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Signs of Economic Recovery, But Where Are the Jobs? Examining the Housing Market
Aired September 5, 2010 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CNN HOST, YOUR MONEY: There are fresh signs of an economic recovery, but where are the jobs. Welcome to YORU MONEY, I'm Ali Velshi. Christine Romans is off this week.
This past week we got the job numbers for August. There is no green in August numbers. In fact the jobs are down; we lost 54,000 jobs in August. But the private sector, private businesses, companies actually added 67,000 jobs that is the Holy Grail. We want companies growing. We don't need government growing. Companies growing mean that the emphasis on economic growth has fallen where it is supposed to.
Stephen Moore is an editorial writer with the "Wall Street Journal, he is a respected sparring partner and a good friend of this show. Last time you and I talked about jobs Stephen, I described it as a glass one quarter full. I stick with that assessment given today's news. You?
STEPHEN MOORE, EDITORIAL WRITER, "WALL STREET JOURNAL:" Yes, Ali, I generally agree with what you just said. The really good news in this report s we got some private sector job growth which you are right that is the mother's milk of the economy. And so I was encouraged by that and by the way this report was a lot better than a lot of economists were forecasting. Most of the job losses as you said were the layoff of census workers. Those were part-time workers, but you know the thing we have to focus on Ali, we need to generate about 125,000 jobs a month just to keep the unemployment rate where it is because we have natural growth in the labor force. So we have got to do a lot better.
VELSHI: And Stephen that is just to keep the unemployment rate where it is. We don't want the unemployment rate where it is at 9.6 percent. It ticked up to 9.6 percent a less important number than the jobs gained or lost. But the fact is, if we want to bring that down to where we were before this recession under 5 percent, we have to add more than 125,000 jobs a month.
MOORE: No question about it, in fact I did some of the numbers Ali in preparation for this show. We have to create about 250,000 jobs a month for the next two years, just to get the unemployment rate down to 8 percent, which is still not great shakes.
VELSHI: Let me introduce Rutgers University Professor Bill Rodgers, he is a former chief economist with the U.S. Department of Labor. Bill, let me just break this down. Just so that we are not constantly talking about numbers, because in America jobs are much more than numbers, they are your livelihood. This is a demographic breakdown of the jobs situation in America.
So remember, we just said the unemployment rate in America is 9.6 percent. That is the general population. Adult men are actually suffering a greater unemployment rate than the general population, 9.8 percent just a little bit higher. Look at women 8 percent, substantially lower than the general population. Teen-agers this is not a fantastic time to be a teenager looking for a job, 26.3 percent unemployment. White people in general 8.7 percent lower than the national average. African-Americans almost double the national average 16.3 percent. Hispanics 12 percent and Asians 7.2 percent lower than the national average.
Bill, we have talked about it before, but many of our viewers may not understand the nuances of that. What does that demographic break down tell you about the economy that we are in?
WILLIAM RODGERS, FORMER CHIEF ECONOMIST, U.S. DEPT. OF LABOR: Well, the economy doesn't treat everybody the same. Unemployment rates vary by race and gender. They vary by your educational attainment, they vary by your age and this recession has been very, very -- similar to past recessions that those who are at the lower part of the income scale or that job ladder, because of lower levels of education, less skill, age, they have born the brunt of this recession but one thing that has also been brought out in the data, even when there weren't major changes in these unemployment rates, it is similar, but during this recession but before this recession started, men and women have similar unemployment rates and men because their exposure in construction and manufacturing took a greater hit.
VELSHI: And women's exposure to education and health care in those areas that have been showing growth in our economy.
RODGERS: One area that is really important about this recovery is that what Stephen said I agree with him, you have to 125,000 new jobs per month. Because if we are still in this average of 90,000 per month that we have been since January these are the various groups we just highlighted, they are going to be the slowest ones to sort of get back into moving from those side streets of America to the Main Streets of America.
VELSHI: OK, very good point. Tig Gilliam I want to ask you a question, Tig is the CEO of Adecco another great friend of our show. You have your finger on the pulse of employment and in particular of temporary employment. There has been a remarkable growth in temporary employment, freelance employment, contract employment, even part time employment. You have said to us before that is a natural part of the process, of -- coming out of a recession. Is it still natural or are we spending too long in this world of more temporary and permanent and no benefits jobs being added as opposed to permanent benefits added jobs.
TIG GILLIAM, CEO, ADECCO: This is part of the recovery process. So as the recession ends and we see economic growth again, it begins from an employment perspective with temporary employees and that began last summer and we have now added 390,000 temporary jobs in the market. Those began in the industrial skills, in fact in some of those lower wage skills you were talking about and then it moves into the professional skills and that is exactly what we are seeing in the recovery so far. Temporary employment is up some 20 percent year on year and that is moving into IT skills and finance and accounting skills. Legal skills we saw about 4,000 job growths in many of those categories in this report, in IT and management services, in finance and accounting.
VELSHI: And you are saying in the report is that reflected in your business you are seeing the same things.
GILLIAM: Absolutely. We see the same thing in our business and in fact we're talking about last month's report where we saw this decline in temporary employment, didn't make any sense. So I think now we have confirmed with the August data that that was just a blip in the data, that the temporary employment is still leading the jobs recovery. Now I agree with you 67,000 private sector jobs is not enough to get us out of this quickly, but if I look at the temporary side and the average workweek we are still moving in the right direction.
VELSHI: Hey Stephen let me ask you this again, you know sometimes on this show we have some great opportunities for discussions, ideological discussions, even heated discussions but in a great way. Today isn't the time for that, because today is the time to help our viewers understand all the nuances of the single most important economic report of any given month at a time that could be a turning point. So I want to break down the last few months' job losses and job creation between government and the private sector.
Let's go over to the wall and I can show you what this looks like, because I want you to explain to our viewers what the distinction is. If you go back to January there were very few jobs created in the first place so the distinction didn't matter all that much. In February, we saw government jobs being lost, private sector jobs being gained. March, you always want that proportion; you want more private sector jobs and fewer government jobs. You see the same thing, March, February, and April and then May, you see this massive jump in government jobs and a drop in private sector jobs. June, loss in the public sector, gain in the private sector, same pattern here. Give our viewers a sense of why this is important.
MOORE: First of all, it is not a complicated equation here Ali, as you know the big bump up in the numbers I think in June for the government employment that was those census workers, the people knocking on doors and asking people to fill out their census forms. We all knew and in fact we said this back in June when I was on this show that those jobs would disappear later in the summer and that is why you see the big decline in the government jobs that will probably last another month or two. The other thing that is going on with government employment is the federal government is still hiring a lot of people because of the stimulus, but at the state and local level where they have balanced budget requirements and they to pay their bills they have had to layoff workers.
VELSHI: That is exactly right. OK, Stephen stay right there. Thanks to the two of you, Bill Rodgers always a pleasure to see you Tig Gilliam thanks very much. Stephen I want you to stick around for a minute.
Millions of Americas remain out of work. And I want to have ivory tower discussion about jobs. This is about real stuff that matters. You want to know what Washington plans to do about it; we are going to do that for you. President Obama's labor secretary is with us coming up next.
VELSHI: All right we want to talk to you not only about what is happening out there in the workforce but what Washington has planned for it. Hilda Solis is the United States Secretary of Labor, Secretary Solis thank you for being with us.
HILDA SOLIS, SECRETARY OF LABOR: How are you?
VELSHI: Very good, good to see you again. Listen, you got a job, you have a great job, I have abused though lately that if there were a reality show called the "Worst job in America" you might want to be a contestant on it, to be the labor secretary with such persistently high unemployment and jobs being lost. Tell me what troubles you about these jobs pictures that we keep on seeing?
SOLIS: Well what we are seeing is actually we have been able to add private sector jobs. If you remember when the president took over the administration we were losing well over 740,000 jobs. In the last eight months we've seen on an average about 90,000 private sector jobs added. This report that just came out changes a bit, we go up a bit. But I would say that it is steady, I think the path that we are on is very good. You see increases in manufacturing and in construction for the first time in a while, about 19,000 more jobs added this time but also in health care that continues to grow.
So I see in different parts of the private sector economy that there is some increase occurring but certainly not as fast and as strong as we would like to see it. That is why we need to have tax reform so we can help small businesses, so more lending can be made available through community banks to small business owners.
VELSHI: Let me ask you this, I want to go back in time. Now a lot of people go back in time to determine who is to blame for this economy and this mess, I want to take a different route I want to take you back in time to when you were a member of Congress and one who is particularly close to labor and to working people. How what do you say to them because 40 percent of the labor force has been out of work for six months or longer. What you are saying about tax cuts and about goosing small business and allowing them to get the loans that they need to get is important.
There is sort of an urgency growing out there that is leading to a dissatisfaction about the end of this economy. So I'm almost looking to speak to Congresswoman Solis for a moment and say what do you tell working people out there who say through no fault of their own they continue to be out of work?
SOLIS: Well you know I recall when I was a House member long before the recession was really tagged as a recession in the area that I represented in East Los Angeles, Southern California, we had unemployment rates as high as 9 percent. So for people in those communities they have been suffering long before the recession was actually called.
I would hope that previous administration would have moved quicker so we wouldn't have had to come out of that ditch and we are finally coming out of that ditch. It is slower because this is a very hard recession. But I think that the tools that we have been able to implement and the fact that we were able to get recovery dollars to provide a safety net for unemployed people, especially dislocated workers, that is what I'm in charge of unemployment insurance, but also equally looking at investments in green technology and training programs. We have given well over $750 million in green renewable energy training and also health care and IT and broadband.
VELSHI: I want to ask you this. Unemployment insurance which you are responsible for and it is many people's life line is under constant attack in this country. There is a growing group of people who say extension of the unemployment benefits to the long term unemployed actually keep them at home and not getting a job. I happen to not believe that, I don't think the data proves that. Bu the fact is you are overseeing a program that is under attack in Congress.
SOLIS: Well, let me tell you, for everyone dollar that the federal government gives through the UI program 1.60 is generated out in the community. And I can tell you that businesses are getting some benefit because people are purchasing goods and services, it keeps the electricity on, keeps power on and gas in the tank so someone can continue to keep looking for that job. What I hear is that people need that as a lifeline and they have earned it and we should be able to stand up tall and provide that support until we get out of the woods. We are not out of the woods yet.
VELSHI: Secretary, one very last quick question for you. You talk about people retraining for jobs. The government doesn't do much of that and a lot of people think the government shouldn't do much of that. How do we deal with people retraining? Do they have to watch shows, like ours and find out what industries are hot and retrain in them themselves?
SOLIS: Well you know what, they can go online to dol.gov and look up information right away as to where the job growth is occurring. Find out if they need to try to get new training to get into these jobs and where they are located. So I would direct people to dol.gov, call this and this and I want to wish everyone a Happy Labor Day.
VELSHI: All right. Secretary Solis what a pleasure to talk to you thanks very much for joining us. Stephen Moore is an editorial writer with the "Wall Street Journal." He is with us and Karen Tumulty is a national political reporter with the "Washington Post" and Lex Harris is the managing editor of CNNMONEY.com.
Steven, I meant it when I said it. I do not envy Hilda Solis her position because how much can the government actually do to fix this problem that we are in right now? You yourself said that the private sector needs to be creating jobs, what role does the government have in helping the private sector create jobs?
MOORE: Well look I worked for the Reagan administration and we had a pretty terrible recession back in 1980, 1981 and 1982. Actually we took a different approach; we cut tax rates for businesses.
VELSHI: Your tax rates were much higher back then.
MOORE: They were. But the point is the only point I'm making is that we had a really strong recovery. In fact at this stage of the business cycle we had 8 percent growth which is five times higher than what we have now. So all I'm saying is maybe we ought to try that approach since the stimulus approach of spending hasn't worked very well.
VELSHI: Well any approaches welcome to be talked about on this show. Karen Tumulty, your view of this that is going on right now, we have had mixed messages in this economy for the last several weeks, a growing chorus of people talking about a double dip recession, we actually have evidence in the last week that it is not that clear that is a double dip, it is certainly not a strong and robust recovery.
KAREN TUMULTY, NATL. POLITICAL REPORTER, "WASHINGTON HOUSE:" Well as a political reporter, I'm putting this against my frame of reference which is Labor Day begins the final stretch to the midterm elections. Where the Democrats had hoped this would in fact turn out to be a recovery summer people aren't feeling it. So the narrative of this election appears to be set. At this point it is looking like it is going to be a very bad environment for
Democrats and their argument going forward is going to be OK, you know you didn't think this has worked all that well, well to elect the Republicans would be a turn back words of the kind of policies that got us into . So this is the battleground, this is the frame of reference we will be seeing over the next couple of months. The president is going to kick this off on Monday at a Labor Day rally in Milwaukee.
VELSHI: Lex, what is your view? You have been looking at this very carefully, what do you think? What do you think?
LEX HARIS, MANAGING EDITOR, CNNMONEY.COM: I'm just so struck by how uncertain everybody is. When you seek to economists, no one really knows what they should be doing. When you talk to Stephen, he has a really clear sense of what has to happen here.
VELSHI: That is why we love having him on.
HARIS: Absolutely. But there are a lot of surveys last week. You hear economists cut taxes and keep them for the rich and don't keep them for the rich. No one is really sure behind it all is the concept of long-term debts and when do we tackle that problem?
VELSHI: The question I get from a lot of people is who is right? I wish I knew. Stay with us all of you, next a few positive signs for the economy, but is that going to help? What Karen Tumulty says, is that going to help Democrats get elected November or does the house go to the republicans. Stay with us. (COMMERCIAL BREAK)
VELSHI: All right. There are a few indicators out this week that are actually showing some positive signs for the economy. The absolute biggest one is that jobs number, now you are going to find this confusing, because we lost 54,000 jobs in August. How is that a positive sign? Well it is a positive sign for two reasons, that $54,000 -- 54,000 jobs is arrived at by a loss of 121,000 government jobs and a gain of 67,000 jobs in the private sector and that is where we want it to be.
Also personal spending and personal income, they edged up in July. That is the most recent month that we have those numbers for and consumer confidence is up as well. Let's talk about this for a second, Karen Tumulty, you know the White House isn't doing this particular job; they are not selling this as well as they could. Partially because I think in some cases they would rather not be talking about the economy. What they are being held responsible for at the end of this summer is having called it the summer of recovery and that didn't happen, having talked last year about how the unemployment rate would be lower than it is today and that not happening.
I think they would just have rather the economy just recovered and they don't have to talk about it before this midterm that is not the reality.
TUMULTY: Yes, well they are not on the ballot in these mid terms. And certainly there are a lot of disappointed Democrats on Capital Hill. Because they had really hoped that this would be an August where they were talking about the economy. But instead, in part the White House's fault for some unforced errors and part our fault in the media. But we were talking about things like a mosque controversy in New York and a lot of things that again, did not I think get to the basic gut concerns at this moment of most American voters.
VELSHI: Stephen, I want to just reflect on something for a second. You and I have worked together for a long time, back in the end of 2007 the beginning of 2008, President Bush and Henry Paulson and Ben Bernanke every few days would come out in the morning and make some sort of a pronouncement about the economy. It didn't make much sense markets didn't like it and it sort of just muddled the message. They kept on talking about how everything is OK. We saw President Obama come out on Monday, last Monday, and talk about the economy a little bit. I couldn't quite establish what point he was trying to make and then in the address to the nation about the end of combat in Iraq. He talked about the economy again it did not seem like a crystal clear message. Either they have got to have a message or they don't, what do they have to do as we head into the midterms and what are the Republicans doing in the absence of that message?
MOORE: Well it is difficult for the president because as Karen will attest to, the two big issues with the American voters right now are number one, what we have been talking about jobs, and number two, the enormous dat and these big deficits and those two things are big problems for the president. But I'll say this on a positive note, Ali and this may surprise you, I actually think you are right that there are some positive signs in the economy this week and those concerns if you had asked me three weeks ago, are we going to have a double dip recession, I would have been very nervous about it. But now I think we are going to skate through this without another dip. So that is the positive news. I think we may slowly be climbing out of this.
VELSHI: Mostly what has got you to shift your view on that? Is the consumer confidence or is it job numbers, what has made you think that it may not be as bad as it felt two or three weeks ago?
MOORE: A couple of things have happened; the stock market has made a kind of nice recovery from the big lows. Number two we are seeing business spending again. I think that is a big deal. You can't have the jobs until they are purchasing new capitol equipment and technology that is happening. And of course the consumers finally starting to feel they can dip their toe in the water and go into the stores again.
VELSHI: But Lex, businesses have some money piled up. We have seen some mergers and acquisitions which is a really interesting sign and consumers have got some money, we have a savings rate closing in on 6 percent from near zero before the recession.
HARIS: That is a good thing.
VELSHI: These are two good things, Lex, what is happening? Who is going to pull the trigger?
HARIS: Well, it is not just some money it is a lot of money. We are talking about $2 trillion on the business side. Consumer balance sheets are back on track but they are scared and it is the thing we were talking about before which is if you know there is a lot of uncertainty about what is to come and what the government is going to do, what is the Fed going to do?
VELSHI: And it is mostly what is my job going to be there in a year?
HARIS: Absolutely. And home prices as well. So it doesn't put people in a good situation to spend money right now.
VELSHI: Let me show you a poll that CNN Opinion Research Corp. has just conducted, back in July the approval rating for President Obama on the economy was 42 percent, it is now 40 percent, he has taken a bit of a dip in that poll. The disapproval was 57 percent in July, it is now 59 percent, Karen has this to do with the administration and the Obama administration and how they are dealing with the economy or has this got to do with how the economy feels?
TUMULTY: I think it is more with how the economy feels. Because the administration every day will trot out some expert that will explain to you how their policies have helped keep the recession from being as deep as it might have otherwise been.
VELSHI: Which is a hard thing to measure? TUMULTY: It is. It is pushing strength. The number I have been watching most closely that I think is really telling, is that in a number of polls if you ask people whether they or someone in their family has lost a job within the last year, the number is getting pretty close to 4 in 10 Americans saying yes and that is such a traumatic thing for a family to go through. It just colors all of your perceptions of everything else.
VELSHI: High interest rates didn't stop people from spending but loosing a job or seeing someone lose a job has done it. Thank you to all of you, what a great discussion and adding some clarity to something that has once again become a very confusing issue.
Karen Tumulty from, "The Washington Post," Lex Haris and Stephen Moore from the "Wall Street Journal." Always a pleasure to talk to all of you.
The financial collapse began with the housing prices. Are home prices starting to stabilize? What does it mean to the value of your house or the one you want to buy coming up next.
VELSHI: A punch square in the nose to all you negative Nellie's. National home prices actually rose 3.6 percent over the past year that is according to the F & P Case Shiller Price Index. But, let me put that gain into context for you. It is not across the board. There are other factors at play. Susan Wachter is a professor of Real Estate and Finance at the Wharton School of the University of Pennsylvania. Susan whether you look at case Shiller or you look at something else, other measures, the fact is that the price of an existing single family home on a nationwide basis is up year over year but we have seen some signs that there is trouble in the housing market. What is it from your prospective?
SUSAN WACHTER, PROF. OF REAL ESTATE & FINANCES, THE WHARTON SCHOOL: The most recent data does show that prices are some what up. But the increase is decelerating and I think it is fair to say we are in a band of uncertainty. Prices may have risen but not a lot and prices are in a lull at this point. They may not actually fall, but we see signs of slowing of the price rice. We are not likely to see a price rise in the next few months.
VELSHI: All right. So some people need to look at it on a national level for investments and how you look at the market. But many people, most of our viewers I think when you are thinking about housing you are thinking about the house you live in, that you might be trying to sell or the one you might be trying to buy. So lets take a look across the country, according to the study that I just cited, there are some hot housing markets out there, San Francisco continues to be hot, Sand Diego, Minneapolis, these are three cities with double digit gains in home prices.
And then you look at the cold housing markets, and no big surprises there, Las Vegas continues to be down, that is an area that was over built, Charlotte a major banking center continues to get hit, Seattle is down 1.8 percent. What stands out to you Susan when you look at the housing market across the country and then you look at the differences in specific markets? Why are there such disparities?
WACHTER: The two key factors are jobs, job growth and you hit upon that for example in Charlotte. Also the key factor is inventory. What is the over hang of houses in the market? For example, Florida is suffering from that. California actually doesn't have much of an over hang that is why it is recovering faster.
VELSHI: How big a deal, I've got foreclosures on one side that are keeping the price of homes down because of that over hang and I have got fantastically low interest rates, which one is going to win out?
WACHTER: On the long run the interest rates will win out. But in the short run it very well may be that over hang in the foreclosures that is the major concern.
VELSHI: Does this look like a time to buy a house to you all things being equal?
WACHTER: If you are in the market for the long run you are not timing the month to month. And housing prices are down and interest rates are at all time lows. But if you are looking to invest in and get a quick return unless you know your market and you are an investor this is a time where many people are on the side lines and that makes sense.
VELSHI: I know your specialty is real estate and finance which means those interest rates, these 4.25 percent interest rates for a 30 year loan, on a conforming loan that isn't -- it is below $417,000 that is kind of amazing. I mean is this something we're going to see for a long time?
WACHTER: A long time, absolutely not. But we are going to see it, I believe -- no one can forecast interest rates let's put that aside. But as long as the economy is in a lull then interest rates will be low. We don't see that job growth coming to take us out of this lull so fast maybe a year from now. So there is some time to take advantage of these all time historic low mortgage rates.
VELSHI: All right. And then you pointed out something that I was going to say on a show that we are focused on this August jobs report, the reality is these two things cannot be looked at independently if jobs continue to be lost it is going to affect the housing market.
Professor Susan Wachter what a pleasure to see you again. Come visit us often. Susan Wachter is a professor of real estate and finance at the Wharton School at the University of Pennsylvania.
Listen the safety net for teaching jobs is under attack. The fight over eliminating tenure in public schools and why some people say it is going to lead to better teachers.
VELSHI: The question is how does an economy prosper, the answer is through strong public education. The economic down turn in education reform efforts like race to the top are testing some perks of the teaching profession particularly the jobs safety net called tenure. It is usually earned after three or four years of service in a public school district, but in one of the most competitive job markets in decade's tenure could get swept up in a wave of reform.
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I'm surprised that I got the job.
VELSHI (voice over): It is smiles at new teacher orientation in Valley Stream, New York. For these new teachers school starts on Tuesday so does the clock on a three year probationary period they hope ends in tenure the union backed safety net that protects teachers from unfair dismissal.
LUISA BATISTA-ESCANDON, TEACHER, VALLEY STREAM CENTRAL: It is kind of overwhelming, think about it, managing a classroom, making lesson plans every week, meeting deadlines, all of this is brand new to a first-year teacher and then on top of it trying to pass each year to get to tenure it is a lot.
VELSHI: Just about every state has a tenure law on the books for public school teachers. In states that don't it is typically granted through local union contracts, its job security in a tight labor market, but critics say it prevents districts from removing bad teachers from the classroom.
PATRICK MCGUININ, ASSOC. PROFESSOR, DREW UNIVERSITY: These due process protections were not intended to guarantee life time employment for teachers. But over time it became prohibitly expensive and time consuming for districts to fire a teacher and today really most districts don't even attempt to do so on grounds of performance even if it is quite clear that a teacher is ineffective.
VELSHI: Teachers can be dismissed after receiving multiple poor evaluations in just 11 states. In other states like New York, those teachers can be fired but usually they are put on an improvement plan.
The Obama administration race to the top is pressing states to rethink the evaluation process. Unions say they are on board.
RANDI WEINGARTEN, PRES. AMERICAN FED. OF TEACHERS: At the end of the day, what teachers want more than anything else is to make a difference in the lives of kids and we need the tools and conditions to do so. Part of that is a teacher development and evaluation system that will help us improve teaching.
VELSHI: For right now, these new teachers are more nervous about meeting their students then meeting administrator's expectations at the end of the year. Superintendent Marc Berrnstein isn't concerned, he said that a tight job market he hired top notch candidates.
MARC BERNSTEIN, SUPERINTENDENT, VALLEY STREAM CENTRAL: It is definitely buyer's market. I'm really proud of what I see; I'm excited about what they are going to bring to the classroom.
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VELSHI: Just about every state has some form of tenure protection. Some states refer to it as a continuing contract or a term contract. Now for the 2009-2010 school year that is the one that has passed us, teachers in thirty two states the ones in yellow here were eligible for tenure after three years. Eight states they are in green, wait a full four years or longer, but ten states you will see them in red dolled out the job protection after just two years or less in the classroom. Critics think that is not enough time to make wise tenure decisions.
The federal government's "Race to the Top" program has sparked reform in the past six months. In Florida, a measure to do away with tenure all together passed the state legislature, it was vetoed by the Governor Charlie Crisp. In Colorado student performance will now determine who is tenured in this tight labor market and in Washington, D.C. public schools Chancellor Michelle Reid has adopted an evaluation system in which a tenure or not a teacher can be fired after a single poor rating.
All right. Coming up next, one of the most common interview mistakes could cost you the job, I'm going to tell you how you avoid making it.
VELSHI: OK an important message for job hunters, do not use a real job interview to explore possible careers that sounds August. Our next guest says it happens all the time and it can cost you the job you so desperately need. Ellen Gordon Reeves is the author of the book with the best title in the world it is called "Can I wear my Nose Ring to the Interview" it is obvious by the way, the answer to that is no unless you are interviewing with a nose ring installer.
Ellen, let's talk again, good to see you. Thank you for being with us.
ELLEN GORDON REEVES, AUTHOR, "CAN I WEAR MY NOSE RING TO THE INTERVIEW:" Good to see you.
VELSHI: This is a remarkable detailed and specific conversation we are going to have. You say there are three kinds of interviews.
REEVES: Right there are, exploratory interviews that are people ignoring, there are informational interviews and concrete job interviews.
VELSHI: OK, so that we think of that last one as the interview, but the fact is, you really have to think about these in three different baskets. Let's talk about the exploratory interview, this is the one we are cautioning people about, treat this separately.
REEVES: Right because what is happening is people are going into interviews and they are being asked why do you want to be in sales. And they are saying, "I can do sales, I've done that for years but I could also do marketing." Well you think you are being flexible but you are really digging your own grave, you can't do you're soul searching in expiration in front of a potential employer.
VELSHI: Somebody comes in and says this is the job for me and I've trained for it and I know. What is an exploratory interview? Who do you have that with?
REEVES: So while you are in that phase, if you are not sure what direction you should go in, which is normal with transition from your layoff, you should be talking to people, friends, colleagues, out placement people, career centers, anyone but make it --
VELSHI: People who are not hiring you.
REEVES: People who are not going to hire you. Sometimes you only get one shot at a person with a lead. So you have to make the distinction and understand what are you saving this person for? Can he or she hire you or should you be figuring out what you want to do with this person.
VELSHI: Exploratory is the first step that is not enough to get you to the job interview. You are suggesting there is a second process, an informational interview.
REEVES: That is right. And people confuse the two and sometimes the three. So in the second, informational interview once you have done the exploration and you understand what you might want you want to do and what you can do, then you figure out which industry and what company and you talk to people in that industry to find out as much as you can about those specific options.
VELSHI: OK, for instance who? So the first one I get, friends, career advisers, places like that. Who is the informational interview, am I going to trade shows, how am I finding these people?
REEVES: Exactly, so career fairs, trade shows, industry events, still use your friends and family but now you are saying I've identified an industry a company or even a specific opening and I want talk to someone who can help me get that position.
VELSHI: Facebook, or linked in.
REEVES: Linked in, social media, now I've identified, I want to work for CNN, and do you work there?
VELSHI: This is it. So we have the exploratory interview and the informational interview, if you are thinking of changing careers until you hit those two you are saying don't go for a job interview.
REEVES: Don't get your soul searching on me, OK, perception is reality. Who am I going to hire? The person who comes in and says oh I'm thinking about this, I don't know I could do this, I could do that or someone who convinces me that I want to work only for you, I want to work for this company, I figured it out, my cover letter, my resume, my interview feel exactly to that position.
VELSHI: So you make it to that point and then have you the job interview. And there are some of our viewers who are in that position. They know what they want to do, maybe they are not switching careers, now give me some advice for the job interview.
REEVES: Now here's the thing. Right. You cast doubt, you are out. In this economy there is no room for this. So now you'll have done all your homework, have the informational interview and you're going to convince me through your knowledge that I can do the job, I want the job, and I know what it takes to get it done and I can do this for you.
VELSHI: This is straightforward, this is one of these conversations that seemed obvious at the beginning but I think there are lots of people who are casting about, it's good to cast about --
REEVES: Do the exploration, do it at the right time, the right place with the right people. Don't do it in a real job interview.
VELSHI: Such excellent advice, such an excellent book, with such an excellent title, Ellen Gordon Reeves, is the author of "Can I Wear my Nose Ring to the Interview."
Coming up next, why you may make some of the same mistakes as your favorite football or baseball star when it comes to money.
But first in this weeks "Turn Around," Poppy Harlow takes a look inside a mobile cupcake business fueled by social media.
(BEGIN VIDEO CLIP)
(UNIDENTIFED FEMALE): All right, who's next? Who's next? Hey there.
POPPY HARLOW, CNN CORRESPONDENT (voice over): Curbside cupcakes hasn't been around long, but Washington, D.C.'s, pink cupcake truck has developed quite a following, and social media savvy is driving the success of this small business.
SAMUEL WHITFIELD, OWNER, COURTSIDE CUPCAKES: So now I'm tweeting and facebooking where my next stop is going to be and I'm telling them how long it's going to take me to get there. They should be ready for us when we get there.
HARLOW: Fingers crossed.
WHITFIELD: Fingers always crossed. I still get nervous every time I go to a new stop.
KIM LUDWIG, CUSTOMER: We were passing by and we saw these guys, but we've been tracking them on facebook.
NIKKI DOWLING, CUSTOMER: This is actually the third time I think it is that I've been out here and now I'm just addicted. Now I'm like wanting them every day.
LUDWIG: Standing in line to get another one for somebody else.
HARLOW: An online cupcake calendar along with constant tweets and facebook updates keeps the cupcake mobile in touch with customers. KRISTI CUNNINGHAM, OWNER, CURBSIDE CUPCAKES: We are about 15 minutes away we give the first stop notice saying, hey, we're almost there, we'll be there in about 15 minutes and we just say the general area. And then when we land, we tweet out again.
HARLOW: And customer feedback is a must.
CUNNINGHAM: For example, today we have a flavor on the menu that was the idea of a customer. Someone said why don't you make raspberry with lemon. We said, why not? Thanks for the idea. So today we have raspberry lemonade on the menu.
HARLOW: And with 13,000 facebook fans and nearly 6,000 twitter followers, fans are usually just around the corner.
CUNNINGHAM: The nature of the way we move makes the information immediate and relevant to people. So it's one thing to say, there's a cupcake truck around somewhere and it's another thing to say there's a cupcake truck outside my building exactly right now. So we're heading of to the square which is -- oh, hello!
(UNIDENTIFIED MALE): Hi.
CUNNINGHAM: You guys almost --
(UNIDENTIFED FEMALE): Oh, wow.
CUNNINGHAM: You just caught us.
HARLOW: Poppy Harlow, CNN, New York.
(END VIDEO CLIP)
VELSHI: Football season starts next weekend, but for all professional athletes it's not just about learning the playbook, it's about learning how to invest your money. The money they will make over their usually fairly short careers. For many of them it starts with the basics.
(BEGIN VIDEO CLIP)
ED BUTOWSKY, FINANCIAL ADVISER: Keep your spending under control, you won't go broke.
VELSHI (voice over): What if your entire professional career was five years or less? Over by age 30, and every dollar you earned had to last you for the rest of your life?
WINFRED TUBBS, FORMER NFL PLAYER: Don't live like you're making $3 million, $4 million a year, live like you're making $150,000 a year.
VELSHI: Million dollar salaries are a reality for today's professional athletes. But that doesn't guarantee a secure financial future, as financial adviser Ed Butowsky knows to well. BUTOWSKY: So what I did is I put together here just kind of a little summary of how and why athletes basically find themselves in financial distress.
VELSHI: Butowsky runs financial boot camps teaching the basics of money management to current and former athletes who may be good at xs and os but not so good at dollar signs.
TONY BRACKENS, FORMER NFL PLAYER: Most the athletes are visual learners. You show it to me, Ok, coach, I can do that. So if you break it down into layman's terms where we could really understand it, hey, this is this, this is this, if you do it like this, then you'll have this at the end, OK.
VELSHI: Ed compares a well-balanced portfolio to a well balanced meal.
BUTOWSKY: We all have an entree with our meal. You should have 50 to 65 percent of your money in public securities.
VELSHI: Ed's ideal meal, 10 to 20 percent of what he calls veggie investments like hedge funds, precious metals and collectibles. Fruit, which equals real estate, 7 to 12 percent, and who doesn't like dessert?
BUTOWSKY: It's OK to have some of the dessert. It's OK to have private equity.
VELSHI: Former baseball all stars Cliff Floyd and Rondell White played a combined 32 years in the majors. They got paid to keep their eyes on the ball. They left keeping an eye on their money to the professionals.
CLIFF FLOYD, FORMER MLB ALL STAR: You're getting ready for the season, you have kids, and you have so many distractions away from your finances.
RONDELL WHITE, FORMER MLB ALL STAR: You're thinking about I need to get two hits tomorrow, or I struck out three times yesterday, so you're really concentrating on the game.
VELSHI: Sound fundamentals are important in sports and investing what ever the size of your paycheck.
BUTOWSKY: Regardless if you are a professional athlete, or if you are a homemaker, if you are a factory worker, if you are a CEO of a company, everyone makes basically the same mistakes with their money.
(END VIDEO CLIP)
VELSHI: All right. We've talked a lot on this show, we've talked about investment mistakes, we've talked about buying a house, we've talked about the unemployment situation, even what you do to get a job, how you interview for a job, how you research it, all of this is available on CNNMONEY.com and to great detail. There are calculators to help you understand whether now is the time to buy a house for you. Go to CNNMONEY.com. Do some noodling around there. There's an investor 101 on there, it is going to be very, very helpful to help you navigate through this very tricky economy that we are going through.
That wraps up it for this show, but please do connect with us on twitter, I'm @Ali Velshi, Christine is @Christine Romans. Go to my facebook page as well, facebook.com/alivelshicnn leave your comments there. I read every last one of them. And make sure you join us every week for YOUR MONEY, Saturdays at 1:00 p.m. Eastern, Sunday's at 3:00 and I said log on 24/7 to CNNMONEY.com. Have a great weekend.