parasailing. i'm fredricka whitfield. i'll see you in about an hour. more now on the desperate work still being done in the jobs recovery. mitt romney's former economic adviser offers surprising government solution. "your money" with christine romans starts right now. makers versus takers, hard work versus government handouts but what if it's not a lack of ambition holding america back? what if it's a lack of opportunity? i'm christine romans. this is "your money." the job market is looking brighter if you've been out of work a very short time but if you've been jobless for six months or longer it's a different story. more than 4 million americans are considered long-term unemployed, that accounts for more than a third of the joblessness in this country, the longer you're out of work, the harder it is to get a job. fragile recovery is threatening to leave these americans behind. it's a crisis that's not going away but what can we do about

it? on the left you hear calls for more government stimulus, on the right you hear more government spending isn't the answer, in fact some republicans say safety net programs like jobless benefits, they add to the problem because they disincentivize work. here's how gop presidential candidate mitt romney put it on the campaign trail. >> you see an america where poverty is defeated by opportunity, not enabled by a government check. >> it is all about opportunity and getting government out of the way, but now one of the architects of romney's economic plan is straying from the very conservative dogma. kevin hassett from the american enterprise institute, welcome to the program. you have a talked about the long-term unemployment issue as a national emergency. priest told you it's a bigger challenge in a parish than a death in the family and here's one of your policy suggestions, the government should just start hiring people. that would seem shocking really coming from a conservative

economist who advised mitt romney in the last election, no? >> well, i mean, i actually am not so sure, i have lots of ideas of things that we should try. the thing is it's a national crisis these are folks disconnected from the workforce and one study showed they sent out a bunch of resumes that people couldn't get interviewed if they'd been unemployed for under six months. people a unless we get creative about reconnecting them to society we need to support them and we need to do a bunch of experiments and see what happens if you give somebody a job or hire an employer to give them a job and try other things to reconnect them and see after that if they can get back into the workforce. number of studies are promising. my colleague, dean bark baker came out with a new analysis that suggests maybe if you have a part-time job that's just for a charity and not being paid that that can keep you from having your skills degrade to the point where employers might actually reach out and give you

a job so there are some maybe positive steps that you can take. >> i think we have seen sort of a retraining crisis by the time people retrain for something, it's obsolete or they're retraining for the wrong things or there isn't a great connection between these programs and industry. at the same time stimulus is a dirty word in washington so you have to have direct hiring into government jobs or subsidizing, government subsidizing jobs for example to work at a charity, you're not going to be able to label a stimulus or your colleagues are not going to like it. >> oh, i don't know if even my colleagues. you shouldn't like it, right? the fact is that if we go back and look at the assertions that were made about how many jobs that were created by the stimulus, you know, we're talking about maybe 2 million jobs, i don't know what the right number is, but if you spent the same amount of money on just giving people jobs or giving employers a certificate where they could let somebody work for them for free you could have created 25 million jobs so

this incorrect job creation is really silly. you don't know you're creating a job for a person that doesn't have a job so if we build a bridge who is to say the guys who know how to build a bridge are going to be unemployed otherwise. you don't know that. so i think this indirect job creation that president obama has been you apursuing hasn't w. >> we'll set that controversial aside and if you want the government to invest in job creation where should the government be focusing, what kinds of jobs that can allow somebody to have skills on a resume and to fill the gap on a resume so they look for attractive. it's something that terrifies me, the longer you're out of the workforce the less desirable by order of magnitude you become when people start hiring. >> right, and the problems that you have, in terms of we know that people turn to drugs, their families fall apart, they have about a 10% higher chance of getting divorced, their kids have a long run negative impact.

we look at grownups who have people long-term unemployed when they're growing up and they have lower wages today, decades later so we know it's a serious problem. what i called for in a recent congressional testimony is that we recognize that it's a serious problem and then start to think about what are we going to do about this to learn what might help because right now we're not doing anything. we're not helping and we're not learning and so what i propose in the testimony and this is where the government jobs program, the other proposals come out is that we think of maybe 10 or 15 ideas that might work and do some random trials all around the country to see if they do work and then start to invest in the programs that actually work and so maybe the people on the left would think a government job might be the solution or the people on the right might think let's have a private employer do it. let them both design a trial and evaluate it scientifically and invest in the one that work. we owe it to americans to at least do that. >> i think you could get some bipartisan agreement. do you think you could get bipartisan agreement on something like that, trial balloons for how to create jobs

for the long-term unemployed? >> i do. >> constituents are republicans and democrats. >> right. no, i think we can. in fact, you know, at the joint economic committee which is one of the more important sort of thought-leading committees up on the hill because it's both the senate and the house committee, there was a big hearing organized by kevin brady, a republican, and the democrats klobuchar on the senate side that looked at this problem and i don't think it was a contentious hearing at all. there were republicans and democrats trying to think hard about how to fix this problem so i think there is hope. i know there are a lot of other problems that are front burner right now but our poll significances need to make this front burner because of the real human pain that is suffered by the people 245 athat are in thi situation. >> i spoke with neil ferguson this week, asking him about lack of opportunity or ambition. he was so concerned 6% of the people in his age group, under

50, 6% of the people are on social security disability benefits. he said there is this real concern about the safety net and people, too many people in the safety net. do you think there's a lack of ambition in this country that we're seeing in these numbers or a lack of opportunity requiring people to hold on for too long to the safety net? >> you know, i'm sure that if you were to look at this individual or that individual that you might find that maybe there are people that should be more ambitious and then some people that are really ambitious but it's just not working, but scientifically we know in the aggregate that if you've been out for six months, somebody mailed a bunch of resumes around and nobody could get an interview, you couldn't get a callback because you'd been unemployed for six months. the lack of opportunity is a serious problem and we understand why. once you've been unemployed for a long time then maybe the next employer is wondering geez, maybe there's something wrong with kevin hassett, maybe i shouldn't hire him. why hasn't he had a job for a year.

as soon as they start to 24i like that, i get depressed, i start to have behaviors that reinforce the negativity and it's kind of a downward spiral so we need to step in and think about what we can do to help those folks. maybe folks end up in the spiral because they weren't ambitious enough or taking their 99 weeks of unemployment insurance. from the point of view of an economist i don't think that's so relevant at this moment. we have millions of people that are long-term unemployed, they need our help. how they got there is a sunk cost as we economists call it and what we need to do is think about how we can fix it. >> thinking about it as family values you're thinking about it as a family values issue as well, not just a dollars and cents issue. kevin hassett, thanks so much. coming up, do you need a guide to manage millenials in the workplace? >> morgan did exactly what was asked of her, nothing more or less 37 she expects a raise and promotion. >> thanks. junior executive manager of data

consulting. >> is that better than assistant manager of junior accounts? >> yes. >> lack of opportunities or spoiled and lazy. does america's next generation of workers have answers to what ails the economy or are they just part of the problem? s of r. i go to angie's list to gauge whether or not the projects will be done in a timely fashion and within budget. angie's list members can tell you which provider is the best in town. you'll find reviews on everything from home repair to healthcare. now that we're expecting, i like the fact i can go onto angie's list and look for pediatricians. the service providers that i've found on angie's list actually have blown me away. find out why more than two million members count on angie's list. angie's list -- reviews you can trust.

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new grads, 152,000 are working in retail, 102,000 as clerks and customer service reps, 94,000 are waiters and bartenders so it might not come as a shock that a huge chunk of the population is checked out at work right now. new gallup poll found 52% are not engaged and 18% are disengaged and dragging down productivity and millenials are more likely to go through the motions. on his fx show a comedian summed up what many think of their younger co-workers. >> every 20-year-old i encounter behind the counter gives me a look, this job sucks. yeah, that's why we gave it to you! because you're 20! which is mathematical guarantee that you have no skills and nothing to offer anybody in the world. >> brad, i hope you're laughing

at that, the author of "manager 3.0." are millenials feeling too entitled, are the parents buffing up their self-esteem and now they're in the real world and bored and disappointed? >> i love that question. when we do workshops and we talk about in the book the biggest single beef is they're so entitled and "time" magazine a couple months ago ran the "me, me, me generation" explaining about millenials being entitled and lazy and one of the things i do in my workshop i show that cover and read a couple quotes and it says companies are discovering that to win the best talent they have to cater to a young workforce that's overly sensitive at best and lazy. it's a generation that refuses to pay its dues. they'd rather hike in the himalayas than climb a corporate ladder. everyone gets a great chuckle and then i reveal theish eye i just read didn't come out two months ago but issue from 1990.

>> generation x. >> complaining about gen x so everyone's jaws dropped to the ground. they're like no, brad that, describes millenials. we love complaining about people in their 20s. that's what we do in this country. >> i don't know who said it first but this is the first generation to get a trophy for just showing up for the season for soccer, not for actually winning the games. but let's look at the other side, middle aged comedians offering that perspective but clips from hbo's "girls" offers the other side of the coin. >> and then i am busy, trying to become who i am. >> our generation grew up here and we should follow our dreams but do students seem to be more practical today, brad? >> absolutely a enit's funny again every generation sort of hears that. i think that's interesting about millenials, you mentioned this earlier they've been told they're special,er this amazing, great, they've been overtrophied. they've heard of all of those

things growing up not because that's what they wanted because parenting shifted. it's actually not about me even though that's how i've been raised my whole life. they have to get practical and say every job is not going to be a dream job. it is going to be something where you like some of it and you're not going to like part of it. >> when they get into the workplace you made some great remarks in the book about how they ask too many questions and they need to just do it. what is your advice to millen l millenials when they get into the workplace? >> they've grown up with so much structure, more activities, more sports, more clubs, free time is down 37% from gen x to millenial. they're used to having a parent, teacher, coach, chaperone tell them what to do. they come to work and wantd the voice to know what to do. i advice don't ask questions but instead of hypotheses, recommendations and points of view. don't blindly ask. >> low wage jobs replacing

traditional middle class jobs. if this generation is cynical, diminished opportunity is probably a big part of that, right? >> it is a big part of that for them because they also have role models, mark zuckerbergs, this guy at 25 was worth $1 billion. why not me? >> you want something between bartender and billionaire, a few choices along the way would be nice. we get that. all right, ask questions on the job and i guess we gen x'ers have to be more tolerant. the u.s. economic recovery could change next year, three big reasons to feel hopeful about the economy, next. mom, dad told me that cheerios is good for your heart,

is that true? says here that cheerios has whole grain oats that can help remove some cholesterol, and that's heart healthy. ♪ [ dad ] jan?

all right, 2014, that's when the economic recovery will finally take off. we've been hearing that for six months now, right, that the economy is poised for a comeback but there are reasons to feel hopeful, for a genuine recovery the economy needs to be growing at around 4% annually. today the u.s. economy is growing at less than half that rate. the congress department recently revised gdp growth down to 1.8% in the first quarter of this year. that could turn around sometime in 2014. some economists expect the economy to grow between 3.5% and 4% next year. businesses blame washington for creating uncertainty, 2012 and 2013 were years of uncertainty with fights over the sequester and obama care and financial reform but the effects of those laws will become clear over the

next year, and that means businesses that have held off on hiring may feel confident enough to start adding workers. the unemployment rate is already down from its peak of 10% during the recession, and the federal reserve says it could hit 6.5% next year. the fed hasn't been standing still. ben bernanke has been pumping $85 billion into this economy every month in order to bring down the unemployment rate to grow the economy but one economist i spoke with says that's not enough. neil ferguson is author of "the great degeneration: how institutions decay and economies die." he says there are fundamental problems with the u.s. economy. >> while we've been focused on the endless macro debates a lot of micro things are going wrong and i think that is why we're not seeing a more rapid recovery, that's why small businesses are staying small. you can do all the stimulus you like but if there are institutional problems and structural problems in the way of growth the fiscal and

monetary stimulus won't work. >> let's talk about the monetary stimulus particularly the fed, what should the fed do? >> this is the policy we've only fr seen before in world war ii but it's being applied at a peacetime. an economy without all the controls during the war. can this go on forever? clearly not. this is an emergency policy for an emergency situation and all ben bernanke has ever said is when the recovery is clearly established, when we've achieved what we're happy with, then we will have to dial this down. the taper means not stopping the policy, it means just buying a little less than 85 billion a month, maybe 84 or 83, but that's going to happen unless you are one of these people who imagine the policy goes on forever which i don't think any serious person does. the problem is, and this is really crucial, whatever ben bernanke says, whatever his successor may say will be interpreted with a kind of manic intensity by markets because it

appears as if central banks are "the only game in town." >> you mention this period after world war ii was the last time we saw debt-to-gdp ratio was as high. the u.s. has 84%, it's been coming down because of the sequester and improving economy. does it give policymakers breathing space or -- >> false hope. >> false hope? >> it gives them false hope. part of it is we planned ten years ahead. the congressional budget office will tell you the deficit will be smaller, come down between 2.5%, 3.5% in 2015 but goes back up again. the entitlement explosion lies beyond that horizon and we do not have even the beginnings of an answer to the question of what we do about that. if we do nothing the problem gets worse and ultimately what it means and this is a central argument of my book "the great degeneration" is that the next generation is going to be clobbered by much higher taxes plus probably also far fewer entitlements than the baby

boomers. that's the reality of fiscal policy and nothing that has happened including the sequester fundamentally changes that. >> you talk about this next generation, almost as if america in some cases is eating its young, when you look at the high student loan debt, the fact that so many kids are underemployed, all of these majors at one time would have been a path to middle class life are not anymore. the kids are underemployed. they're not even working in jobs. >> right. >> large share of graduates are not working at jobs that require a college education. >> exactly. there is a huge generational imbalance. it's like we've broken the contract between the generations. we spend in terms of government spending roughly twice on the elderly what we spend on the young. that's mostly because of health care but it also reflects really chronic underfunding of education. the piece of education we spent a lot on is the degree programs, very, very expensive tuition for college but the benefits of that look economic had economically questionable. we'd be better off improving our high schools which for most people in the u.s. deliver a sub

prime education and the further down you go, the income distribution until you get to the really poor zip codes the worse the schools get. it's very interesting mobility, social mobility has declined in the u.s.. we talk endlessly about inequality but we should worry about social immobility. if you're born into the boston quintile chances are you're stuck there. that isn't what happened in the past. what happened to the american dream? >> even though he says the u.s. has its structural problems ferguson is hopeful about the future and gives the overall economy a b plus. if you want to see more visit cnn.com/yourmoney. coming up, men's underwear, lipstick, shark attacks and hot waitresses. you probably can't guess what they have in common. the common thread and why it matters to your money, next. [ female announcer ] switch to swiffer wetjet,

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the federal reserve is looking for signs of economic strength so it can pull back its historic stimulus. that means every single piece of economic data getting heightened scrutiny on wall street. er this there are also some unconventional ways to read the economy. forget the monthly jobs report, forget gross domestic product and the consumer price index and check out these economic readings. what do shark attacks, hot waitresses and men's underwear have in common? they're economic indicators, of course. why men's underwear? the theory, said to count alan

greenspan among its believer s undies are the first thing men stop buying when the economy goes out. this shows the recovery. another theory the hemline index, it's been around since the 1920s. the shorter the skirt the better the economy. two dutch economists studied it their conclusion hemlines can't predict the economy but recessions do lead to longer skirts after a three-year lag time. today's maxidresses are perhaps sign of a financial crisis hangover. ♪ connie francis only had part of the story. lipstick may tell a tale on the economy. this indicator says when money is tight women indulge in small luxuries instead of big ones but lipstick sales fell during the last recession so maybe we kiss this indicator good-bye. and from lips to jaws.

in the movie amity island was packed. more people vacationing in the water and more shark attack. since the end of the recession the numbers have been trending upwards and there's the hot waitress index. illustrated by "two broke girls." >> please i really need this job. we lost all our money. >> reporter: the hotter your waitress the worse the economy. why, because in boom times beautiful women are more likely to work as promotional models, product reps and other jobs where hotness helps. ridiculous? yes. but it gets worse. sugardaddy.com surveys its clients on the economy, the dating site that pairs wealthy men and women with attractive sugar babies. in a survey those daddies are predicting a downturn. if they start buyiop buying unde

should be worried. >> thank you, we're here every saturday 2:00 p.m. eastern and sunday at 3:00. find me on facebook and twitter and check out our blog, see what our letter grades for the economy. cnn.com/yourmoney. i'm continually interested and fascinated by how much athletes, patients, everybody wants their own data because they want to learn and be better and have better outcome. >> you can get this information all the timeea