any kind of substantive job growth to provide an incentive for employees to reach back in the cube and to hire more young adults for their available positions.
CAFFERTY: Interesting stuff. Mr. Sum, we're going to have to leave it there. Thank you for being with us. I appreciate it.
SUM: Thank you.
CAFFERTY: Andrew Sum is the director of the Center for Labor Market Studies at Northeastern University.
Still ahead on IN THE MONEY, PETA is taking its fights for animal rights inside the walls of American business. Find out how sign holders are turning into shareholders. And if you think that's the wrong way to skin the cat, or if you have something else on your mind, you can send us an e-mail.
That was such a trashy transition. Wasn't it? It was awful. Did you write that, Jake (ph)?
Our address is firstname.lastname@example.org.
Back after this.
CAFFERTY: It looks like the animal rights group PETA is taking the "if you can't beat them join them" philosophy to heart when it comes to some big U.S. companies. Well, not exactly.
Money.com's Allen Wastler has more on their new strategy. This is not a group known for its great sense of humor. But they have been effective in getting their message out. But this is a whole new approach, isn't it?
ALLEN WASTLER, MONEY.COM: They're very effective. And actually, they're sort of borrowing it from the union play book kind of, because unions a few years ago figured out, hey, you know, if we get somebody on the board, maybe we could influence the decision-making.
So PETA says, you know what we're going to do? We're going to buy stock in places like Tyson Food, Pilgrim's Pride, Hormel, and the dining chains, too. Applebee's, Chili's, Outback Steakhouse. All right?
SERWER: I'm getting hungry.
WASTLER: And even Denny's. And they're going to say, and if we get enough of the stock in each of these companies, we can put up shareholder resolutions...
CAFFERTY: At the meetings, right?
WASTLER: ... and we can start banging the drum at the meetings, going to other shareholder groups, which including labor unions, but also a lot universities, a lot of very sensitive pension funds, where they're saying, you know, you're doing this to the animals and you're doing this to the animals.
CAFFERTY: But what does that do if they're successful? Does that drive up the price of my steak?
WASTLER: It will probably drive it if they're successful. But, you kind of wonder...
SERWER: Drive the price of the stock down, too.
ASNES: That's a real long shot. There's been attempts of shareholder resolutions like this for years and years on all kinds of issues. Really, the most it ever gets for anybody is publicity. If publicity is what PETA is after, as they so often are, this is a good tactic.
WASTLER: Agreed. But actually, they just got Whole Foods to adopt this humane animal standard at all their grocery stores.
ASNES: Yes, but that's Whole Foods. That's their whole schtick.
CAFFERTY: Allen, let me ask you a question. When you talk about that, why do you go "humane animal standards?"
WASTLER: Because you're going to eat the thing, OK?
WASTLER: Oh, Mr. chicken, I'm so sorry that I'm about to slap you on to the grill and put some barbecue sauce and eat -- this strikes me as, we're the top of the food chain. Let's live like it.
CAFFERTY: All right. I thought that was maybe where you were going. I just wanted to clarify. Now, the fun site this week plays kind of right into this whole theme, doesn't it? You know.
WASTLER: And you know, PETA, actually they do have a great sense of humor. OK? So our fun site is a place where you can go and check out some of the commercials that they've done that networks have refused to air.
WASTLER: I mean, they have stuff like fornicating cats, erotic vegetables. We have one segment of one of the more G rated ones of cows. So let's take a look at that.
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WASTLER: These are cows singing their objections to becoming leather. And it's actually quite amusing. But the networks refused to run this one, too. But it's actually one of the much more tame...
CAFFERTY: I was going to say, that's kind of mild, right?
WASLTER: Now, the way to get to this fun site, it's complicated, (UNINTELLIGIBLE), Jack.
CAFFERTY: Yes, last week you had me read it and people's eyes just glazed over it, so why don't you do it?
WASTLER: We're going to put it on the IN THE MONEY show page, OK?
WASTLER: The way you get to that is just go money.com/inthemoney and you're there, baby. Or, you could go to the money.com homepage, and where you see the word "TV," the little initials there, just click on that, and you'll say, oh, IN THE MONEY is on the schedule. Boom, you're right there.
CAFFERTY: And the fun site will be in that same place each week?
WASTLER: We're going to put the fun site on that. You can navigate right to that and you can watch the cats, the cows, the vegetables.
ASNES: Oh boy.
CAFFERTY: Well, some of us aren't old enough.
Thank you, Allen.
WASTLER: Sure thing, Jack.
CAFFERTY: All right.
Coming up on IN THE MONEY, we're going to dip into the e-mail bag and read some of your correspondence. Remember, you can tell us what you think about this program or anything else that's on your mind by e-mailing us at email@example.com.
Back in a minute.
CAFFERTY: Last week, we asked you if you would ever give your child psychoactive drugs. That was the e-mail question of the week.
Mike in Los Angeles said, "Prescription drug do not address the cause of the problems. These drugs are the direct result of drug company lobbying. Profits have taken seniority over solutions."
Lisa in Kentucky said, "What they don't tell you when you give your children these drugs is that it can limit his or her career choices. Taking some of these drugs can get you disqualified from military service, getting a pilot's license or becoming a cop. Had I know this, I would never have agreed to put my son on medication."
Ellen, on the other hand, said this: "If your child said to you he didn't want to live anymore, what would you do? We need to do what we can to keep young people from turning to street drugs. If it meant keeping my child alive, out of jail, and off the illegal narcotics, of course I'd give him Ritalin or anything else the doctor prescrbes."
Time now for the e-mail question of this week which is as follows: How long should the United States stay in Iraq? Send your answers to us at firstname.lastname@example.org. We'll pick some of the more compelling ones and read them on the show next week.
All right. That's it. Thank you for joining us for this edition of IN THE MONEY.
Thanks to our group here: "MONEY" magazine's senior editor, Marion Asnes, who is in this week for Susan Lisovicz. Drop by any time, Marion.
ASNES: Thank you.
CAFFERTY: "Fortune" magazine editor-at-large Andy Serwer, and money.com managing editor, Allen Wastler.
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