♪ money, money, money, money, money, money, money ♪ ♪ money, money, money, money, hi everybody, welcome to "the wall street journal report," i'm maria bartiromo. happy labor day weekend, everybody. the chairman speaks, the republicans meet, and feeling the heat. the dog days of summer. but what will the markets do as we hawaii into the fall? the state of the american labor and where will the jobs come from. my conversation with hilda solis. >> where is the innovation. >> the answer may surprise you, where young people are headed to look for jobs. why the financial crisis could strengthen our economy in the long run. "the wall street journal report" begins right now. this is america's number one financial news program. "the wall street journal report." now, maria bartiromo.

first, though, let's get to bill griffith with a look at the stories making headlines this week, bill? thanks maria, here are stories making news as we head into a new week on wall street . it is summertime, will the living be easy? central bankers from around the world are meeting in jackson hole, wyoming, they're waiting to hear whether or not federal chairman ben bernanke will signal any new moves to help boost america's economy. during his speech, he said he would not rule out further use of nontraditional policies and the fed would act to produce growth as needed. it was a slow week for the markets, until we got to thursday, when the dow fell below 13,000, during the session, touching the lowest low in four weeks. the markets rebounded on friday. the gross domestic product was slightly up, showing an annu

annualized growth rate of 7.1%, not enough to meaningful lower the unemployment rate. the case price index shows that prices rose in june from the same period a year ago, the first year-over-year increase since the summer of 2010. gasoline prices are also on the rise, hitting a national average of more than 3.80 a gallon, partly because more than 90% of oil production in the gulf of mexico was shut down because of hurricane isaac. and, of course, we are in the peak driving season. so what is more important than the economic summit in jackson hole? who is there, or who is not? joining us, david wessel, author of the new book "red ink" inside the high stakes politics of the federal budget. david, thank you for joining us. >> a pleasure. >> let's start with the annual conference at jackson, that is highly anticipated. the speech by ben bernanke, markets looking for any clues about possible quantitative easing. during his speech, he said

nontraditional policy tools have been and continue to be effective in providing financial accommodation. what does that mean to you? do you think the fed steps in during their next meeting in september? what do you think? >> i think it means the fed does step in, basically i summarize his speech this way, quantitative easing, all the bond buying we've been doing, it works. the economy is still sick, the medicine can help them, i'm going to give them more medicine, probably in september. >> all right, he needs more data, the jobs number, and all that. also notable who was not in the meeting, the european bank central president, mario dhragi, he was absent, canceled this week. why was he absent this week? what does that tell us? >> you know, he has a full plate, we talk about how divided the meetings of the federal

reserve policy are. some people want to do more, some less. that is nothing compared to what mario dhragi faces. so i think it is not easy to get from frankfurt to jackson hole. usually it is quiet, not so in europe this year, and secondly, he is trying to work out a compromise within his organization that will allow him to do more to help the european economy without having the germans walk out of the room. >> let's talk about the subject of your -- your latest book, the massive federal deficit and gridlock in washington. do you see a short-term solution. will we fall off the fiscal cliff with the tax cuts set to expire in january? >> you know things are so bad in washington that people can't even agree if you're going to go over the fiscal cliff or run into it. so i don't see anything happening in the short term. if short term means before the election. if mitt romney wins, they just delay the whole thing in the next six to nine months, with the argument that the president should have a chance to put the budget together. the interesting thing is if

obama wins, the white house indicates they're going to have negotiations with the republicans, and they're trying to make the fiscal cliff look -- trying to make the president look bold enough to go over the fiscal cliff as a bargaining tactic with the republicans. whether it works, gosh, i don't know. >> how do you read the difference between the president and mitt romney in their approach to fixing the deficit? especially when it comes to medicare? do you think either has a chance to repair that? >> well, i hope so because the program is broken. i wrote a column this week suggesting that whoever is going to cut medicare is a real distraction. both of them are going to cut medicare, because change means changing the program so it doesn't cost as much as it's predicted to cost. the obama budget and paul ryan's budget, the one crafted by mitt romney's running mate take us to about the same amount of money spent on medicare ten

years from now. but they get there in a very different way. do we have the government change is, trying to make providers more efficient? or do we do it the mitt romney, ryan way, where we turn to competitive marketplace where seniors choose private plans and a traditional medicare plan. that would he about a great debate to have. >> you made it very clear you're not very optimistic on the way to deal with the debt in washington. how do you see it playing out? is it at least go that it becomes a big issue in the presidential race? >> yes, i think it is good we're in the post-denial phase of our discussion about the deficit. very few people in washington repeat the phrase of dick cheney that deficits don't matter. everybody kind of said that deficits matter. but i can't figure out what forces them to the table to compromise the action. it seems to me it takes a crisis, either a financial one or an artificial one, or could it be a sudden outbreak of

leadership? unfortunately, i don't see the latter happening any time soon. so the question is whether or not there is some move that we have to get things done, and prove to american people that congress divided between the democrats and republicans can govern after the election. we may get there but we're not there yet. >> does that mean you don't feel that the election will change things when it comes to the deficit? >> i don't think it will change much, i don't think either side will win decisively, president obama, if he wins will, have to find a way to do business with republicans and his chief interlocutor will be paul ryan. and if romney wins, even he gets the senate, democrats will have enough vote to block whatever he wants to do. so the only way this gets done is if the loser decides that governing is more important than

scoring points for the election. >> david, always good to see you, thanks. now back to maria and the rest of the program. up next on "the wall street journal report," on the labor day weekend, where are the jobs? my discussion on the work and the work force with labor secretary, hilda solis. and building better jobs with better wages. how the office, benefits and careers of future may come from reinventing our oldest neighbors. let's take a look at how the stock market ended the week. back in a moment. two years ago, the people of bp made a commitment to the gulf. and every day since, we've worked hard to keep it. bp has paid over twenty-three billion dollars to help people and businesses who were affected, and to cover cleanup costs.

today, the beaches and gulf are open for everyone to enjoy -- and many areas are reporting their best tourism seasons in years. we've shared what we've learned with governments and across the industry so we can all produce energy more safely. i want you to know, there's another commitment bp takes just as seriously: our commitment to america. bp supports nearly two-hundred-fifty thousand jobs in communities across the country. we hired three thousand people just last year. bp invests more in america than in any other country. in fact, over the last five years, no other energy company has invested more in the us than bp. we're working to fuel america for generations to come. today, our commitment to the gulf, and to america, has never been stronger. era detergent once head-butted a tea stain so hard... a cup of tea on the other side of the world felt it. twice the stain fighting power as the next leading liquid value brand. era, the only detergent that's chuck norris approved.

welcome back. most of us are enjoying a labor day weekend. many americans are concerned about the future of their jobs.

joining me now where the jobs are or are not in today's economy is labor secretary hilda solis. thank you so much for joining us. >> great to see up thanks. >> the unemployment rate above 8%, we haven't seen the consistent job growth, most economists agree, is required to really lead us to sustained recovery. how do you characterize the job situation in the country today? >> you know, maria, i have to look back at the last 3 1/2 years and to be certain, we're on a good path. we have seen 4.9% private sector jobs and seen a slow recovery in manufacturing and 500,000 jobs in manufacturing alone that kr have come about in the last two years and half of that has been evidenced in the automobile industry because of investments that this administration made.

we're making a lot of partnerships with community colleges to make sure we have skill sets that employers want and need. that's what i've been hearing from around the country as i travel from west coast to east coast. let me ask you, because so much debate and conversation these days, the secretary -- about the fiscal cliff, the tax cuts expiring, the spending programs expiring. all this has led the economists to say that the rate could topple 20% and we could see recession. what is your take on the bush tax cuts? should they be extended? >> well, as you know the president has looked forward to the discussion with congress and the senate, and hopefully we can get to some sort of resolution where we don't go off the cliff. because it was never our intention to do that. and right now we can close the gap if we just allow the revenues to be raised and put the focus on the individuals who

could afford to pay more on the increase in their taxes, and that would be the millionaires and billionaires. >> well, let's be fair, taxes are going up for more than anyone making $200,000. so that is not exactly a millionaire or billionaire. so should we really have the stand off on the raises on the taxes for a portion of people when everybody is waiting in the balance to see while this fiscal cliff waits in the balance and everybody is waiting to see what happens. because everybody is going to see their taxes go up, above $200,000. not millionaires. >> well, i would think that hopefully, the public will contact their representatives so that we can get to the table. the president has been willing to hear any ideas and any discussion that will help get people to the table. but that has not been the case. and i would just say from where i sit, we have been working very closely with our friends in the private sector. we did a five-state tour in

manufacturing and the investments with community colleges. and there are a lot of about by businesses say we're not going to wait for government. we'll start working on things now. we have to plan for our future and our future workforce. >> tell us where the jobs are right now, secretary. where do you see hiring happening in the country? >> i see it happening in areas like manufacturing and in high-tech areas. i still think that the best bet we have is by getting more people skilled up, and that means getting additional credentials at community colleges. that's why the president has made so much funding available, so we could partner with private industry and community colleges to make sure the curriculum reflects the actual kind of technique and work that those employers want. >> let me ask you, secretary solis, i know that companies and defense companies have to give employees a certain amount of time, heads up, before they lay off the people because of the spending programs going away.

i believe they will have to tell the employees their jobs are cut by october one, are you expecting a big number of layoffs as a result of the spending programs going away, and this fiscal cliff issue? are you expecting a lot of layoffs at year end? >> well, what i'm expecting is that everyone work through due diligence here, because you shouldn't falsely give out notice if you in fact have not been notified that your contract is not going to be renewed. >> everything has changed so much, we call it the new normal, but of course, industry after industry, you are seeing technology differences, things changing. if you started your career today, secretary solis, where would you want to work? >> well, i would want to make sure that i have the skill sets available, and that means soft skills and also technical skills. so i would first of all want to make sure that whatever credentials i get, and i'm talking about a one- or two-year

credential that you can obtain at a community college, that are low cost and could turn people out right away. i would look at apprenticeship programs. for example, welding. there is a shortage of people that have that skill available. it's hard to find people that have those kinds of skills. >> that is a great point, secretary, great to have you on the program, thank you so much, and happy labor day to you. up next, what do shoes, social media and big box stores have in common? it's all part of the new social media that's building the new normal.

when it comes to the best jobs of today and tomorrow, can we do better by thinking more creatively, like the industrial and agricultural ages of the past? my next guest says we're looking at the greatest opportunity lying in a creative age. richard florida is the author of "the rise of the creative class" revised from its original edition. great to have you on the program. four or five years into a sustained financial crisis, very high unemployment, these are issues we're talking about all the time. you said an interesting thing in your book, the longer the crisis goes on, the smaller the ideas get for fixing it. tell me about your big idea on

this, the transformation on the classes. >> well, it is interesting, people are bringing back manufacturing jobs, we'll bring back some, a couple hundred thousand. they're saying educate people for the new jobs. now there are professional jobs, management jobs, arts and crafts, they're growing at a good pace. if you have a ba, a bachelors, under 5% for unemployment rate. but we have 60-plus million americans today, 45% of our workforce, doing the low-wage service jobs. the people who prepare our food, take care of our aging parents, our kids, wait on us in shops, retail clerks and those jobs, pay 25 grand, 30 grand, not secure jobs. what i argue about in the book, talk about in the country, we have to make those low wage service jobs, we have to somehow boost them up, make them better jobs.

>> if we're relying on them, how do we make them better paid jobs? >> well, we did it in manufacturing and this surprises me how we forget and go back to the small solutions. my father, born in the '20s, got a job in a factory. it took nine people to make a family wage when he started that job. came back from world war ii, stormed the beaches at normandy. he said i came back, as if by magic, i could buy a home and put you boys through college. we decided we could pay more, that is what we have to do with services. you know what? when you look at the best service companies. i have done that, i have looked at zappos and other studies, there is a published work, when you look at the retail workers, they engage their workers, get better customer service, higher productivity, it is a win, win for the worker and for the company.

>> where is the innovation, who is innovative when it comes to service jobs and blending them with creative jobs? >> well, i think when you look at the annual list of the best employers, you get the high tech companies, but you also get companies bubbling up like the container store, my good friend, tony schayes' company, zappos, whole foods. but they did the role model of engaging the employees, they can become better service workers, just like in a factory, workers form a quality circle. get the workers together. they engage in continuous improvement. that is the other really interesting thing about zappos, now this can't happen everywhere. they're out of the suburbs, moving back to downtown, taking over the old city hall, but they're buying up old condos and they're creating more affordable housing so they can pay their workers better. give them an opportunity to move up from within, but now they can

get a little more affordable housing. they're tackling that on two ends. that is what the best service companies are doing. >> and where are your students with respect to education? where do they live and want to work? >> well, this is a big shift i talked about in the book. i talked about it ten years ago, but it has shocked me what happened over the past decade. young people in the tech field who used to go to the office park, and silicon valley, that is still a great place. but more and more people want to by in big cities. like new york. and i said what if you wanted to go to the suburbs and want a big house? no, i'll take a smaller space in a dynamic city. one thing we're seeing is the reinvention of big cities, but the other is high tech. >> i think it is really interesting, for a long time it was about silicon valley in

terms of entrepreneurs, now you see it in brooklyn and across the country. >> and it is still the number one place for start-up companies, silicon valley. but number two is new york, the number two place, twitter put its headquarters in san francisco. so i think you see this new shift. what i like about this, is it offers up the city as a place not only to solve technical problems. not only to do new software, but create business models. maybe when you have an interesting guy like mayor bloomberg, or a very good problem-solver like rahm emanuel, you could actually see this combination of technology and social media solving big urban problems. and for me, it seems like a big step for our country. >> i agree with you, a great story. thank you for joining us. >> thank you. >> you too, richard florida joining us. up next, we'll take a look at the impact on your money, and why you may be driven to distraction if you're in your ka this weekend. stay with us.

for more on our show and our guests, check out the website, wsjr at cnbc.com. follow me at google plus and twitter. and now for a look at the stories that could impact your money. monday is labor day, all u.s. markets are closed. and the dnc beginning in charlotte, north carolina. thursday is beginning of fashion week in new york city. and friday, the monthly jobs

report out from the department of labor. we'll find out how many jobs lost or gained in the month of august. and finally, today, you are not alone if you spent any part of this holiday weekend in your car. triple a says at least 50 million americans will travel away from home, a 50% increase from last year, and the highest number from the recession in 2007. that means more americans are spending more on travel. a good sign for the economy. thank you for joining us, next week, a walk down one of the oldest streets in new york where everybody knows your name and your ticker symbol. harry's bar. have a great weekend, everybody, i'll see you next weekend.