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tv   Real Money With Ali Velshi  Al Jazeera  December 25, 2013 7:00pm-7:31pm EST

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>> this is al jazeera america live from new york city. i'm tony harris with a look at tonight's top stories. egypt has declared muslim brotherhood a terrorist organization some say it is based on false accusation. the more than half had a million people of the u.s. and canada are without heat and light tonight if you can imagine. major ice storms knocked out power days ago. utility companies say they're making progress but the nasty conditions are making repairs difficult. there is disappointment this christmas. after shipping problems, ups
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saying a shorter shipping season, a lot of people ordering late delayed shipping. utah officials say they're planning an emergency appeal right now after another court denied their request to stop same sex weddings in the state. and those headlines if you would like the very latest on any of the stories that we're following at al jazeera, head on over to our website at www.aljazeera.com. www.aljazeera.com. "real money" is up next on al jazeera america. >> more americans are getting back to work. also, firsthand look at the full-time pursuit of freelance jobs. plus how some investors are putting a price tag on how much
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you're worth and what you might earn in the future. i'm ali velshi, and this is "real money." >> this is reel money. you are the most important part of the show. join our live conversation @aj real money or . this is christmas and the best gift we can receive is job growth. the most troubling part of the recovery is employment. evidence the economy is generating consistent job growth. at a rate that is actually quite healthy. it's not stellar. in november the u.s. economy added 203,000 new jobs. that's coming off revised figures for september and
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october that show that we've added 200,000 new jobs a month since the summer. so far the economy is up 2.1 million jobs this year. 2013 is likely to be the best year for job creation since 2005. we're going to get to the december numbers on january 10th. we also got a pleasant jolt this month when we unwrap the job openings report put out by the labor department, 3.9 job openings, openings. that's a jump compared to the same month last year. now this suggests that u.s. employers after years of caution are finally in a mood to expand. looking ahead manpower group recruiting firm that conducts a quarterly survey said employer optimism has pushed it's net employment outlook to the highest level in five years.
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17% of employers say they intend to hire more staff in the first three months of 2014. another 7% say they plan to reduce staff. others say they intend to keep their staff level flat but the biggest hiring gains will be seen at the lower end of the scale. and leisure and hospitality jobs, retail and whol wholesale trade. well, another job category. construction and manufacturing added 45,000 jobs in november. that's almost a quarter of all the new jobs that were created last month. those positions typically pay as much as $26 an hour. that's good. but before we get too excited realize this, one in five of the jobs created last month came from relatively low wage sectors, like retail and leisure. that speaks to a big problem of this recovery, the quality of the jobs being created is not as good as many of the middle class
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jobs that were destroyed during the recession. we have that story. >> reporter: it's been a job recovery built on part timessers, waiters and waitresses and other jobs that don't really pay much. during the recovery most of the growth has been focused on key occupations, retail sales, food preparation, laborers and freight, waitresses and waiters, personal home care aids, customer carry reps, laborers and ground workers. according to the economic policy institute more than a million of these jobs created since the recovery started. compared to the median hourly wage of $24 an hour. >> job creation has been unacceptbly low. let's hope that it is not the new normal. >> reporter: during the recession many of the jobs lost were middle class jobs that
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allowed families to live on $50,000 a year. but middle class jobs are not coming back as fast. according to the data, during the recovery the number of low wage jobs has grown the fastest followed by high wage positions but middle income jobs are still nowhere near pre-recession levels. that's not unusual. data from the federal reserve bank of atlanta suggests low wage sector's consistently produced 40% to 50% of the job growth. the jobs that come back are diverse and pay better but yet the jobs report does give some hope that the u.s. economy is getting stronger. >> well, more companies and businesses are turn to go consultants or contractors, fancy names for freelancers with technical skills and advance degrees to do work for them on short term assignments. for the companies it's a way to save on costs. for freelancers
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themselves it offers flexibility that they can't get in a staff job. it can come with pitfalls. the biggest being job security. >> you have to hustle. you can't be making a name for yourself and sit at home. >> lena is part of a growing workforce of skilled freelance labor. a trained lawyer she does part time consulting gigs for large financial services firms. >> i'm hired by different companies, financial companies, investment companies, mutual fund companies, and i represent them at large financial planning, broker dealer meetin meetings. >> in between they supplements her income doing contract work at new york city law firms. she has not always been a hired gun. she had a full time staff position before strike out on her own. >> if something happens to your business, you'll be fine. >> and it has not always been easy. >> when you get a paycheck at the end of the week that you
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worked your put off, you can question your valley, whereas at a job you can do nothing at day and still get a pay they can at the end of the week. >> companies are relying on freelancers to cut costs. something that the labor department does not relybly measure. when the comprised one-third of the workforce, but their ranks are growing fast. private forecasters say freelance workers could account for half the workforce within 15 years. >> one reason, firms are using information technology to do more short-term projects. fueling a rise in temporary hires. isn't benefits make up a third of staff compensation, going freelancers makes sense. >> the drive to go finding lower costs, finding cost savings. freelance work or part time work makes a great deal of sense.
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for freelance standpoint, you now have flexibility in your schedule. >> lena chose to go solo but she said many of her fellow contract lawyers would prefer the stability that comes with a full time position. >> since the down turn there has been a lot more lawyers that can't find jobs that do this kind of work. so the jobs between 2008 it's been like an accordion. sometimes there are a lot of gigs. sometimes there are very few, so it's been a little stressful for people who rely on this as their major source of income. >> she said skill freelancers need to cast a wide net to make it in today's labor market. >> when i work with people and they're frustrated about not being able to get a law job. i said don't work for a law firm. work for a financial company, sales, markets, there are opportunities out there who need a legal mind. they need someone who can write, express themselves, talk, and whatever it is, analyze like a lawyer can.
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>> al jazeera, new york. >> an economist at the center for american progress, a progressive think tank that researches public policy. while freelance job growth is good for business it is not necessarily a positive for the economy. sarah, good to see pup thank you for being with us. the thing that struck me in patricia's story is the cost of hiring employees. it seems to make sense to businesses if i don't have to pay this 30% more and i've got this flexibility, you can see why this trend is catching on. >> oh, yeah, it makes sense why employers want to have freelance workers. they don't have to offer them benefits. they don't have to offer them any kind of paid leave package, no vacation, no family or medical leave. no paid sick days. they don't have to pay unemployment insurance, no workers compensation and exempt from the fair labor standards act. it really means that employers get off very easy, but the
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unfortunate side-effect that have is that the people who are filling these freelance position have very few protections. >> i guess this is part of the whole issue of having high unemployment and taking a while to get jobs back. for now the market dictates that employers are able to do that. you see that changing in coming years? >> well, i think the one thing that we really need to be careful about making a distinction are people who are voluntarily freelance and workers who are misclassified as freelance because there are a significant number of workers who really should legally be considered a full time employee, but workers are finding these loopholes in the law and allowing themselves to classify them as freelance when they shouldn't be. i think that's a very different problem than saying i'm choosing to be a free land worker, i know the risk. >> when the market gets tight. when unemployment is low and when it's hard for people to find workers, those workers tend
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to develop more rights. >> you know, i've had several conversations today with freelance workers who have directly told me that they're afraid to say anything because they know they'll get fired, and they know they can be replaced. when unemployment is high and multiple applicants for job openings people are afraid to open their mouths but it means that workers where getting the short end of the stick here. >> under obamacare it outlines how you can't call people contractors if you do this much hours with them for this much money. do you think we'll find a move where you can hire freelancers and staff and you can't misclassify staff that you don't want to see benefits to. >> we're already seeing a crackdown on misclassification. the last time we had good data in $20,062.67 billion was lost because of misclassification,
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and that number has only grown as it has become a larger portion of the labor force. the government has a real interest in making sure that employers are not able to-- >> go forward with that. if you're misclarifying, and the government is earning less money on the taxes that both the employee and employer would pay. >> right, so things like unemployment insurance, for example, workers compensation, unemployment insurance is a social insurance program that works by pooling risk and resources. so when you have fewer workers who are paying into that system through payroll taxes when the employers are not paying into the system on their behalf, that has a negative impact on the overall system. and so those are things that as we've seen with this recession it's really a huge problem when there is not enough money in reserves. >> great conversation. thank you for joining us. sara is an economist at the center for american progress. bigger salaries in the boardroom. smaller salaries in the
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stockroom. the widening wage gap in america. plus the reason why a lot of people on main street are mad, we'll tell where you some of those--we'll tell you why those who cashed in last year did not this year. that and more when "real money" continues.
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>> bosses have been getting big pay raises over the years, but regular workers, not so much. president obama talked about the wage gap between the wealthy and the rest of america. part of the president's focus in the coming year will be raising the minimum wage now at $7.25 an hour. now the wage gap between your average american worker and the ceo is huge and now the gap is getting bigger. >> there is a saying that a rising tide lifts all boats. the u.s. economy has expanded. corporations have grown and everyone is reaping the benefits, right? not exactly. while the leaders of big companies, the ceos salaries have sigh rocketed, 725% from 2008 to 2011, the average american compensation has barely
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moved. just 5th 5% over the same perio. wide pay disparity hurts morale. >> they get angry when they see those at the top making a disproportionatality of the wealth, taking a disproportionate amount of the profitability of the company home in their own pockets. >> an example were last year. jc penny's former executive officer raked in $53 million his final year on the job. a stunning 1,795 times more than the 29,006 of hundred $88 average wage. mcdonald's ceo received a
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compensation package of $13.8 million. the average employee, 22,000 a year. a ratio of 621 to 1. some corporations justify the ratio by boosting the value of shareholder stock. >> they began the effort to tie their compensation through stock options and other means to the corporation's financial performance. unfortunately this has created a real short-term mindset where american managers have come to manage four of the short term as opposed for the long-term health of the enterprise. >> the gap between corporate executive pay and workers wages was not always so vast. for much of the last century the ratio was consistent. but in the early 80s workers
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fell farther and farther behind. in 1980 the ratio was 42 to 1. 20 years later corporate leaders were taking home and today they take home 204 times more than workers. there is no sign that the ratio will be improving, but it may become more transparent when the federal government orders corporations to report the difference between what bosses earn and what they pay their workers. >> last month the question of salary caps of ceos was put to vote in switzerland. the plan would keep managers making 12 times what their lowest employee earned. it was rejected. salary is one thing and bonuses another. bonuses are expected to rise jobs that involve taking big
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risk that used to pay the most are no longer reaping the biggest rewards. we have the story. >> it's the big payday that fattens wallets on wall street and fuels the ire of main street. rangranging from the thousand te millions, it comprises 80% of pay package. this season the spoils won't be shared equally. a tepid deal climate, it's expected to be 5% to 10% lower than last year. the biggest losers are bond traders. their bonuses are expected to fall 5% to 10% due to low interest rates and wrong bets. >> they guessed it wrong. with the tapering of the fed and so forth, so they were on the wrong side of those trades.
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>> reporter: alan johnson produce as closely watched survey of wall street compensation. according to him low risk steady income generators like mutual fund are the winners and should see a bump on the soaring stock prices. >> we've this had a change. mutual funds and other things that are paid at least as well if not more, and that trend will continue. >> regulators have tried to force change on wall street strong arming banks tied to compensation to future stock performance. by pressing wall street firms in preferred stock regulators hope to discourage the type of short term risk taking. ironically the policy could bring more on main street.
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it means that some bank heads will receive huge payout. >> the package of delivered stock in options was valued $14 million. now they're worth $18 million thanks to a 29% gain in the stock price this year. the same year that saw the bank get slapped by a record $13 billion fine. some believe the best way to drive more responsible behavior is to change how bonuses are calculated. >> right now most of your bonus when calculating your bonus or compensation over all you are looking at what profit you make for the firm. the idea here would be to say don't just look at how much profit you make for the firm but how much risk did you take. how much risk did you expose the firm to in your activities. >> al jazeera, new york. >> last year average salary for a financial security employee was $365,000.
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that's five times higher than other for-profit businesses. have you wondered how much your worth? investors give you money now based on what they think you'll earn later. it involves an algorithm. all the details when "real money" continues. >> primetime news. >> welcome to al jazeera america. >> stories that impact the world, affect the nation and touch your life. >> i'm back. i'm not going anywhere this time. >> primetime news: weeknights at 8 and 11 eastern. only on al jazeera america.
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the stream is uniquely interactive television. in fact, we depend on you, your ideas, your concerns. >> all these folks are making a whole lot of money. >> you are one of the voices of this show. >> i think you've offended everyone with that kathy. >> hold on, there's some room to offend people, i'm here. >> we have a right to know what's in our food and monsanto do not have the right to hide it from us. >> so join the conversation and make it your own. >> watch the stream. >> and join the conversation online @ajamstream. >> you probably heard of company
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starters. like kick starter. stacey tisdale explains. >> reporter: ask nathan sharp, the founder of price tacking nifty.com how he was able to start a business and many of his former classmates in an entrepreneurship program were not, and he'll tell you it was a question of economics. >> you got to have the ability to go for some time without income, to go some time putting your entire reputation on the line. >> reporter: sharp was able to do that thanks to a company called up start which gave him a new kind of loan. a loan for starting a business, paying down student loan debt. instead of paying the money with interest, borrowers pledge a percentage of the income. >> a total of $50,000 through up start and pledged 2.5% of my
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income. >> reporter: dave gerard, a former google executive said the majority of borrowers use the funds to reduce student loan burdens. the second largest group uses it for living expenses while starting a business, and a growing number are using it to enhance their work skills. >> people are increasing their salaries by 50% increase in how much they can earn by taking 12-week courses. >> this is how it works. you create a profile share area education, your work experience and your goals. up start uses an allegor an a am to determine how much you will earn. you will pay it back over a five or ten year period. the good news if your salary falls below $30,000 your repayment time is extended. the bad news, if you make it big and earn a lot of money you
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could end up paying five times the original loan amount. gerard said the model gives borrowers a financial freedom to pursue their goals without amazing large amounts of debt. >> you can learn how to write code if that's what you want to do, invest in yourself. that will pay off for the rest of your career. >> companies like up start and others in the space do not have a long track record. none of them have been operating in the united states for more than three years. they also say these companies currently best service a very elite demographic. >> these companies will be able to cherry pick from the best and brightest of students. that may be good for these companies. it may be good for the best and brightest of the students. it's not good for the vast majority of students. >> nathan said one of the most important aspects of the pay as you earn model is that it gives the entrepreneurs the freedom to
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take a risk at exactly the right time. >> there are all these people who have the real window in life when they didn't have a spouse orchids or a mortgage or anything else that prevents them from taking risks now. >> risks that people are bet willing pay a big reward down the line. stacey tisdale, al jazeera new york. >> that's our show for today. i'll ali velshi. thanks for joining us.
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i'm lisa fletcher, and you're in "the stream." what's the right equation to help students learn. here's the formula, and it has many rethinking the future of education. >> we bring in your voice and all of your live feedback throughout the show. in the 1920s everybody thought radio was the tool that was going to transform learning, and now people are looking to online education for this. >> we have this thing call

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