SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Good evening, everyone.
And welcome to this special Labor Day edition of NIGHTLY BUSINESS REPORT.
I`m Susie Gharib. Tyler is off tonight.
And on this Labor Day, what better topic to discuss than the job market — a key issue for the economy, and one that is the focus of both Wall Street and Main Street.
And while the job market is getting better, it`s still facing a number of issues, from wage growth to getting the long-term unemployed back to work.
So, tonight, we`ll tackle those challenges and look at what some companies are doing to hire the skilled workers they need.
We`ll also meet a couple of entrepreneurs who took their passion, mixed in some hard work and turned their bright ideas into successful businesses.
We start tonight with the state of the American job market. The unemployment rate currently stands at 6.2 percent, down from a high of 10 percent back in 2009. But despite making progress, Federal Reserve chair Janet Yellen recently said, quote, “There is still more that needs to be done.”
Hampton Pearson has more.
HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
The job market is improving, but there are still lots of work to do. In Jackson Hole, Fed Chair Janet Yellen called the employment picture hazy, on her short list of concerns, reducing long-term unemployment and increasing the prospects for higher wages for those with jobs.
DIANE SWONK, MESIROW FINANCIAL: Chair Yellen has made it clear: she wants to see wage gains. And until she sees wage gains and the proof in the pudding, she`s not going to pull the trigger on raising rates in this economy.
PEARSON: Headline unemployment now at 6.2 percent is down more than a full percentage point in the last 12 months. While the economy has regained the nearly 9 million jobs last since the recession, millions of Americans are working for far less money.
The two sectors that lost the most jobs, manufacturing and construction, where the average pay is about $60,000 a year, are still about 3 million jobs short of a full recovery.
Meanwhile, job growth accelerated among lower wage workers, in the restaurant, hotel and health care sectors, according to an economic analysis from the U.S. Conference of Mayors.
JARED BERNSTEIN, CENTER ON BUDGET AND POLICY PRIORITIES: A lot of people are saying what do you mean an improving economy? What do you mean the recession is five years in the rearview mirror? My paycheck is still flat.
PEARSON: Figuring out just how much flack there is in the job market and getting those who have chosen not to participate back in the game is perhaps the biggest challenge.
SWONK: The biggest losses in labor force participation has been in young people, not just high school students, people in their 20s, but that sort of the really the prime earners out there and people it their prime of their career, the 35-year-old to 44-year-olds. And that`s where you really got to bring people back in again.
PEARSON (on camera): Here in Washington, we know that employment is half the mandate for the Federal Reserve, but heading into the fall elections, expectations for action on major jobs initiatives from Congress or the White House have never been lower.
For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson.
GHARIB: We turn now to Joe Davis to talk about the American job market. He`s the chief economist at Vanguard, the giant mutual fund firm.
Joe, nice to have you with us on this holiday show.
I want to start off by just asking you —
JOE DAVIS, VANGUARD: Nice to be here.
GHARIB: — about what are you expecting this Friday when we get the Labor Department reporting the latest — the employment report? Are businesses hiring and are they hiring more than we`ve seen over the last couple of months?
DAVIS: Well, I actually think so, Susie. I think we`ll see continued strength. We have seen that for several months now and, in fact, particularly relative to the past year. The U.S. labor market is tightening, although it is far from tight. But the momentum that we see not only in the pace of job creation, but also the breadth of jobs — more industries are adding jobs than in the past. So, I think that all sums up to the fact that we will continue to see modest but strengthened, strong momentum in the labor market.
GHARIB: The number that everybody focuses on is the unemployment rate. Right now, it is 6.2 percent. If the momentum continues, as you`re saying, where do you expect that number to be, let`s say, by the end of the year?
DAVIS: Well, I think the main expectation is around 6 percent, if you ask the Federal Reserve and many other economists. I think the clear risk is that the unemployment is below 6 percent. The biggest reason for that, if we continue to add jobs at the recent pace that we have been in the United States, it is that unlikely we will see, although possible, unlikely we will see the rapid increase in labor force that would be needed to offset those gains and to keep the unemployment rate above 6.
So, I think, clearly, the risk is, is by the end of the year, the unemployment rate is at the high 5 percent range.
GHARIB: The other frustration and you heard it in Hampton`s package is that, quote, that people say, “The economy is improving, well, I don`t see it in my paycheck.” I mean, wages have just not moved. Do you see any change in that? Will we see people`s paychecks growing a little bit?
DAVIS: Well, I think two points. One, is it`s actually a fair point.
I mean, the wage growth, as we all know, has been around 2 percent on average for the past four years, despite a rapid decline in the stated unemployment rate.
That said, we are seeing small changes, I think not so much in industries rapidly increasing pay, they`re very small in number in the share of the economy, information technologies is often cited as the example. However, we are starting to pick up. Those industries that had the flattest wages or no wage growth at all, even cuts in pay an hour such as construction, retailing, we`re starting those industries gravitate closer to 1 percent, 2 percent.
So, arithmetically, we would expect to see a modest firming in wage growth from this 2 percent level to say 2 1/2 percent to 3 percent early next year. I think that`s important because I think the Federal Reserve will be reluctant to raise rates until they see those wage gains.
GHARIB: Now that you bring up the Federal Reserve, I mean, one point that keeps coming up when policymakers are talking is that a lot of the problems in the job market are structural, that those jobs just aren`t coming back. This is the new normal, so to speak.
Others are saying, no, this is just an economic cycle, and once the economy gets better, the jobs will come back. Where do you stand on that?
Because that`s a critical question and answer that will determine what happens with interest rates.
DAVIS: Totally agree, Susie. We`ve done a lot of work on this.
We`re actually right down the middle. It`s not a short cut.
There`s clearly cyclical elements, which means if we see stronger demand, higher wage gains, some Americans who are currently out of the labor force will return. But there`s also clearly a structural impediment, it`s not just demographic forces that have kept labor force participation rate down, it`s also things such as potentially skills mismatch, the rise in disability, which historically have not tended to follow or returned to labor force in such rapid pace.
So, as we calculate the numbers, it`s roughly 50/50. So, the good news is that those who are savers or investors out there, it means a little bit less slack in the economy, slightly higher pressure on wages for those who do have jobs.
The downside, however, is that the potential growth rate for the economy is a little bit weaker than some would have thought just a year or two ago.
GHARIB: All right. Tough situation for especially out of work Americans. Thank you so much, though, Joe, for coming in and giving us your views on everything.
DAVIS: Thank you, Susie.
GHARIB: Joe Davis of Vanguard.
And still ahead on the program, what companies across the country are doing to make sure they can find the right workers with the right skills.
GHARIB: It`s a big problem, some employers want to hire but can`t find the right workers. The problem, a lack of skilled labor, which threatens both the company`s growth and profitability. But some are figuring out ways to solve that problem.
Mary Thompson traveled to several companies in North and South Carolina and Minnesota to get a closer look to find out where the jobs are.
MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Business is booming at TIMCO Aviation. The Greensboro, North Carolina firm provides FAA required maintenance to commercial, cargo and military planes.
It`s benefiting from the strong growth in the aviation industry, growth threatened by a lack of skilled workers.
KIP BLAKELY, TIMCO VP OF INDUSTRY & GOV`T RELATIONS: We are at capacity. And so, again, if we were to expand, it would be an issue of getting enough workforce in here to actually work those aircraft.
THOMPSON: Kip Blakely is TIMCO`s vice president of the industry and government relations. He said to meet demand and replace the 30 percent to
40 percent of its workforce nearing retirement, TIMCO needs to hire 350 workers a year for the next three.
(on camera): Replacing them isn`t easy. The workers who take a part inspect, to repair and then put planes like the 737 back together again, need to be FAA-certified. And that`s a process that takes two years.
(voice-over): To ensure steady stream of workers for present and future years, TIMCO`s partnered with Greensboro`s Guilford Community College to get the word out about jobs in the industry, starting with talks that are aimed at kids as young as fourth and fifth grade.
AUDREY FLOYD, GTCC AVIATION MANAGEMENT CHAIR: We try to spark that interest early when people are open to anything and haven`t been routed in other directions.
THOMPSON: Audrey Floyd chairs the aviation program at Guilford.
Along with the elementary school outreach, Guilford and TIMCO support a four-year aviation program at a local high school.
One student, Junior Bruno Cacace, interned at TIMCO last summer and is shadowing at TIMCO engineer this year. The experience helped him to cement his decision to become an aviation engineer.
BRUNO CACACE, SHADOWING STUDENT AT TIMCO: It`s more interesting now that I`ve seen in depth and been in the cockpits of airplanes.
THOMPSON: A third way Guilford funnels workers to TIMCO, a two-year program providing graduates like technician Daniel Wade with the FAA certification they need to work on the planes.
DANIEL WADE, TIMCO TECHNICIAN: I`ve changed oil filters. I`ve cleaned and lubed cables, removed and replaced parts. A little bit of everything here.
THOMPSON: And for TIMCO, getting more people who can do everything is the one thing it needs to keep growing.
Two years ago, J.W. Hulme had a problem. The company`s former CEO, Jennifer Guarino, say the maker of luxury leather goods and accessories couldn`t find the workers it needed to meet growing demand.
JENNIFER GUARINO, MAKERS COALITION: It began to worry our company.
And we thought, at one point, it actually was strangling our growth. We had to actually, you know, slow down our sales as a result of that.
THOMPSON: It`s a common problem. A survey by the Manufacturing Institute says 82 percent of U.S. manufacturers have skilled jobs they can`t fill. Vacancies that are growing now that rising labor costs in Asia are prompting many to bring work back home.
Work is what Larry Corbesia was looking for when he landed in a homeless shelter after 15 years of checkered employment history.
LARRY CORBESIA, J.W. HULME EMPOLOYEE: I just wanted some kind of income and some kind of steady job.
THOMPSON: He found one at J.W. Hulme after a nonprofit called Life Tracks directed him to an industrial sewing class at Minneapolis`s Dunwoody College of Technology.
Dean Debra Kerrigan designed the program at the urging of the manufacturing group that includes J.W. Hulme. Known as the Makers Coalition, it promotes a trade of industrial sewing and hires and apprentices Dunwoody students.
DEBRA KERRIGAN, DEAN: Companies didn`t want to focus on training.
They wanted to focus on being productive.
THOMPSON: Dunwoody`s six-month course costs just over $4,200. Many students like Corbesia receive grants to defray the costs.
(on camera): The course launched last year, but only after Kerrigan confirmed regional firms would need 90 new hires over the next 6 to 18 months, and more over the next seven years as retirement will claim 50 percent of their workforce.
(voice-over): The first class hitting snags, though. J.W. Hulme vice president Laura Smith saying the new hires needed more work.
LAURA SMITH, J.W. HULME V.P. OF BRAND MANAGEMENT: The first three brought in from the program, we really saw a need to have highly skilled more refined skills for industrial sewing for leather.
THOMPSON: With employer`s feedback, Dunwoody altered the course.
Students now spend more time at the machines, less time on the books. Its placement rate is 90 percent, and graduates earn an average hourly wage of $13.46.
But for Corbesia, the new skills and job are priceless.
CORBESIA: It makes you feel proud when you see a finished product.
It looks real good and you know you did your best on it and everything is nice and neat and straight. And it`s guaranteed for life.
THOMPSON: A life improved by an industry stitching a workforce back together.
At the V.C. Summer Nuclear Station, a massive derrick splits the summer skies. It`s part of South Carolina Electric and Gas` $10 billion project to build the first two nuclear reactors in the United States in 30 years. At its peak, the project will employ 3,500 construction workers.
But SCE&G is looking to hire a permanent workforce for another big job.
JEFFREY ARCHIE, SCE&G CHIEF NUCLEAR OFFICER: We`re going to bring on about 800 total workers to support the staffing for our operating plants.
THOMPSON: It will be three or four years before the reactors come online, but SCE&G`s chief nuclear officer Jeffrey Archie says hiring started five years ago.
ARCHIE: We wanted to make sure we did was we brought in the right people at the right time. So, initially, we are going to be doing a lot of training and a lot of instruction, so we hired instructors first.
THOMPSON: Those instructors now train nuclear operators at a simulator built on the 240-acre site, the start of ongoing training these employees will receive throughout their careers. SCE&G has hired more than half of the 800 workers, but still needs engineers, mechanics, technicians and chemists.
(on camera): Depending on the job, the Nuclear Energy Institute says starting salaries in this industry will be about $52,000.
(voice-over): SCG&E wouldn`t say what it pays, only that it`s competitive and that it has a full benefits package. Now, the company is finding workers from the industry, military and four-year colleges, while partnering with local schools to create a pipeline of trained workers.
One of those schools is Columbia, South Carolina-based Midlands Technical College. Five years ago, Midlands` president Sonny White says it co-developed a two-year nuclear program with SCE&G, training workers to work here and abroad.
DR. SONNY WHITE, MIDLANDS TECHNICAL COLLEGE PRESIDENT: They can go to work anywhere in the world where the Nuclear Regulatory Commission has oversight.
THOMPSON: The majority of Midlands nuclear students are adults, with many looking to change careers.
Like 37-year-old Kimberly Hall. The chemist left a job in the drug industry, lured by her fascination with nuclear energy`s potential.
KIMBERLY HALL, MIDLANDS TECHNICAL COLLEGE STUDENT: Since I`m a scientist by nature, it`s just a process that you can take uranium and power an entire city.
THOMPSON: The hope of landing a steady job brought 25-year-old Wesley McQueen to Midlands. Once a temporary worker for the state, he graduated last year and now works as a nuclear mechanic at SCG&E.
WES MCQUEEN, SCE&G EMPLOYEE: I`m not sure how far up the ladder I`ll climb. I definitely plan on spending 30, 35 years with the company.
THOMPSON: McQueen recharging the career by taking the nuclear option.
GHARIB: And Mary Thompson joins us now.
Those are terrific and inspiring stories. One — in the last one, they were saying that they wouldn`t say what they were paying, but that there`s a good benefits package.
But are you finding if you`re skilled and you`re in such demand, that wages are going up?
THOMPSON: It depends on two things, industry and geography. There are certain industries that are growing like gang busters. The aviation services industry and oil and gas. There you see some wage pressure again because demand is so great for the services.
The other factor that depends on wages, higher wages, that is, is geography. If you`re operating in an area where there is a large labor pool, there`s no wage pressure whatsoever. You can find the workers that you need and hire them. But if the labor pool is small, some companies say they`re having to pay up.
GHARIB: It`s a case of simple supply and demand. I also just was wondering, you know, if you were researching these stories, what did you find in terms of peoples perceptions of what does skilled mean? I mean, what skilled means in today`s market place than it did, let`s say, a decade or so ago?
THOMPSON: Skilled basically means not only are you able to fix things, you know, fix a machine with a hammer, and a wrench, and all the other things, but also you need to know how to fix technology. So, not only do you need tow the nuts and bolts of the machines that you`re working on, but you also need to know how the software that runs these machines works. So, it`s nuts and bolts, and reboots and crashes. That`s what you need now as a skilled worker.
GHARIB: You know, I`m sure you hear this all the time, but on this show, we get so many CEOs who come on, and the big worry is where we`re going to find the workers of tomorrow. And they`re very concerned about it.
But it`s really piecemeal. These stories that you were covering of a company here, company there that found a solution.
What are you learning in terms of some kind of broader plan of action from the highest levels of Washington so that we have a national policy?
THOMPSON: Apprenticeship programs, more connection between businesses and community colleges.
And lastly, a change in mindset in America. These are not your grandfather`s manufacturing jobs. They`re in his nicer places, there`s a career path. The companies are trying to change that image.
GHARIB: Well, let`s hope we have some consciousness raising on that.
Mary, thank you so much.
And coming up — from a Kickstarter campaign to the Super Bowl, how one young entrepreneur turned her bright idea into a growing business.
GHARIB: For many Americans, starting a business sometimes turns into the best job ever. We wrap up tonight`s special with a look at two successful entrepreneurs.
We begin with a physician who found a way to improve the health care experience for all the complains about the hassles of seeing a doctor to waiting and waiting in the emergency room, one entrepreneur put together a treatment plan to bypass all that, helping both doctors and patients in the process.
DR. JAY PARKINSON, SHERPAA: You`re right in and you just say, hey, I have a sore throat.
GHARIB (voice-over): Jay Parkinson is a doctor. His patient, our health care system.
PARKINSON: Everybody knows health care is broken and inefficient.
GHARIB: That`s why he started Sherpaa. The two-year-old service provides access to doctors 24/7, online and on the fine. They can answer questions, give advice, diagnose problems, prescribe medications and speed the referral process, and it`s paid for by employers.
More than 100 companies are paying about $30 a month per employee to offer Sherpaa as a benefit.
PARKINSON: Nobody has ever said this is a bad idea, ever.
GHARIB: Certainly, not Martin Refsal.
MARTIN REFSAL, CANARY MARKETING ASSOCIATE: I woke up one morning and I just felt deathly ill.
GHARIB: Refsal works at Canary, a New York tech startup. He has a primary care physician but called Sherpaa instead.
REFSAL: In less than an hour I had a prescription called in to the pharmacy just on the block, and I had a referral to a specialist who I went and saw later that afternoon.
GHARIB: Better yet, communications with Sherpaa don`t generate any insurance claims. Parkinson says the service is reducing claims by about
PARKINSON: So the company all of a sudden looks really healthy, so their premiums increase much less.
GHARIB: It`s not the first time Parkinson has mixed medicine with modern technology. In 2007, his practice literally took to the streets in Brooklyn. He was carrying about $280,000 in student debt and couldn`t afford to rent office space. So, he began texting and e-mailing with patients. His story attracted national media.
PARKINSON: Half my day was spent answering reporters` questions, you know, book offers, movie offers. It was insane.
GHARIB: Instead of trying to become a star, he dedicated himself to improving the health care experience for patients and for doctors.
DR. IDA SANTANA, SHERPAA EXEC. MEDICAL DIRECTOR: The doctor has this higher position and what this does is put the patient in charge in a big way.
GHARIB: Ida Santana is a staff doctor at Sherpaa and earns more than she might as an average primary care physician.
SANTANA: It`s really kind of moving medicine into an electronic age where most doctors don`t e-mail with their patients and that`s — like who doesn`t e-mail?
GHARIB: So far, companies are using Sherpaa in New York, New Jersey and California with Illinois coming on board soon.
WhiteOps is a New York cybersecurity firm. Its COO Ash Kalb stumbled across Sherpaa and is now a big believer.
ASH KALB, WHITEOPS: We started talking about what the ideal health care program would like, and we didn`t think it existed. But I started Googling around and I came across Sherpaa and it was exactly what we described to each other as what we like.
GHARIB: Kalb thinks having a doctor on call is making his company more efficient. His employees don`t need to see a doctor in order to communicate with one, and that`s what Jay Parkinson calls progress.
PARKINSON: To me, the future of primary care looks what like what we`re doing here.
GHARIB: Sherpaa says it has added 20 new companies since we first aired that story back in July. It`s also expanded into Illinois and now plans to be in six more states before the end of the year.
Our next story is about a disruptive innovation in the world of the iconic Barbie doll. The pink toy aisle is going through a dramatic transformation because of one woman who wants to inspire future generations of female engineers, one toy at a time.
Tyler has her story and her bright idea.
MATHISEN (voice-over): Debbie Sterling didn`t play with erector sets when she was growing up in Rhode Island. In fact, it was quite a surprise when her high school math teacher suggested she study engineering in college.
DEBBIE STERLING, GOLDIE BLOX FOUNDER & CEO: I didn`t know what an engineer was. I thought it was a train driver.
MATHISEN: She learned quickly at Stanford, though, that engineering is a field dominated by men. Sterling says only 11 percent of the U.S.
engineering force is female, a sore spot that got her talking with a college buddy, another woman who mentioned playing with her brother`s Lincoln Logs and LEGOs as a child.
STERLING: At that It just hit me, that why were those her brother`s toys and why didn`t it get those as a little girl?
MATHISEN: So, Sterling begun talking to neuroscientists and reading about cognitive development. And she came up with an idea.
STERLING: Girls have really strong verbal skills and love story and characters, and what was missing from all the construction toys in the market, there was — why are we building this rollercoaster and who is riding on it and where are we going? And who is it helping?
MATHISEN: The verbal hook is a book starring Goldie drawn by Sterling herself. And why not? Her grandmother, Sterling Sturtevant, was one of the first woman cartoonist back in the 1950s, drawing the curmudgeonly Mr.
But toy makers weren`t buying Debbie`s idea. She says they were stuck in time. Mr. Magoo`s time.
STERLING: The message kind of over and over again was looking at me with pity, saying oh, this girl doesn`t know that construction toys for girls don`t sell. Suddenly, I`m walking around like I`m in the twilight zone, I feel like I`m in the 1950s.
MATHISEN: To prove them wrong, Sterling and friends team-tested prototypes all over the San Francisco Bay Area.
STERLING: You learn that there is so much more complex than what the pink isle makes them out to be.
MATHISEN: The pink isle — princess dolls, makeup kits, play kitchens
— and to Debbie Sterling, a target for disruption.
Her message was a hit on Kickstarter in 2012, where she roped to raise
$150,000 to make 5,000 units.
STERLING: And we hit the goal in four days.
MATHISEN: In a month, she raised about $185,000. The first production run, 40,000 units.
Toys “R” Us ordered and soon, right there in Barbie shadow, there was a new kid on the block.
STERLING: It gives me goose bumps to see Goldie next to Barbie and now, girls have a choice.
MATHISEN: Goldie has had a makeover by professional artist this year, but her spirit hasn`t changed.
STERLING: We have Rosie the Riviter, we have Pippi Longstocking, we have Matilda, we have Punky Brewster and Eloise. Those were sort of the five female characters that influenced Goldie.
MATHISEN: Last November, GoldieBlox they released this video. It was a one-week wonder until legal issues with the music as you were faced, but the bottom line is it helps sell a more GoldieBlox toys.
STERLING: We shot up to number one and number two bestselling toys on Amazon (NASDAQ:AMZN) this week.
UNIDENTIFIED MALE: Deborah Sterling.
MATHISEN: The same week in Chicago, Sterling was named the Rising Star Inventor of the Year by the toy and game industry, an honor, for sure.
But her focus is still on the toughest build of all, change.
STERLING: Engineering doesn`t have to be this incredibly intimidating math science thing. We can start showing girls that engineering actually changes people`s lives and it can help make the world a better place.
GHARIB: Earlier this year, GoldieBlox won a free commercial during the Super Bowl telecast. And it`s been growing, adding two new additions of GoldieBlox to the mix for a total of four.
That`s NIGHTLY BUSINESS REPORT for this Labor Day. I`m Susie Gharib, have a great evening, everyone. Tyler and I will see you right back here tomorrow night.
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