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tv   Real Money With Ali Velshi  Al Jazeera  May 5, 2014 7:00pm-8:01pm EDT

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>> i'm michael eaves, thank you for watching this edition of al jazeera. you can find more information on the website "real money" is next. it is a global power struggle for gas and oil. pipe lines gives vladimir putin the upper hand in europe. i tell you how america wants to level the playing field. america's middle class is getting squeezed. i meet three families meeting the matter head on. working for tips, i tell you about the people depending on them to live and ask if they'd be better off with a bigger pay check instead. i'm ali velshi, and this is "real money".
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. >> this is "real money," you are the most important part of the show. tell me what's on your mind by tweeting and facebook. all right. energy ministers from the group of 7 industrialized country, the g7 are meeting in rome, as more violence is flaring up in ukraine between security forces and pro-russian insurgents. on the agenda at the g7 - energy security in an increasingly volatile world. the g7, by the way is made up of seven countries, united states, canada, japan, britain, germany, france and italy. at stake it the lopsided dependence that europe has on russia for its number needs and the limited leverage the g7 has in opposing russia's intervention in the ukraine. that's why the focus of talks are on forging a unit front on
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taking sanctions against russia and developing alternative sources of energy to wean the west off of the russia's oil and gas exports. the european union relies on russian pipe lines to bring in about a quarter of its gas nodes to power industry and to heat homes and businesses. for e.u. members, germany and italy, it's more like 40%, which is why the u.s. and europe are not united when it comes to expanding the sanctions because energy alternative include cultivating alternate supplies from no way and algeria and the yate. u.s. energy companies are applying for export licences to sell liquified natural gas to global markets. officials are talking about non-conventional methods of exploiting gas deposits in western europe, things like fracking. they are looking at
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alternatives. all the solutions are years away from making a dent on russian imports. >> then there's canada's natural resource minister, making his case for what he insists will be enhanced security in north america. he's calling for u.s. approval of the controversial ketone excel pipeline, the existing pipeline. this is the keystone xl extension, from canada to the united states. it needs white house approval for that. this expansion would double the amount that is brought in. it would move more oil into the world market through the gulf of mexico. but the obama administration is delaying approval for what appears to be political reasons. it's an election year and environmentalists within the president's base hate this promote. even so, keystone xl supporters in the u.s. senate are ready to vote on a bill giving the go ahead to the promote and skirt
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white house approval altogether. stephen schork follows global economics closely as the founder and editor of "the schork report." and joins me from philadelphia. lots going on, let start with natural gas in - from russia through ukraine into europe. we have a lot of natural gas in the united states, but we can't get it there. right. and it's a good new, bad news situation. the good news is the proposal on the board for lng export terminals could supply and offset the situation in europe - that is 30% or 155 billion cubic metres of russian dependence much the yate could replace that gas two times over. that's the good thu news. the bad news is we are 10 years away from seeing that fruition. there's no short-term solutions.
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moscow demonstrated in previous winters, in the good times, that they are willing to cut off gas supplies. if they play hard ball vladimir putin will cut off supplies. the u.s. cannot go alone, because it cannot go by itself. the real alternatives is for the europeans to exploit its own resources. france, with nuclear technology could add cheaper btus, fracking could help, as it has in the yate. unfortunately only the baltic countries are embraces the fracking technology. in other countries in western europe, they are forbidden. >> liquified natural gas, that's the way to ship it. why have we not got the ability to export that in place in the united states?
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>> it's a perfect case of why they made long-term economic forecasting applicable. the only way you do long-term forecasting is to make astrology look respectable. 10 years ago the broadest people told us north america was running out of the natural gas. we new the shale gas was there, but didn't have the economic incentive to get it out. going inside of 10 years going from we need to import lick weified natural gas, so licences were to import lng into the united states. in 10 years we go from "we have to import to be have to export." >> that will mean it's not just an american resource if everywhere can get their hands on it. will we see an increase in natural gas and electricity as a result. >> you brought up an excellent point with regard to after the winter. we see what happens when there's demand in the winter that there was a pull back in supply this
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year. now, if you do not allow the extra gas to get to the world markets, there's a disincentive to produce more gas. a producer is left with the unfortunate choice of either leave the gas in the ground or bring it out and sell it at an artificial low price to what they could receive in the broader sense of a global market. if you open up the export market. similar to allowing crude oil exports in the united states, if you open it up, you snenivize and -- incentivize and create a return. will it increase prices? perhaps, but not to a level that would cause a deleterious impact to the u.s. consumer and country. >> you know a lot of that. stephen schork, editor of "the schork report." the city of new york has a texting offer for buffs, all you need is a grand. i'll tell you about it.
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and why hire a pro when a stranger can do it for rest. what the raise of air b&b says about our economy and culture, that and more. keep it here.
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that massive data breach over christmas caught up with target's c.e.o. gregg steinhafel. the theft of millions of customers credit card information cost him his job after six years at the hem. the breakdown was so costly that sales plunged. the breach sparked hearings in congress. target is upgrading its security and partnering with mastercard to adopt better card technology. the board voted to remove stipe , and is looking -- gregg steinhafel, and is looking for a new c.e.o. detroit is launching a clearing house of sorts. if you are looking to buy a
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cheap home, the motor city may be the place for you. detroit is trying to come up with ways to destroy blighted neighbourhoods. they are auctions homes. the bids started at $1,000. the city hopes to collect $20,000. winning bidders have six months to bring houses up to code and move in. >> we met up with herb strather, a resident in real estate domer, deploying a different strategy to battle blight. he tries to help people stay in their homes. >> there's hot bids going on. we are bidding. >>. >> reporter: it's a busy time for herb strather, who heads up a real estate investment firm. detroit born and raised herb strather wants others to get involved and buy back the real estate. >> 73-00 is counter high bid. >> so he's in the thick of a
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class to teach and help other local detroiters buy foreclosed homes, he and his class bought over 200 homes at an 80% discount. >> this is crazy. the houses are going for twice as much as last year. >> it's not just about profit. herb strather normally deals in commercial real estate. he wants to help people stay in the home. >> someone is in the house. they get in. >> as he drives through the neighbourhoods, he checks to make sure they are not occupied. >> there's somebody in the driveway. we are going to go up and see if they'll give us a little discussion. hopefully no guns come out. [ laughs ] . >> if they are, he offers people the chaps to stay in the hem -- chance to stay in their home, representing from him with an option to buy. >> are you aware that the home being auctioned. are you interested in staying here.
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>> herb strather from herb strather and associates joins us. you are giving people the option to buy foreclosed homes. this is different to what the city of detroit is doing, which has been in the newses in the last couple of days. >> that's correct. it's great to be on the show. i love you as a host and i'm happy to be here to promote detroit. >> thank you, sir. >> detroit has unprecedented real estate opportunities, this thursday is the same as every thursday, at 10 o'clock there's bank foreclosures at city hall. my class, and as a real estate professional, we closed a couple of big end dollars, i am interested in creating the next generation of developers bringing our city forward and making sure it takes its proper place in the world. we have a hands-on approach. my students tonight, in class, is going to be looking at the legal moves and in the next
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couple of days they'll look at the properties that they found on the legal news. so they'll be prepared on thursday to bid. >> this is - the stuff the city is doing, it's getting rid of homes starting at $1,000, but these are holes that are vacant, that are abandoned. the deal is you buy one and you have to fix it up and occupy it within six months. the ones that your students are buying might be occupied. >> very much so. as a matter of fact, a goal is to empower home owners so that they know what their rights are. many of them do not realise that the day before the auction, many of the banks lower the prices down by 90%. the last property re bought had a $79,000 mortgage, and the couple died. they were older, died, it was reverse mortgage and they sold it to us for $10,000. my students looked at the
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property. it was a beautiful neighbourhood, beautiful, airconditioning. we went down, we were the only bidders for $10,000. this is - you know, this is amazing because when you look at du toit, we have a -- detroit, we have a future-clean balance sheet. one of the level in america. we have top leadership. new leadership. tens of thousands of people wanting to move. 25% of the world first order. >> you have a great airport. stadiums, casinos, but you have blight, areas with house after house is overgrown, abandoned, drug houses, things like that. >> that is true. but i call that opportunity. where else in the world can you get thousands and chous aned of properties that you can pick up for peppies on the dollar. the auction later this year will be for $500 a house. men will go for 500.
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in east english village, a beautiful area with beautiful homes, you can tack and bid starting at -- take and bid starting at $1,000. we hope it goes between 15 and 20,000. we'd like to invite the world to come in and participate. >> what are the terms. let's say i want to buy a house, i come and stalk to you. how -- talk to you. how does it work. do you inspect the house ahead of time. do you - when do you may for it, do you have a mortgage or pay cash. >> for the auction now, which is a smart move, to take this huge inventory of 40,000 houses we have and put them on the market. for these homes you have to pay cash, it's all cash, and you have to bring the homes up within 180 days, you have a limited period of time. what we want to teach people is how to repo vate the homes and not get in trouble. if someone wants to come to detroit. you have to have a partner.
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i invite you. you can get me at my website. don't try it alone. >> what you don't want is to buy a vacant home and not have anyone looking after it or living in it. can people buy homes - you said you want to keem people in the homes, can you buy a foreclosed home and have the people stay? >> absolutely. as a matter of fact thus, at the auction on thursday. 80% of the homes are vacant homes with home owners living in the house. the home owners does not know they can get the house for $0.10 on the dollar. why would the bank sell homes for pennies on the dollar. maybe they are reimbursed from the feds. >> we have to follow - i don't know about that. thank you for what you are doing. you're a native of detroit and a lot of this is about making your city a better place. >> herb strather chairman
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mistaken of strather & associat associates. >> sharing is profitable for millions opening their homes, handing over their car keys and cooking for people they don't know because of the rising popularity of internet start-ups using an internet start up of people that share personal goods and services. some are airbnb, allowing apartments to be represented out. it gets interesting with companies that let ut eat a home-cooked meal at someone's dipper table. renting power tools and others. these companies are creating commerce built on trust. it's called the sharing economy. it's a new trust me era with internet start-ups teaching us to leave strangers.
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the executive editor joins me now from san francisco. good to see you jason. i think of the sharing economy as the opposite of the littageous economy where you can't let someone touch something without a massive legal agreement because they'll sue you if they slip in your house or car. >> yes and no, a big part of the economy is there are rating systems. if you stay in someone's house and they don't turn the sheets down, you can give them a bad review and it could impact their future. it's amazing that we get into strangers cars and houses. all of these things we have been trained for decades not to do. >> part of this is efficiency. it's like the ebay. it's the idea that there's stuff wasting time at your house, you put it on ebay. everywhere wins. this is where some of this came from, excess capacity. you don't drive your car, you don't live in your house.
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why not get money for it. >> that's right. a lot of people wrote about the showing of the economy through that lens. i wanted to look at how it's changing us behaviourally or socially. the impetus is economics. one of the effects is all of a sudden we are meeting and talking to people and having interpersonal relationships with people that we wouldn't have had before, only with businesses. >> look at airbnb or lyft. they are established lobbies, in one case it's the taxis and the car service lobby saying it's dangerous, they are not professional, they may not be injured, and with airbnb, the hotel company say these things do not make sense. in new york the city is saying you can't do these things. there's an established hierarchy working against the shared economy. >> 100% true. there's a saying in silicon valley that it's better to ask forgiveness than permission. the companies have gone in, you know, head strong and disrupted
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all the industries, going up against major established industries. that being said there are concerns. if you open an apartment in new york and your neighbour is representing out there place by the night. that impacts your life in a serious way. i think there are questions that a lot of companies will have o answer as they mature and grow. >> we'll talk about warren buffet's annual meeting and people complaining about the price of hotels in omaha. and he said there's airbnb, and stay at someone's home. when you get endorsements, is if your sense that the shared economy is here to stay. >> when warren buffet puts his house up on airbnb, definitely. there's an element of genie out of the bottom. there's a huge demand on both sides of it. there are home owners that want to rent out their rooms and
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guests who either for price reasons, because hotels are expensive or it's a nice experience. >> some people like the shared economy, it's not about the economics of it. >> yes, that's right. i have never taken lyft before i started writing the story. lyft is like a taxi service, put you sit in the front seat, you give the driver a fist bump and billed as your friend with a car. promoting the idea that you'll talk, it's not just a commercial transaction. before i reported the story i thought it was weird. after taking it a few times, i was charmed by it. now i take it instead of toxies. >> good to talk to you. jason, exive editor at "wired." check out the cover story. it's called woodstock for capitalist. no sign of hippies or bad acid. tens of thousands take the trek
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to pick warren buffet's brain. and talking about a bad trip, the melt down of the middle class, why it's happening and what is happening to help those families feeling the squeeze. that and more when we come back.
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. warren buffet occupies his own place in the pantheon of the world's richest people. many regular people like the 83-year-old billionaire. one reason is his company, berkshire hathaway, helped small investors score big returns. since warren buffet took over the country in 1965, berkshire's stock delivered gains - if you reinvested the gains - of 19.7", compared to 9.8% of the s&p 500. recently berkshire's stock performance hasn't been as stellar, i'll talk about that
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with a long-term shareholder. think of berkshire hathaway as a fund holding huge stakes in many companies like geico, candies, heinz. and companies that are not household names, medical protective and others. another reason is the stock price trading at $189,800 a share, but that doesn't mean you have to be rich. rather than split the stock he created a second class, berkshire b class trading for $126 each. that makes buying the stock more realistic for millions of investors. every year - i have been to that, it's something - tens of thousands of investors or fans flock to warren buffet's home town of omaha nebraska for his annual meeting. it happened this past weekend. as always investors posed for pictures with the man known as
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the oracle of omaha, and watched him play ping-pong with bill gates, and he and the chairman charlie munger took questions about stock that they own, including coke and bank of america. the company may spend $50 billion for a major acquisition. it's a lot to do with honesty and willingness to give issues on things that matter to americans. he scored points saying it's wrong that rich people pay a lower tax rate than his secretary and others in the middle class. the obama picked up on this and proposed the warren buffet rule, that no millionaire should pay less than 30% of their income in taxes. >> berkshire's shareholder robert miles is a big fan and tapes a course titled "the genius of warren buffet", and
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has written three books been bust. thank you for being with us. >> thank you for inviting me. >> there's not many investors who had three books written about then. there's many about warren buffet. he's an unusual character, what sets him apart from everyone else in the investing world. >> his down home folksiness, the fact that he's a midwestern plain spoken folksy guy who is relatable and represents the common man, not the suite of executives enriching themselves with stock options. you mentioned earlier that the target c.e.o. is being replaced. he may walk away with $50 million in stock options and compensation. that would never happen with warren buffet or his sub-siduraries. that's one of many examples. >> he doesn't walk like c.e.o.s
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walk. he has a simple life, lived in the same house he loved in for decades, a normal house, it's not a compound. there's something about warren buffet that appeals to people. fundamentally he makes people a lot of money. >> he does, but he also is very relatable in that he believes that you should pay taxes and you should bepatriotic, and that you should do the right thing, and he leads by example, which is very refreshing and an inspiration to investors, business people and others as well. phillan throe pists. he gave away all his money and ipp spired other billionaires to do the same. give half of their money away. >> how would you describe to people that don't know his investment strategy. there are many that invest as
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warren buffet would. >> his style is value investing where you attempt to any a dollar for $0.50. warren buffet has done that since being in college at the university of columbia and is rational about his approach, and is a genius, so he makes it look easy. most participants in the stock market, 95% of them are buying what everyone else is buying, and are buying momentum stocks and growth stocks, and they don't really truly understand what they own. warren buffet understands... >> he stayed away during the tech bubble. stayed away from the tech surge this time around too. >> he did, and now he's sitting on $50 billion of the cash. he has $67 million flowing in every day to omaha to be allocated. $2 billion a month. it's paying next to nothing, but he patiently waits for an opportunity like heinz ketchup
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to come along, will step in in a big way. he's looking for an acquisition in the 20 to 30 billion range, and they can handle it without taking out any more debt. >> the event. there's no shareholder meeting, no annual meeting like it. it's like a sporting event, a stadium filled with people, with a separate room, a convention centre filled with companies that he owns. there's nothing like it in the investing world, right? >> no, sir. it's remarkable that he could attract, you know, 40,000 people were all over the world, over 50 countries represented, one weekend, the first saturday of may in omaha, where he and his partner, charlie munger, sit on stage without reference to notes, without previewing any of the questions and answer upedited questions for six hours.
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>> yes. >> it's extraordinary. and in the meanwhile, you can go the convention centre, buy anything from jewellery to underwear to chocolate. >> i brought a pair of cowboy boots when i was there. good to talk to you, thank you for being was. >> thank you for inviting me. >> bob miles is a long-term shareholder and an author. it's the american dream - a good job, home for the family and the kids. coming up, i'll introduce you to three families struggling to make that dream a reality and an expert saying things may be worse than what they seem. as i will do all year. bartenders and waitresses - i'm looking at tipping in america, and what would happen if we stopped it altogether. this is "real money," keep it right here.
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sabino "america's middle class: rebuilding the dream"
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all year long we are continuing with a network wide conversation on america's middle class, "america's middle class: rebuilding the dream." the middle class is in crisis, squeezed by years of job losses, rising costs and stagnant wages. 40% of americans say they belong to the middle class, down from 53% in 2008, when the recession hit. there's no definition of what the middle class is, economists define it by income. we define it as households with total incomes of anywhere
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between 40 and $100,000. that encompasses millions across geography and diversity with similar aspirations - secure job, owning a home, access to heath care and college education for children. add to that time off for vacation and save enough to live comfortably during retirement. for many these are harder to achieve. the financial range differs depending where you live. for some context median household income in the united states was $51,371 a year in 2012. half of all households earn more, half earned less. 7% lower than it was in 2008. in fact, adjusted for inflation, median household income was no higher than it was in 1995. that is a setback of 17 years
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the median number does not take into account the geographical differences and focussing on income doesn't take into account how the middle class behaves. we are confident in our definition. either way rebuilding the dream is important. the most important part of a robust economy is the middle class. spending creates stronger consumer demands and desperately needed tax revenue. without a strong middle class america's economy will falter. today's middle class is under pressure, our goal is to sign a light on the problem and look for solutions that help us to prosper. as part of the coverage, we are introducing you to people like yourselves and with pressures in their daily lives. we are following their progress, like the william family, bowlin of tennessee, and sabino family
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of new york. [ ♪ music [ ♪ music ]. >> reporter: with one home, two kids and several pets, phil did diane seemed to have it all. >> don't worry about it. >> i heard that song before. >> the long island new york couple says what they have are severe money problems that are seriously affecting their marriage. >> our counsellor told us couples will get divorced quicker over finances than if someone strayed and had an affair. >> i'm very worried because you don't know what will happen next. >> did you see the other two? >> despite a combined income of over $100,000, cara and stephanie williams are in serious debt and want to move from the chicago suburbs to a more affordable area.
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like over 9 million other home owners, their house is under water. >> to get out of the foreclosure we had to pull the retirement fund. >> i cried a lot. >> it's my american nightmare. >> how is your day. >> jodi is a single mother of a teenage son. >> we are not restocking the store, i'll close on the 24th. >> and a struggling small business owner. in a bold attempt to stay afloat. she is rebuilding her dream by moving her store to a new location. >> i'm on a mission that i have to keep this business going. getting the new store up and running details are overwombing. stakes are high. i think that i have been afraid to realise how high they are. >> the stories of these families are not isolated. they illustrate a disturbing
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trend within the middle class, a conclusion by sociology professor kevin light. he says this country's middle class is in decline, and things may be worse than they appear. he's the author of a book "middle class meltdown in america: causes, consequences and remedies." he joins us from the university of iowa. good to see you, thank you for being was. >> thank you for having me. >> this is a poll it sized issue. when you look at the stories of the family - by the way, we could have picked any three families - you can't but feel something is wrong. they are doing all the things our parents taught us we had to do to succeed in an economy and it's not working for them. >> no, in fact, it didn't working for them. to some extent what your family shows is that we have lost a narrative for how to get ahead, that having a job and working hard at it and having a mortgage
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and trying to make payments and send your children to school is more difficult by the day. >> is there one culprit to this, or is it a combination of things? >> it's really a pretty complex combination of things. you have globalisation that is brought to our shores cheap gds and services provided by educated and industrious people. you have american political positions that favoured higher income earners. that had something to do where it. you have financial deregulation that allowed us to loan money to people that we used to pay them so you could get credit cards with, no proof of income. you can buy cars with no money, you used to buy houses with no money down. we made it easy to consume
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things and get into debt. we replaced earnings from a job with debt as a way to finance middle class lifestyles. >> we had news that panera bread finds so many errors when people check out their food that there are, in many stores, adding automat automatic kiosks. it struck me wouldn't it be better to train people. technology is part of the culprit here. >> yes, although we probably can't go back to not having technology. it's so efficient that a lot of middle manager jobs involving passing information from one office to the next are gone. a lot of other jobs are being checked out too. >> let's talk about the widespread effect. there's an effect whether you are in the middle class or not,
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to a dwindling middle class. if you hollow out the middle class in an economy like america's, we will all suffer in some way. >> yes, we will. the consumption of the american middle class drives the rest of the economy. one way or the other the middle class has to consume things, buy durable goods like washing machines, cars andsterios, and buy -- stereos, but they have to buy services because they are the ways the rest of us make money and profit. without those things the economy goes downhill. >> you mention borrowing a little while ago. what are some orthodox ways that families struggle with. so they have to think about ways to borrow. what are unorthodox ways that you discovery people are borrowing. >> there are a lot of them. probably one of the key ways that people borrow is they
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started to borrow against the equity of their house to finance consumption. which was fine as long as housing prices were going up. when the housing market collapsed, a lot of people ended up underwater on their mortgages. people would buy houses and then when one of the pair lost a job, so a married couple, the man or the woman lost a job, they'd find uneither dox ways to make payments. like they'd put it on credit cards or cash out the savings or retirement account. we have seen the mainstreaming of pay day loans or pawn shops seen in the suburban parts of the united states, things you saw in downtown areas in seedy neighbourhoods. there are ways for the middle class to borrow money in upconventional ways that didn't exist in the late 1970s. >> you heard the williams family, a family we cover saying
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they had to tap into their retirement. we heard that from other families. >> i hope you'll stay part of the conversation as we understand more about the plight of the middle class. kevin light is a professor at the university of iowa. >> all week and all year long we'll follow the sab seenos, williams and bowlin families and learn the pressures faced and solutions that cann help to rebuild the dream. tomorrow we look how jodi bowlin, who is putting everything on the line, to regain her place in the middle class is doing. it's the truth about working for tips in america. if you get tips, you probably get less in your paycheck. some want to change the system and get rid of gratuities. >> if they get rid of tipping. i'm stuck with an hourly rate. i have no way to improve myself
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financially. >> i look at wages versus tips and which works better in the long run - coming up.
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last week president obama and democrats cried foul when
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senate republicans blocked a measure to raise the minimum wage, lost in the talk is a provision that would benefit 3.3 million waiters, bartenders, hairdressers and others that live off of the tipsment the national tipping average is 19%. they can vary wildly, depending on the restaurant. many tipped workers make about $5 more than hour. some think we should do away with tipping and pay people fair wages. here is david shuster with the latest on america's $40 billion economy. >> are you set there? >> yes, we are. >> change out of $40. >> cashing out each night paul paz considers himself lucky to be a waiter in oregon. >> there's six states in the united states in my business that pay full minimum wam, oregon, we are at $9.10. regardless of what i make in tips i earn that $9.10.
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>> a single parent for 35 years, paz found he could raids three children working 20 hours a week. he works at oswego grill, and tips make up 75% of his wages on a good day. >> it can be $200 a shift to $500 a shift. there are some of my peers that work at high end restaurants that make six figure incomes. >> how much a tip worker makes depends on where they work. washington currently leads all states by paying $9.32 for tip workers, following by oregon and four other states mandating a wage higher than the minimum wage of $7.25. the handful of states are largely the exception. 19 states maintain a base wam for tip workers of just 2.13 an hour. >> 70% of workers earning this
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wage are women, suffering three times the poverty rate. they use food stamps at double the rate is the of the workforce and the median wage, including tips is under $9 an hour. >> saru jayaraman runs restaurant opportunity center, a workers group advocating raising the minimum wage for tip workers. the restaurant industry is the second largest, fastest sector of the u.s. economy, over 10 million workers, one in 12 americans works in the restaurant industry. seven of the 10 lowest paid are restaurant jobs. half are tipped provisions. >> created in 1966 the separate minimum wage for tipped workers - it has fallen behind. >> president obama's proposal raises the base raise to $7.10
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an hour, and peg it to 70% of the full one. the restaurant industry trade group warns a hike in the base wage guts dangerously into a restaurant's 4-6% profit margins, forcing owners to limit employee owners, pass on costs to customers and shut down. >> you have to recuperate the money. you can raise prices, but that takes you so far because, you know, if you go to a restaurant and try to pay $50 for a hamburger, no one would buy it. >> a small but growing numbers of restaurants are saying no to tipping always, offering to pay what they say is a higher stable wage. >> the higher wage is $12 per hour, after a year, $16. after a couple of years, you could be making a substantial wage. >> johnny livesay opened a
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group. he says many would prefer higher wages than a gratuity, but old habits die hard. >> some customers really want to quit. >> paul paz hopes that it stays in so long as he waits tables. >> if they limit tipping i'm stuck with a flat amount and have no capability, regardless of my skills or performance of improving myself financially. just last month minnesota was the latest state to raise the minimum wage, including those that work for tips. it is a growing list of states that have higher base winter games than the federal minimum. all the talk of tip and non-tips would be moot if it's banished. it's out ramous, but not to
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elizabeth dunn, who writes about food and culture for "the wall street journal," and wrote a column in "the guardian" making her case that tipping is awkward, unfair and bad economics. she joins me now. explain that first, the bad economics. >> it's bad economics because it's something that you are doing that is optional after you get a service. we think about giving money to get something. you are giving money for something you have gotten any. that's a funny think. >> the concept of giving service. >> that's right, you may never go back. >> one of the things that you write about is that it's confusing. we don't under. we get services that we don't tip for, we expect doctors and night attention to do what we expect them to do. others we tip. it's not clear. >> yes, it's a funny - if we were to design the hospitality industry, we would never choose to single out people to be
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tipped. everyone else is paid a salary. it's confusing to people whether or not they are paying the wage, or giving them something optional, and that impacts the decisions that people make. >> and tipping the bartender, not the guy that friled the steak in the -- grilled the steak in the back. >> exactly. >> you make the argument if you are poring a bottle of win, why does it makes a difference if it's a $15 or a $5. >> that's right, it's what the menu prices are, how expensive the bottle of wine is, how many are in the restaurant. it's not based on quality. >> you made the point that it's possibly racist and sexist. >> yes. >> tell me about that. >> there's a professor at the cornell school who did a lot of research and that shows what impacts how much a server makes has a lot more to do with possibly race, gender, how attractive a person is, than how good a job they did.
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one example would be, friendships, that attractive females make more than less attractive females. white servers tend to make more than black servers. that's unsavory. >> he goes down the road to say it's less related to the service that you get than who you are, what you look like. >> his research indicates that 2% of tip variation is accounted for by the quality of service. that's a small amount when you think about someone's wages. bod yi language comes into it as part of the equation. if i, as a server touch your arm, or write a smiley face on the check. that could up my tip. >> what is the - how much traction does the idea have that you suggest of eliminating tips. >> i think it will be difficult. because a sticker shock of higher menu prices.
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it's culturally engraped in america, it will -- ingrained in america, it will be difficult to unseat it. >> as you saw in david shuster's piece, a waiter didn't like the idea. good to see you. a food and travel writer with the "wall street journal." coming up, the basics of the general election in india, and 816 reasons why america needs to pay attention to what is happening in the 10th biggest economy. stick around.
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>> i want to talk to you now about something that is too big to ignore. india's general election, by big i mean 815 million eligible voters participating in a 6-week 9-stage process, shaping up to be the biggest exercise in the history of democracy, involving 930,000 polling stations covering 1.3 million square miles of territory. the voting end a week from today, we'll have the results on may 16th. indian voters will elect 543 out of 545 seats in the lower house of parliament. the lower house selects the prime minister. the front runner is narendra modi, the leader of the main opposition party b.j.p.
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he heads a hindu nationalist party, poised to displace the indian nationalist party. i'll help to keep you on top of the election because india is the 10th largest economy, the eye in brics, the acronym for some of the world's fastest growing economies, along with brazil, russia, china and south africa. india faces tough challenges. forecast growth of the 5.3% is a far cry from 9.3%. when the new government takes office, it has a lot on its place, inflation. business confidence and investment are falling, corruption is rampant. analysts are bullish saying the economy bottomed and the rupee stabilized. in our interconnected world economy americans cannot afford to ignore what happens in india.
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that's why the show will be talking about the indian elections and economy in the days and weeks to come. that is our show for today. i'm ali velshi. thanks for joining us. good evening, everyone, this is al jazeera america. i'm john siegenthaler in new york. nigerian nightmare a new frightening twist in the disappearance of hundreds of schoolgirls. crisis in ukraine, the fighting spreads as another border goes on alert. >> russia behavior, will go beyond crimea, will go beyond ukraine. >> nato's role, we'll talk to the head of the alliance and ask what it