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U.S. Economy Added Less Jobs in August than Previous Months; Dark Web Explored; New Lamborghini Cheaper than Previous Models
Aired September 6, 2014 - 14:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN HOST: Hiring slowed in August, the smallest jobs gains of the year. Is this economy cooling down, or is this part of our low and slow recovery? I'm Christine Romans. This is CNN MONEY.
Your personal information under attack, a possible security breach at Home Depot, and celebrities' private moments exposed. We're going to take you to the dark corners of the Internet where all this is happening.
Fast food workers walk off the job again, protests in 150 cities. Are they winning the minimum wage fight?
And later, come for a ride in the most affordable Lamborghini on the market. It's still going to cost you six figures, but you'll look really good driving it.
But we start with the labor market -- 142,000 jobs added in August. That number was below expectations which were above 200,000. The unemployment rate now 6.1 percent. That's down slightly, but this report broke that streak of big job gains. You can see the big hiring numbers earlier this year slowing in August. Our CNN MONEY panel is here, Jose Pagliery, Cristina Alesci, and Paul La Monica join me today. Paul, you call it the barbecue economy, low and slow. Is the jobs report just more evidence of that?
PAUL R. LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Sadly I think that's the case, and I've been saying it since 2010 for crying out loud. We've had this subpar growth. Even above 200,000 isn't fantastic. The one thing I wouldn't be that worried about, though, is that August is historically this strange month for the jobs market. Three years ago the first report about the August 2011 number showed no, zero, no new jobs added and it eventually got revised higher. So people I spoke to said this number will be revised higher, the economy isn't that bad. So that's one thing to be a little bit --
ROMANS: One month does not make a trend, but it is a pause in another trend that had been very, very good, six months in a row of 200,000 plus. You wanted to see that continue into the fall.
CRISTINA ALESCI, CNN MONEY BUSINESS CORRESPONDENT: Yes. And one thing that investors will potentially be paying attention to is the Fed and what it's going to, right. Kind of boring here in the U.S., but as far as the European Central Bank goes, investors are looking to see what it is going to do to help that region's struggle and economy get back. And just this week the ECB announced $1 trillion package which is being described as an aid package. But investors are still trying to figure out whether it's going to work or whether the European economy is going to need more at this point.
ROMANS: When you look at the dashboard of instruments that Janet Yellen is looking at, right, the jobs number, the 6.1 percent unemployment rate and the 142,000 net new jobs created, those are the two numbers she's really looking at. She's looking deep inside these numbers. A labor force participation rate that is way too low, back to the 1970s, an underemployment rate still in double digits, a third of the American workforce is working in freelance jobs. We still have some structural weakness here.
JOSE PAGLIERY, CNN MONEY STAFF WRITER: Let's talk about the quality of these jobs. This recovery has been a lot about the quantity and not the quality of the jobs. The jobs that we're creating are not in STEM, which is science, technology, engineering, math. These are the jobs we want. They're high-tech jobs, they pay well. Instead a lot of these jobs are being created in fast food, restaurants, bars, as well as the health care sector. It's not doctors and nurses. We're talking about home health aides.
ROMANS: But I think we're seeing that change. We're seeing it broaden out the next few months. The professional services, I loved the number.
LA MONICA: The wage growth, again, it's not gangbusters, but 2.1 percent year over year is an improvement. And it's now a slightly higher than the inflation rate. So, again, nothing to get that excited about, but nothing to be depressed about.
ROMANS: Until now a low wage recovery. We want to see it broaden out in terms of different kinds of jobs. Thanks, guys.
You know, the solid middle-class jobs are coming back, but more than 40 percent of the jobs created during the recovery have been low wage. This week fast food workers walked off the job in 150 cities across the country. They want $15 an hour and they want the right to unionize. Cristina, the protests have been going on for two years. Is it making a difference?
ALESCI: Well, that's a really difficult question to answer, but on a broad basis I think you have to make a distinction what's going on at the city and state level in Democratic areas --
ROMANS: And there's a lot of movement. There's a lot of movement.
ALESCI: There's a lot of movement there, and this specific movement on the broader scale, low-wage workers are winning some of those battles. If you look at a city like Seattle they were successful in getting that $15 minimum wage hike. So there you have progress. But when you're looking at these protesters, they want companies like McDonald's and Wendy's to pay more, and on that front, we really haven't seen that much movement. However, McDonald's is acknowledging that these kinds of protests and these kind of headlines could have an adverse impact on their business. So that is progress. Also, these protesters are making some headway in court.
LA MONICA: I think they might get some help. The National Labor Relations Board, a very important ruling, saying that McDonald's may have to treat employees of franchisees as if they with their own. And that's one thing that I think a lot of these companies in fast food have been saying, well, it's not really our problem, it's our franchisees'. They may not be able to make that claim anymore.
ROMANS: You're seeing some of the executives of these companies start to acknowledge that there is this real shift in sentiment and public opinion in America about paying somebody more than $7.25 to do these jobs. The national restaurant association, the lobbyists, they point out in 2007 when the minimum wage was raised you had hours cut back and many prices go up. So they're still fighting the same old battle here.
PAGLIERY: Let's note that these protests are unlike any in history, and here's why -- 20 or 30 years ago, we protest for higher wages, they get them, fine. But we're at the dawn of the age of automation. And so we have to ask ourselves, even if they get those higher wages, are they just going to get cut in 10 years by robots that bread chicken --
ROMANS: In 10 years? Next year. At what price does McDonald's say we'll automate two-thirds of the kitchen. What price does that become? And that's something that all the restaurant owners are looking at.
LA MONICA: Mc-Watson.
ROMANS: There you go. There you go. I don't know if I'm blush on that yet.
No more smokes this week at CVS. The pharmacy chain made good on its promise to stop selling tobacco products. The company has a new name, CVS Health. Could sugary drinks and fattening snacks be the next to go?
(BEGIN VIDEO CLIP)
LARRY MERLO, PRESIDENT AND CEO, CVS HEALTH: If you talk to a nutritionist, a dietician, they will take you that those products taken in moderation or the occasional use have not been proven to cause medical harm. The same can't be said about tobacco. There's no amount of tobacco use that can be considered safe.
(END VIDEO CLIP)
ROMANS: So, Cristina, you talked to the CEO. Is this about health or is this about positioning in a more health conscious society and profits?
ALESCI: Well, look, it was not a difficult decision for CVS to make. First off, it's a very small part of their overall business, $2 billion and $126 billion of revenue. Not that big of a deal. Low margin business. Cigarettes are a very low margin business. And not that many people are smoking, at least it's not a growth area. Bottom line, the value of this kind of PR campaign outstrips anything they could have lost in terms of profit. And, look, CVS wants to focus on the growing part of the health care sector, right? That is growing. And, do you know what, we happen to have a shortage in primary care physicians which CVS is looking to fill in their clinics in their stores.
ROMANS: So give the Nicorette gum, don't give the cigarette. Focus on the other end of the business, the growing end of the business, not the stagnant end.
LA MONICA: Yes. Even though they changed the name to CVS Health and getting rid of the Caremark name, it's Caremark that is still driving that business, more than half of their revenue coming from the pharmacy benefits company. And for a company like CVS it probably would seem odd to have signs where it's, like, go in and get your flu shot here instead of going to a doctor. And, oh, by the way, get a pack of Camels on the way out. You know, it's a little bit strange for them to probably be faced with that.
PAGLIERY: And like Christina said, this is a huge growth area. With Obamacare suddenly they are a lot more insured people, 8 million more that will be pushed into this. And so as the number of smokers is declining, the number of insured is increasing, and so they are pivoting, and they are being smart about it.
ROMANS: You look at any of the numbers, any of the forecasts, it's all wellness and health that are the big drivers for jobs and a lot of things over the next decade.
ALESCI: They got to take the fattening stuff off the shelf.
ROMANS: All right, all right. We'll see, we'll see.
Former House majority leader Eric Cantor has a new gig on Wall Street. Cantor joining boutique investment bank Moelis and Company as a vice chairman and board member. He's going to get a $400,000 base salary and millions more in cash and stock bonuses and a Manhattan apartment to live in. Jose, you've seen the Washington-Wall Street revolving door plenty of times. What does it say about Eric Cantor?
PAGLIERY: The Tea Party was right about him. That's what it's proving, right? So the big criticism was that this guy has deep connections with Wall Street and there's a revolving door between Washington, D.C., and Wall Street. Well, look at what he did. He just proved that point. And the reason he was brought on board was to exercise the relationships he has on the Hill, and he's going to do that, right? And so this really shows that the Tea Party is right about mainstream Republicans, and it doesn't help them at all.
ALESCI: It could actually make it more difficult for Eric Cantor to come back to Washington, to your point. But I think the cooler move for a lot of former civil servants going forward is going to be breaking into Silicon Valley, right? We saw Uber, which is having some issues with regulators around the world, not just in the U.S.
ALESCI: He goes -- David Plouffe goes to Uber, and that is a transition I think we'll see more of for civil servants, not only because of the pay, but because of the high-profile nature of those positions.
ROMANS: I think you're absolutely right.
LA MONICA: To be honest, it's a nice consolation prize, particularly financially, but I don't think Cantor woke up the day after he lost his primary saying, yea, I'm going to Wall Street and cashing in. So long Capitol Hill.
ROMANS: The revolving door. I love the idea that Silicon Valley is the other stop in the revolving door. That's going to be interesting to watch. Thanks guys.
All right, coming up, the underbelly of the Internet, criminals trading nude pics of Jennifer Lawrence and Kate Upton, trading them like baseball cards. But they want your data, and it is more valuable than you think. We go inside the dark web next.
ROMANS: Your information under attack. Home Depot is the latest retailer investigating a possible security breach. This one could be bigger than the hack that exposed 40 million target shoppers last year. What happens to all those stolen debit and credit card numbers? Laurie Segall introduces us to the dark web.
LAURIE SEGALL, CNN TECHNOLOGY CORRESPONDENT: When credit cards are hacked, they go up on the black market. Home Depot's investigating a security breach. It's the latest major retailer targeted by hackers. And as more companies are breached, there's more stolen credit card info floating around the web.
Let's break down what happens to your data on the black market. A privacy group called the Digital Citizens Alliance says they found a hacker boasting about having credit card numbers. They pose as a potential customer.
UNIDENTIFIED MALE: I'm calling about the credit cards.
UNIDENTIFIED MALE: OK. Now, did you want CVVs (ph), fullz, or dumps?
UNIDENTIFIED MALE: I think fullz, but I'm trying to figure out how many I can buy.
UNIDENTIFIED MALE: Do you need the date of birth, social, all that as well?
UNIDENTIFIED MALE: Well, I don't know. I'm trying to get some cash, so I'm looking to buy some stuff so I can sell it.
UNIDENTIFIED MALE: OK. So, you're looking to buy stuff online?
UNIDENTIFIED MALE: Yes.
UNIDENTIFIED MALE: OK. What sites are you planning to target?
SEGALL: But before your card number is bought and sold over the phone, you'll find them for sale on what's known as the dark web. Think of it as the underbelly of the Internet. It's a network you're only able to access through the Tor network, an encrypted browser that makes it difficult to identify users. The average black market price for all the data on your credit card is a little over $100, if it's taken from an account on eBay or PayPal it's cheaper. You're looking at a price tag of $27. The cost of taking control of your bank account, close to $200. And stolen cards from Asia are worth more than those from the United States. Different factors including how quickly your credit card company reacts all play into the black market value.
You can find everything from drugs to firearms on the dark web. And it gets darker. There are forums where photos of nude celebrities are bought and sold.
MICHAEL GREGG, SECURITY CONSULTANT: A lot of times these things might be privately traded. Think of them as baseball cards. You've got one and I've got one. And they are traded in these groups, and we may never hear about it.
SEGALL: A dark web of some of your most personal data.
ROMANS: Wow. Laurie Segall now joins me. Now, Laurie, hacked credit cards, illegal drugs, stolen celebrity nudes, is this dark web growing?
SEGALL: I mean, the short answer is absolutely. Think about how many retailers have been hacked over the last year, so there's a rich, rich data. There's so much data on the dark web about this. And also you have ways to browse the Internet anonymously now. You have digital currency that's difficult to trace. Put all that together and it makes it very easy.
I will say I spoke to a source who says there are reams on the dark web where they trade these nude photos of celebrities. Oftentimes you never see them. They never come out publicly. And even to get into these reams you have to hack a celebrity, so it's pretty unbelievable.
ROMANS: That is unbelievable. It's scary, the stolen nude photos of Jennifer Lawrence and others out there all over the Internet. There's been a lot of finger-pointing at Apple and iCloud. They've made some changes.
SEGALL: Absolutely. You know, they've said outwardly iCloud wasn't hacked, but what's more concerning is the fact that they said that hackers were able to figure out passwords, and that's how they were able to breach the accounts. So Tim Cook has come out and said, hey, we're going to add two-factor authentication. We're going to bulk up those efforts. We're also going to give you a notification if your iCloud data was restored. So those are definitely steps in the right direction.
That being said, he did come out and say we need to do a better job talking about password security because that's potentially what happened in this scenario.
ROMANS: We know most people still have a password that is either "password" or one, two, three, four, five, six, seven, eight. So we do bear a little bit of that as well. Is this the right timing for Apple? I mean, they should be really hyping up to next week's new iPhone debut, but instead we're talking about weakness in iCloud.
SEGALL: It's certainly not great timing for this to happen to Apple. Let's be honest. It's a good time to have a conversation about security, but this event they have coming up has so much hype they're expected to release the iWatch, and they haven't really released a new product for ages. So there's so much pressure on this. The last thing the CEO Tim Cook wants to do is be addressing this. Now, that being said, he did address this before the event, which might soften the blow a little bit.
ROMANS: Even the Obamacare website this week was hacked. Is this a fact of life? Do we accept this as the cost of doing business?
SEGALL: It seems like another day, another hack, right? But I think there needs to be a bit more call to action, and we're seeing that happen, you know, even with the integration of some of these chips within the credit cards. We need to do a better job.
And I think it comes down also to pass word security, because we need to do a better job with passwords. And we keep coming back to passwords and the fact that hackers might not be able to breach into a system, but there's also human error and social engineering. They're able to guess your password, so we've got to do a better job of that.
ROMANS: We talked about the two-factor passwords. You say over and over again, two-factor authentication.
SEGALL: Yes, absolutely.
ROMANS: Do it, everybody. Do it. Thank you, Laurie Segall, nice to see you.
Coming up you could save for decades to pay for college or retirement, or you could buy one of these instead. It's the cheapest model this iconic company makes, but it's going to set you back six figures. The price tag on that, next.
ROMANS: Hybrids save you money and help the environment. SUVs offer plenty of space for your kids and your stuff. And sedans are an affordable option if you drive to work. The newest Lamborghini has none of those features. It's fast, it's sexy, and it seats two. But it's half the price of some other models by the Italian automaker, so we're calling it the entry level Lamborghini, maybe for the one percent. CNN MONEY senior writer and auto guru Peter Valdes-Dapena takes us for a ride.
PETER VALDES-DAPENA, CNN MONEY SENIOR WRITER: Meet the entry-level Lamborghini. Lamborghinis look amazing. If you want to attract a crowd just pull up in one of these. The new Lamborghini Huracan, the name means "hurricane" in Spanish, but this car drives smooth and easy, which is saying something considering the all-wheel drive Huracan has gobs and gobs of power and goes really, really fast.
Fast is comfortable in this car. It handles curves beautifully. Plus, nice steering and responsive brakes keep you feeling completely in control. But everybody knows a Lambo can go fast. The real challenge comes when you slow down. Even then the car is a pleasure to drive.
UNIDENTIFIED MALE: This car is fun to drive in traffic. If your kid is really lucky, you can take your kid to school in this car.
VALDES-DAPENA: That's one major feature Lamborghinis have tended to lack until now -- genuine refinement. With prices starting around $240,000, this car could be called entry level compared to the even more powerful Lamborghini Aventador. But to be honest, I think the less expensive Huracan is much better. Too bad cheaper in Lamborghini terms still means "I can't actually afford it."
ROMANS: You can take your kids to school in this car. Oh, well, one kid, because there's only room for one more than you. For more fast cars and all the money news that matters most, check out CNN MONEY. Our expanded video section has fresh stories every day. You'll also find the latest on stocks, the economy, all of that and more, 24/7 on CNN MONEY.
Coming up, college is worth it is with an asterisk. The dirty little secret about recent grads and the jobless rate, next.
ROMANS: College is worth it, with an asterisk. The unemployment rate for someone with a bachelor's degree is 3.2 percent. For a high school graduate it's double that, 6.2 percent.
But here's the dirty little secret no one tells you. Those numbers measure everyone with a bachelor's degree from a brand-new grad to someone who has been working 40 years. Break the numbers down by age and the story's a little different. And 8.2 percent, that's the unemployment rate for people with a bachelor's degree who are under the age of 25. Yes, once you have a degree and some experience your investment in higher education is likely to pay off, but it's getting that experience in the first place that's so hard. That's why you hear about recent grads working as baristas and retail clerks. And 46 percent of college grads age 22 to 27 are working in jobs that don't require a college degree.
But that doesn't mean college isn't worth it. The New York Fed finds the average value of a bachelor's degree is $275,000. It takes about 10 years to recoup the costs, but you've got to finish in four years. Staying one extra year lowers your lifetime earnings by $85,000. Taking two additional years is even worse, slashing your lifetime earnings by $174,000. College is worth it, but you've got to keep the debt down. You have to finish on time even in three years if you can. And you have to know that your first few years out the golden ticket may take longer to get punched.
Thanks for watching CNN MONEY. We're here every Saturday at 2:30 p.m. eastern, so set your DVR, and check out CNNmoney.com every day for the money news that matters most to you. You can find us on Twitter, Facebook, Instagram. Have a great weekend, everybody.