1
00:00:14,200 --> 00:00:17,440
Speaker 1: This is Wall Street Week. I'm David Weston bringing you

2
00:00:17,720 --> 00:00:22,680
Speaker 1: stories of capitalism. This week, the silver tsunami of seniors

3
00:00:22,720 --> 00:00:25,920
Speaker 1: looking for nice places to live, creating a two hundred

4
00:00:25,960 --> 00:00:29,000
Speaker 1: and seventy five billion dollar hole that needs to be filled.

5
00:00:30,160 --> 00:00:33,280
Speaker 1: Plus President Trump wants to eliminate the Department of Education.

6
00:00:33,720 --> 00:00:36,560
Speaker 1: What would that mean and how much would it save?

7
00:00:38,080 --> 00:00:40,839
Speaker 1: And what the next Trump administration will mean for the

8
00:00:40,840 --> 00:00:43,960
Speaker 1: banking system and what it's already meant for the world

9
00:00:44,000 --> 00:00:48,640
Speaker 1: of bitcoin. But we begin with a story of second acts,

10
00:00:48,920 --> 00:00:52,479
Speaker 1: a story of reinvention, of repurposing, and the future of

11
00:00:52,560 --> 00:00:56,520
Speaker 1: America's shopping malls in the growing age of e commerce.

12
00:00:57,960 --> 00:01:01,200
Speaker 1: It's the busiest time of the year shopping, a time

13
00:01:01,280 --> 00:01:03,920
Speaker 1: that in the past would have seen the Berkshire Mall

14
00:01:04,080 --> 00:01:07,399
Speaker 1: in Why I'm Missing Pennsylvania packed to the gills.

15
00:01:08,080 --> 00:01:10,479
Speaker 2: So the mall was built in the early seventies.

16
00:01:11,360 --> 00:01:14,400
Speaker 3: It was in its heyday, especially at this time of

17
00:01:14,440 --> 00:01:18,440
Speaker 3: the year, the time between Thanksgiving and Christmas.

18
00:01:17,800 --> 00:01:21,240
Speaker 2: It was packed. Our police department.

19
00:01:20,880 --> 00:01:24,720
Speaker 3: Would go out and assist for traffic control.

20
00:01:25,120 --> 00:01:28,920
Speaker 1: As borough manager for Wyomissing, Michelle Bhaer saw the Berkshire

21
00:01:28,959 --> 00:01:32,200
Speaker 1: Mall in its glory days but the story today is

22
00:01:32,400 --> 00:01:33,040
Speaker 1: very different.

23
00:01:33,959 --> 00:01:38,440
Speaker 3: Tenancy, I would say is about sixty percent, so I

24
00:01:38,480 --> 00:01:40,760
Speaker 3: mean just the visual of walking through it compared to

25
00:01:40,800 --> 00:01:43,360
Speaker 3: even a decade ago, when again, at this time of

26
00:01:43,400 --> 00:01:46,440
Speaker 3: the year you would be bodying, checking people trying to

27
00:01:46,440 --> 00:01:50,760
Speaker 3: get from store to store versus as of today, I

28
00:01:50,760 --> 00:01:53,360
Speaker 3: would say sixty to seventy percent of the parking lot

29
00:01:53,600 --> 00:01:54,640
Speaker 3: is fenced off.

30
00:01:55,640 --> 00:01:59,360
Speaker 1: What's happened in Wyomissing is far from unique across the

31
00:01:59,360 --> 00:02:02,520
Speaker 1: country or because love affair with shopping malls has cooled.

32
00:02:03,080 --> 00:02:05,680
Speaker 1: It was an affair driven by the passion of consumers,

33
00:02:06,080 --> 00:02:09,520
Speaker 1: a passion to buy, but also to buy alongside others

34
00:02:09,680 --> 00:02:10,800
Speaker 1: sharing that passion.

35
00:02:11,680 --> 00:02:15,919
Speaker 4: It's the emotional connection. So let's not forget why people shop,

36
00:02:16,000 --> 00:02:19,440
Speaker 4: why women primarily shop right, So eighty five percent of

37
00:02:19,480 --> 00:02:22,800
Speaker 4: consumption generally occurs from the she, the female side of things.

38
00:02:23,600 --> 00:02:26,799
Speaker 1: Adrian Yee is a retail analyst at Barclay's and has

39
00:02:26,840 --> 00:02:29,079
Speaker 1: followed the business for nearly twenty years.

40
00:02:29,960 --> 00:02:32,680
Speaker 4: Back in the day, it was the social outlet and

41
00:02:32,720 --> 00:02:35,760
Speaker 4: that hasn't necessarily gone away. Unfortunately, we have all this

42
00:02:35,840 --> 00:02:39,600
Speaker 4: social media where people don't socialize in a public space.

43
00:02:39,960 --> 00:02:45,320
Speaker 4: The US consumption is the most oversupplied in the world.

44
00:02:46,040 --> 00:02:49,960
Speaker 4: So pre pandemic, or i should say actually pre GFF,

45
00:02:50,760 --> 00:02:54,800
Speaker 4: so we had approximately seven square feet of retail space

46
00:02:54,840 --> 00:02:58,639
Speaker 4: per capita. Now you compare that to in Europe, it's

47
00:02:58,639 --> 00:03:01,000
Speaker 4: about a dollar or one square foot to one and

48
00:03:01,000 --> 00:03:03,800
Speaker 4: a half square feet per capita, and then obviously in

49
00:03:03,840 --> 00:03:05,799
Speaker 4: Asia it's significantly lower than that.

50
00:03:06,880 --> 00:03:09,760
Speaker 1: The US hasn't lost its passion to consume, and it

51
00:03:09,840 --> 00:03:12,800
Speaker 1: still has a lot of retail space, but there's a

52
00:03:12,800 --> 00:03:15,280
Speaker 1: good deal less of that space than there used to be.

53
00:03:16,000 --> 00:03:19,320
Speaker 1: In the nineteen eighties, there were approximately twenty five hundred

54
00:03:19,360 --> 00:03:24,200
Speaker 1: malls in the country. Today fewer than one thousand, raising

55
00:03:24,240 --> 00:03:27,200
Speaker 1: the question of how far it could go, whether malls

56
00:03:27,240 --> 00:03:29,359
Speaker 1: could simply disappear altogether.

57
00:03:30,280 --> 00:03:33,320
Speaker 5: We don't think they're dying, but the better malls have

58
00:03:33,400 --> 00:03:37,480
Speaker 5: a place in the market, and we think what's left.

59
00:03:37,920 --> 00:03:40,480
Speaker 5: We don't think they're all going to die. However, there

60
00:03:40,520 --> 00:03:43,200
Speaker 5: are some that will probably die in the future.

61
00:03:44,720 --> 00:03:48,480
Speaker 1: Egl Namdar's company owns some eighty of the malls that remain,

62
00:03:49,080 --> 00:03:51,680
Speaker 1: and he says they can still be a good investment,

63
00:03:52,120 --> 00:03:56,080
Speaker 1: provided they're the right malls. When you look for an

64
00:03:56,120 --> 00:03:58,880
Speaker 1: investment in a mall, what's the profile you look.

65
00:03:58,720 --> 00:04:03,080
Speaker 5: For, Well, look for a great location, a good market,

66
00:04:03,280 --> 00:04:08,000
Speaker 5: strong market, a growing market. We look at the mix

67
00:04:08,160 --> 00:04:12,200
Speaker 5: of tenants in the mall occupancy, who the anchors are,

68
00:04:12,640 --> 00:04:16,440
Speaker 5: sales of tenants, the trend, and we hope we can

69
00:04:17,040 --> 00:04:17,720
Speaker 5: buy more as.

70
00:04:17,640 --> 00:04:18,000
Speaker 4: We go on.

71
00:04:19,520 --> 00:04:22,320
Speaker 1: We may be seeing a natural correction in the number

72
00:04:22,360 --> 00:04:25,679
Speaker 1: of malls pulling back from their peak, but that correction

73
00:04:25,800 --> 00:04:29,039
Speaker 1: has been turbocharged by the rise of e commerce.

74
00:04:30,000 --> 00:04:33,640
Speaker 4: E Commerce as a percent of sales from twenty ten

75
00:04:33,760 --> 00:04:38,080
Speaker 4: to about twenty fifteen was just hugging ten percent, hugging

76
00:04:38,240 --> 00:04:42,000
Speaker 4: hugging ten ten, and then from seventeen to nineteen went

77
00:04:42,000 --> 00:04:44,800
Speaker 4: from ten to thirty. It was a s curve of

78
00:04:44,839 --> 00:04:47,719
Speaker 4: adoption where all of a sudden it was like, oh why,

79
00:04:47,960 --> 00:04:53,000
Speaker 4: because this generation demanded of Amazon and all these other things.

80
00:04:53,279 --> 00:04:56,760
Speaker 4: So now we're in the era where this next two

81
00:04:56,880 --> 00:05:00,800
Speaker 4: decades of consumption is everything that I picked that I

82
00:05:00,920 --> 00:05:04,160
Speaker 4: want that is going to land at my doorstep when

83
00:05:04,200 --> 00:05:06,000
Speaker 4: I blink my own when I sapped my fingers or

84
00:05:06,279 --> 00:05:09,360
Speaker 4: I blink my eyes. Like Genie, if it.

85
00:05:09,320 --> 00:05:12,720
Speaker 1: Went to thirty percent in twenty nineteen, I think you said, right,

86
00:05:13,640 --> 00:05:16,760
Speaker 1: what happened with the pandemic and where is it now.

87
00:05:16,080 --> 00:05:19,280
Speaker 4: In one year? So that that thirty percent, which is

88
00:05:19,360 --> 00:05:22,159
Speaker 4: kind of like specialty, more like specialty like on mall retail,

89
00:05:22,400 --> 00:05:24,839
Speaker 4: less so in furniture and more so in apperil, but

90
00:05:24,880 --> 00:05:30,719
Speaker 4: generally that numbers thirty percent. It flipped in twenty twenty.

91
00:05:31,240 --> 00:05:33,080
Speaker 4: It went to seventy thirty.

92
00:05:33,400 --> 00:05:36,640
Speaker 1: Seventy percent e commerce econmo percent bricks and mortar.

93
00:05:36,520 --> 00:05:38,880
Speaker 4: Because you can go to the stores. And then what

94
00:05:39,000 --> 00:05:41,880
Speaker 4: happened is it sort of like kind of ratcheted down

95
00:05:41,960 --> 00:05:45,440
Speaker 4: sort of in twenty twenty one, in twenty twenty two

96
00:05:45,839 --> 00:05:48,760
Speaker 4: and serves now kind of at a level playing field

97
00:05:48,800 --> 00:05:51,600
Speaker 4: where it's kind of more like forty forty five percent

98
00:05:51,640 --> 00:05:54,200
Speaker 4: e commerce and it's heading to fifty to fifty.

99
00:05:54,520 --> 00:05:56,640
Speaker 1: Can you envision a world in which actually bricks and

100
00:05:56,680 --> 00:05:58,719
Speaker 1: mortar start eating back into e commerce?

101
00:05:59,279 --> 00:06:01,839
Speaker 4: My view is it a fifty to fifty world is

102
00:06:01,880 --> 00:06:04,800
Speaker 4: about right, because a fifty to fifty world will be

103
00:06:04,839 --> 00:06:07,400
Speaker 4: about five hundred stores. So does you know kind of

104
00:06:07,440 --> 00:06:10,159
Speaker 4: in that range.

105
00:06:09,000 --> 00:06:11,920
Speaker 1: Which malls get hit the hardest by the retrenchment depends

106
00:06:11,960 --> 00:06:15,520
Speaker 1: on the type of mall involved. Not all us shopping

107
00:06:15,560 --> 00:06:19,240
Speaker 1: malls are created equal. They come in three basic classes.

108
00:06:20,320 --> 00:06:22,600
Speaker 1: A Class A mall is one that makes at least

109
00:06:22,600 --> 00:06:26,280
Speaker 1: five hundred dollars per square foot a year. Research from

110
00:06:26,279 --> 00:06:29,480
Speaker 1: Capital One says their average vacancy rate is just three

111
00:06:29,560 --> 00:06:34,160
Speaker 1: point six percent and they're largely doing just fine. On

112
00:06:34,200 --> 00:06:37,320
Speaker 1: the other extreme, class C malls average less than three

113
00:06:37,400 --> 00:06:40,320
Speaker 1: hundred dollars per square foot per year and have much

114
00:06:40,400 --> 00:06:44,279
Speaker 1: higher vacancy rates. That leaves Class B malls right in

115
00:06:44,360 --> 00:06:47,400
Speaker 1: the middle, which is where Namdar likes to be given

116
00:06:47,440 --> 00:06:51,159
Speaker 1: their availability and the bigger difference between what they cost

117
00:06:51,360 --> 00:06:54,560
Speaker 1: and the revenue they can generate, which investors call the

118
00:06:54,920 --> 00:06:55,520
Speaker 1: cap rate.

119
00:06:56,400 --> 00:06:58,919
Speaker 5: What we like to invest in is A B or

120
00:06:58,960 --> 00:07:02,159
Speaker 5: B plus malls. Those are malls that they do well,

121
00:07:02,200 --> 00:07:05,960
Speaker 5: but they're one level below the A, and there we

122
00:07:06,000 --> 00:07:08,839
Speaker 5: feel that there's an arbitrage in the cap rates, that

123
00:07:08,880 --> 00:07:12,080
Speaker 5: you could buy them at much more attractive cap rates

124
00:07:12,120 --> 00:07:14,840
Speaker 5: than the A and maybe a little bit less than

125
00:07:14,880 --> 00:07:17,720
Speaker 5: the c's that we feel don't have much life left

126
00:07:17,720 --> 00:07:18,360
Speaker 5: in them.

127
00:07:19,160 --> 00:07:22,280
Speaker 1: If I own a B mall, is it possible for

128
00:07:22,320 --> 00:07:24,600
Speaker 1: me to do something to make that into an AIM all?

129
00:07:25,800 --> 00:07:32,280
Speaker 4: Simply no, because the A mall designation is based on

130
00:07:32,400 --> 00:07:38,160
Speaker 4: the sort of five mile radius of income density demographic. Okay,

131
00:07:38,200 --> 00:07:42,040
Speaker 4: I want an income demographic in that five mile radius.

132
00:07:42,080 --> 00:07:44,760
Speaker 4: That makes seventy five to one hundred thousand dollars. Now

133
00:07:44,760 --> 00:07:48,720
Speaker 4: I can go look for my malls. So the designation

134
00:07:49,080 --> 00:07:51,960
Speaker 4: of the A or the B is actually based on

135
00:07:52,640 --> 00:07:55,440
Speaker 4: the wealth. So if you think that an area will

136
00:07:55,480 --> 00:07:58,520
Speaker 4: in ten years become more more wealthy, then you're going

137
00:07:58,600 --> 00:08:00,720
Speaker 4: to make that bad because these least are also ten

138
00:08:00,800 --> 00:08:01,240
Speaker 4: years long.

139
00:08:02,040 --> 00:08:04,720
Speaker 1: If a mall owner can't change the demographics of its

140
00:08:04,760 --> 00:08:08,400
Speaker 1: immediate surroundings, what can it do to improve its investment?

141
00:08:08,920 --> 00:08:11,480
Speaker 1: What can be done to save a struggling mall.

142
00:08:12,440 --> 00:08:15,360
Speaker 5: Now, our main focus is to do joint venture with

143
00:08:15,480 --> 00:08:18,720
Speaker 5: a developer and bring someone in and say, let's go

144
00:08:18,840 --> 00:08:21,240
Speaker 5: as a partner and we can repurpose it, whether it's

145
00:08:21,280 --> 00:08:27,880
Speaker 5: a for residential for you know, hospital, for you know, industrial, hotel,

146
00:08:28,120 --> 00:08:31,560
Speaker 5: mixed use, other types of retail, big boxes, you know,

147
00:08:31,840 --> 00:08:34,840
Speaker 5: junior anchors. So that's what we're trying to do. But

148
00:08:34,880 --> 00:08:38,880
Speaker 5: in some cases we just would sell it if there

149
00:08:39,040 --> 00:08:42,280
Speaker 5: isn't a demand for that joint venture.

150
00:08:43,360 --> 00:08:45,520
Speaker 1: Which takes us back to the Berkshire mall and why

151
00:08:45,559 --> 00:08:48,880
Speaker 1: I'm missing Pennsylvania, which has become something of a problem

152
00:08:48,960 --> 00:08:52,520
Speaker 1: for borough manager Ware and for its owner, which turns

153
00:08:52,559 --> 00:08:56,160
Speaker 1: out to be none other than Egle Namdar. The average

154
00:08:56,160 --> 00:08:58,439
Speaker 1: income within a mile of the Berkshire Mall is close

155
00:08:58,480 --> 00:09:02,200
Speaker 1: to one hundred and thirty thousand, but that's just seven

156
00:09:02,280 --> 00:09:06,079
Speaker 1: thousand people. Zoom out five miles and the average income

157
00:09:06,160 --> 00:09:09,480
Speaker 1: drops to seventy three thousand dollars a year across almost

158
00:09:09,520 --> 00:09:10,960
Speaker 1: two hundred thousand people.

159
00:09:11,720 --> 00:09:14,320
Speaker 3: I believe the highest assessed value was in the mid

160
00:09:14,360 --> 00:09:19,560
Speaker 3: fifty million dollar range. That coupled with mercantile tax, you

161
00:09:19,600 --> 00:09:23,680
Speaker 3: were looking at probably anywhere between four to seven hundred

162
00:09:23,679 --> 00:09:28,480
Speaker 3: thousand dollars in annual tax revenue. Compare that to the

163
00:09:28,520 --> 00:09:33,200
Speaker 3: most recent reassessment that dropped it down to five million dollars.

164
00:09:33,679 --> 00:09:36,840
Speaker 3: So you can do the math on four hundred to

165
00:09:36,920 --> 00:09:41,640
Speaker 3: seven hundred thousand lower to ten percent. I mean, that's

166
00:09:41,760 --> 00:09:44,800
Speaker 3: if you're talking in terms of our overall budget. Current

167
00:09:44,840 --> 00:09:49,120
Speaker 3: annual operating budget is around thirty million dollars. Four hundred

168
00:09:49,160 --> 00:09:52,760
Speaker 3: thousand is the amount we spend annually on televising and

169
00:09:52,800 --> 00:09:57,400
Speaker 3: repairing our water means or that's a third of our

170
00:09:57,480 --> 00:10:04,280
Speaker 3: annual street improvement. So that amount could have a significant

171
00:10:04,360 --> 00:10:08,720
Speaker 3: impact when you're talking about services the borough can provide

172
00:10:08,840 --> 00:10:10,839
Speaker 3: and tax revenue that's being generated.

173
00:10:11,880 --> 00:10:15,480
Speaker 1: Berkshire's owner recognizes the problem. He says he shares the

174
00:10:15,520 --> 00:10:18,600
Speaker 1: community's goal of getting revenue from the property and tax

175
00:10:18,640 --> 00:10:21,800
Speaker 1: payments up, but that sometimes the issue lies with the

176
00:10:21,840 --> 00:10:25,880
Speaker 1: local government and difficulties in getting timely approval of plans

177
00:10:25,920 --> 00:10:27,240
Speaker 1: to redevelop.

178
00:10:27,520 --> 00:10:29,920
Speaker 5: I think that if you have a good use that's

179
00:10:29,960 --> 00:10:33,560
Speaker 5: going to help the city and help the developer the landlord,

180
00:10:34,000 --> 00:10:36,600
Speaker 5: maybe you can expedite things where we can make that

181
00:10:36,720 --> 00:10:40,760
Speaker 5: happen quicker. I hate to see certain assets sit empty

182
00:10:40,920 --> 00:10:44,200
Speaker 5: for years and years till you get the zoning approved,

183
00:10:44,200 --> 00:10:48,480
Speaker 5: the entitlements. I hope that there's a way that everybody

184
00:10:48,520 --> 00:10:51,360
Speaker 5: can work together and maybe expedite it, because the ultimate

185
00:10:51,440 --> 00:10:55,720
Speaker 5: goal is to have that land repurpose into a new

186
00:10:56,080 --> 00:10:59,080
Speaker 5: class that is ideal for the community, for the city,

187
00:10:59,200 --> 00:11:01,160
Speaker 5: for us, for everybody.

188
00:11:01,480 --> 00:11:03,720
Speaker 2: The intent was to redevelop it.

189
00:11:04,600 --> 00:11:07,960
Speaker 3: The borough quickly found out that current ownership that's not

190
00:11:08,400 --> 00:11:12,640
Speaker 3: how they operate. They instead buy properties and effectively sit

191
00:11:12,720 --> 00:11:16,200
Speaker 3: on them. So the redevelopment plan that I think the

192
00:11:16,240 --> 00:11:19,839
Speaker 3: community and borough council expected to see obviously has not

193
00:11:20,040 --> 00:11:24,880
Speaker 3: happened much to the dismay of most everyone who just

194
00:11:24,920 --> 00:11:29,400
Speaker 3: kind of sits back and watches it continue to further deteriorate.

195
00:11:30,760 --> 00:11:33,960
Speaker 1: However, things ultimately work out for the Berkshire Mall. All

196
00:11:34,040 --> 00:11:37,000
Speaker 1: parties recognize the need to repurpose the property for a

197
00:11:37,120 --> 00:11:41,000
Speaker 1: changed world of retailing, and they all see potential yet

198
00:11:41,120 --> 00:11:42,040
Speaker 1: to be realized.

199
00:11:42,840 --> 00:11:46,400
Speaker 3: I don't think shopping centers as a whole are a

200
00:11:46,520 --> 00:11:49,160
Speaker 3: dying breed, and twenty years from now you're going to

201
00:11:49,200 --> 00:11:53,000
Speaker 3: see every single one of them repurposed. There's clearly development

202
00:11:53,080 --> 00:11:53,559
Speaker 3: going on.

203
00:11:54,640 --> 00:11:57,000
Speaker 5: It just takes a while, but are really our intent

204
00:11:57,160 --> 00:12:00,880
Speaker 5: is to work together with the towns of ease as

205
00:12:00,960 --> 00:12:04,000
Speaker 5: much as we can work together as a team to

206
00:12:04,160 --> 00:12:07,440
Speaker 5: redevelop these assets into something that will hopefully be here

207
00:12:07,440 --> 00:12:09,320
Speaker 5: for the next hundred some of the years.

208
00:12:10,320 --> 00:12:13,480
Speaker 1: Adapting to the wants and needs of the current generation

209
00:12:13,640 --> 00:12:16,160
Speaker 1: and those that come after them will be the key

210
00:12:16,240 --> 00:12:19,200
Speaker 1: to the long term health of the shopping ball and

211
00:12:19,360 --> 00:12:24,560
Speaker 1: the key to a successful second act. Still ahead, how

212
00:12:24,600 --> 00:12:28,920
Speaker 1: America is preparing for the Silver Tsunami. That's next on

213
00:12:29,080 --> 00:12:42,520
Speaker 1: Wall Street Week. This is a story about a tsunami,

214
00:12:42,679 --> 00:12:46,439
Speaker 1: an overwhelming wall not of water, but of people. As

215
00:12:46,480 --> 00:12:49,400
Speaker 1: our population ages and needs places to live that can

216
00:12:49,440 --> 00:12:52,319
Speaker 1: accommodate their particular needs and desires.

217
00:12:54,520 --> 00:12:59,840
Speaker 6: We considered probably for different residents, and that would be

218
00:13:00,120 --> 00:13:06,560
Speaker 6: for COVID, and then we looked at Murano and loved Mirano.

219
00:13:06,960 --> 00:13:10,320
Speaker 1: That's Marilyn Bergstrom, an eighty seven year old widow who

220
00:13:10,400 --> 00:13:13,600
Speaker 1: has recently left her house in Seattle, Washington to take

221
00:13:13,640 --> 00:13:16,599
Speaker 1: up residence in an upscale senior living development.

222
00:13:17,040 --> 00:13:21,880
Speaker 6: My husband he got lung cancer and passed away in

223
00:13:21,960 --> 00:13:25,240
Speaker 6: a year, and then I stayed in the house for

224
00:13:25,320 --> 00:13:28,199
Speaker 6: another year, and then I decided it was time for

225
00:13:28,240 --> 00:13:31,880
Speaker 6: me to move on. Well, I had thought years ago

226
00:13:32,000 --> 00:13:35,320
Speaker 6: I wanted to live in a senior living community before

227
00:13:35,360 --> 00:13:36,000
Speaker 6: I had to.

228
00:13:36,520 --> 00:13:39,440
Speaker 1: Bergstrom is on the leading edge of a coming explosion

229
00:13:39,480 --> 00:13:43,439
Speaker 1: in people who will seek senior living accommodations. The number

230
00:13:43,440 --> 00:13:46,760
Speaker 1: of Americans over age eighty is projected to surge over

231
00:13:46,760 --> 00:13:50,000
Speaker 1: the next twenty five years from thirteen million to day

232
00:13:50,360 --> 00:13:54,360
Speaker 1: to over thirty two million by twenty fifty, and within

233
00:13:54,480 --> 00:13:58,320
Speaker 1: the growing population over seventy five, those with annual incomes

234
00:13:58,360 --> 00:14:01,560
Speaker 1: over one hundred thousand dollars are growing much faster than

235
00:14:01,600 --> 00:14:04,560
Speaker 1: the rest, with the highest percentage of growth coming from

236
00:14:04,559 --> 00:14:07,280
Speaker 1: those with incomes over two hundred thousand dollars.

237
00:14:07,960 --> 00:14:10,760
Speaker 7: Demographics are definitely in our favor. I got into this

238
00:14:10,920 --> 00:14:14,679
Speaker 7: business just over thirty years ago, and we talked about

239
00:14:14,760 --> 00:14:18,240
Speaker 7: then this silver tsunami that was coming. Well, I'm happy

240
00:14:18,280 --> 00:14:21,600
Speaker 7: to say that I'm actually seeing it happen now. You know,

241
00:14:21,640 --> 00:14:24,720
Speaker 7: within the next five to ten years, that aging population

242
00:14:24,880 --> 00:14:27,560
Speaker 7: is actually going to be moving into senior living.

243
00:14:27,960 --> 00:14:31,040
Speaker 1: Tanegaal is one of those addressing the growing demand for

244
00:14:31,160 --> 00:14:35,720
Speaker 1: high quality senior living. She's president of Meryl Gardens, which

245
00:14:35,800 --> 00:14:39,680
Speaker 1: owns and operates retirement communities in seventy locations across the

246
00:14:39,760 --> 00:14:44,200
Speaker 1: United States, including Morano, which Marilyn Bergstrom now calls home.

247
00:14:44,680 --> 00:14:47,560
Speaker 1: And what her company provides goes well beyond just a

248
00:14:47,600 --> 00:14:48,400
Speaker 1: place to live.

249
00:14:49,040 --> 00:14:52,600
Speaker 7: We define senior living as a place for people to

250
00:14:52,720 --> 00:14:55,560
Speaker 7: go enhance their lives once they're past the age of

251
00:14:55,560 --> 00:14:59,600
Speaker 7: sixty two and they're ready to downsize, or they have

252
00:14:59,720 --> 00:15:03,120
Speaker 7: some need that really keeps them from living in their

253
00:15:03,120 --> 00:15:06,760
Speaker 7: own home and makes them want to move into senior living.

254
00:15:06,960 --> 00:15:11,320
Speaker 7: So we provide help with activities of daily living. We

255
00:15:11,400 --> 00:15:18,840
Speaker 7: provide meals, housekeeping, maintenance. Probably the most important and maybe overlooked,

256
00:15:19,000 --> 00:15:23,120
Speaker 7: is social interaction. People who live at home alone are lonely,

257
00:15:23,480 --> 00:15:26,920
Speaker 7: and we know that socialization helps you live longer, and

258
00:15:27,000 --> 00:15:29,240
Speaker 7: certainly not just longer, but happier lives.

259
00:15:29,480 --> 00:15:33,960
Speaker 8: Taichi, yoga, all those amenities don't come cheap, particularly at

260
00:15:33,960 --> 00:15:36,760
Speaker 8: the high end of what Meryl Gardens has to provide,

261
00:15:36,920 --> 00:15:39,560
Speaker 8: But today there is a growing number of seniors like

262
00:15:39,640 --> 00:15:41,160
Speaker 8: Bergstrom who can afford it.

263
00:15:41,840 --> 00:15:46,120
Speaker 6: I'm paying about seventy five hundred a month. That includes

264
00:15:46,200 --> 00:15:49,240
Speaker 6: my car, which I like to have as long as

265
00:15:49,280 --> 00:15:53,600
Speaker 6: I can drive. I feel that it's a fair price

266
00:15:53,720 --> 00:15:57,880
Speaker 6: for what you get. This is far better than any

267
00:15:57,920 --> 00:16:00,800
Speaker 6: place I expected to live. When I moved in. I

268
00:16:00,920 --> 00:16:04,000
Speaker 6: just felt like I was in the fancy hotel every

269
00:16:04,040 --> 00:16:05,240
Speaker 6: morning that I woke up.

270
00:16:06,040 --> 00:16:08,520
Speaker 1: And Tanna Gall says that as pleasant as it is

271
00:16:08,560 --> 00:16:12,040
Speaker 1: for residents like Bergstrom, it should also be good business

272
00:16:12,160 --> 00:16:13,200
Speaker 1: for Meryll Gardens.

273
00:16:14,040 --> 00:16:16,360
Speaker 7: I would not say it's a high margin business. It

274
00:16:16,400 --> 00:16:21,160
Speaker 7: is a middle margin business. Our margins have been a

275
00:16:21,200 --> 00:16:24,320
Speaker 7: little more compressed of recent since the pandemic. The pandemic

276
00:16:24,360 --> 00:16:26,800
Speaker 7: goes really rough on our sector, for sure. If your

277
00:16:26,880 --> 00:16:28,840
Speaker 7: question had been to me, Tanna, what keeps you up

278
00:16:28,880 --> 00:16:32,040
Speaker 7: at night? I would have said getting enough great team

279
00:16:32,080 --> 00:16:36,000
Speaker 7: members there's a couple things that we're looking at. Number one,

280
00:16:36,400 --> 00:16:39,600
Speaker 7: we are trying to attract more people into our business

281
00:16:39,600 --> 00:16:42,680
Speaker 7: that don't even know we exist. So, for example, we

282
00:16:42,840 --> 00:16:46,440
Speaker 7: hire a lot of people from the hospitality business. It's very,

283
00:16:46,520 --> 00:16:49,240
Speaker 7: very similar to running a hotel. We have also really

284
00:16:49,240 --> 00:16:54,000
Speaker 7: broadened our scope in reaching out to colleges and universities.

285
00:16:53,520 --> 00:16:58,840
Speaker 1: Were bused to steal robust demand that's about to explode clientele,

286
00:16:58,960 --> 00:17:02,120
Speaker 1: with the ability to a high prices, a business with

287
00:17:02,240 --> 00:17:05,159
Speaker 1: solid margins, all of it should make the world of

288
00:17:05,240 --> 00:17:09,160
Speaker 1: senior living a truly good real estate investment. But, as

289
00:17:09,280 --> 00:17:13,639
Speaker 1: Nickmaps Vision CEO Eric Morton says, there's one thing holding

290
00:17:13,640 --> 00:17:19,000
Speaker 1: it back. Supply. His firm tracks senior housing inventory and demand.

291
00:17:19,560 --> 00:17:22,800
Speaker 9: Senior housing is really facing a watershed moment as the

292
00:17:23,280 --> 00:17:27,920
Speaker 9: baby boomers begin to turn eighty. Senior housing construction has

293
00:17:28,000 --> 00:17:31,400
Speaker 9: been outpaced by eighty plus growth since twenty twenty two,

294
00:17:31,480 --> 00:17:33,679
Speaker 9: and that gap is only set to continue as the

295
00:17:33,720 --> 00:17:36,600
Speaker 9: boomers grow by about forty percent by the end of

296
00:17:36,600 --> 00:17:39,199
Speaker 9: the decade. It's really on the supply side that the

297
00:17:39,280 --> 00:17:44,280
Speaker 9: issue has manifested. So the pandemic brought inflation to construction

298
00:17:44,400 --> 00:17:49,200
Speaker 9: costs as well as a historic increase in interest rates,

299
00:17:49,240 --> 00:17:51,720
Speaker 9: and the effect of that has been to make the

300
00:17:51,760 --> 00:17:55,000
Speaker 9: cost of development basically out of reach for most markets.

301
00:17:55,320 --> 00:17:59,040
Speaker 9: And so what's happened is the senior housing inventory growth

302
00:17:59,240 --> 00:18:02,400
Speaker 9: has hit all time lows right as demand is set

303
00:18:02,440 --> 00:18:03,399
Speaker 9: to explode.

304
00:18:03,640 --> 00:18:06,639
Speaker 7: I have been fortunate enough to watch our industry go

305
00:18:06,720 --> 00:18:10,240
Speaker 7: through two very big cycles. As I mentioned back in

306
00:18:10,280 --> 00:18:15,040
Speaker 7: the mid nineties, when assisted living hit Wall Street. Nobody

307
00:18:15,119 --> 00:18:17,600
Speaker 7: was public before, but a bunch of companies went public

308
00:18:17,640 --> 00:18:20,639
Speaker 7: in the mid to late nineties and they built a

309
00:18:20,800 --> 00:18:23,680
Speaker 7: lot of assisted living. And then we had the dot

310
00:18:23,680 --> 00:18:26,760
Speaker 7: com bust and things slowed down again. And what was

311
00:18:26,800 --> 00:18:29,000
Speaker 7: good from that is it took all those buildings that

312
00:18:29,040 --> 00:18:32,159
Speaker 7: we built and filled them up, and so then the

313
00:18:32,160 --> 00:18:34,639
Speaker 7: supply demand was in a nice balance for quite a

314
00:18:34,640 --> 00:18:38,320
Speaker 7: few years. And then when the recession hit in eight

315
00:18:38,400 --> 00:18:41,360
Speaker 7: to ten, the same thing happened. We had a lot

316
00:18:41,400 --> 00:18:44,520
Speaker 7: of product on the market and people weren't moving in.

317
00:18:45,119 --> 00:18:48,160
Speaker 7: So now as we come into a new economic climate,

318
00:18:48,400 --> 00:18:52,360
Speaker 7: it is probably the lowest I've seen on construction starts,

319
00:18:52,840 --> 00:18:56,400
Speaker 7: maybe in my thirty years. So in some ways that's

320
00:18:56,520 --> 00:18:59,560
Speaker 7: a little bit distressing to me. But what I'm seeing

321
00:18:59,640 --> 00:19:04,240
Speaker 7: happen is everybody's filling up our occupancies, I'd say, is

322
00:19:04,280 --> 00:19:06,680
Speaker 7: an industry are back up to about where they were

323
00:19:06,800 --> 00:19:07,800
Speaker 7: before the pandemic.

324
00:19:08,600 --> 00:19:11,440
Speaker 1: Occupancy rates are back up, But now there's a risk

325
00:19:11,560 --> 00:19:13,879
Speaker 1: things will go too far that there will be a

326
00:19:13,880 --> 00:19:16,640
Speaker 1: substantial shortage in available senior housing.

327
00:19:17,400 --> 00:19:19,040
Speaker 9: At the current pace, we're on track for about a

328
00:19:19,080 --> 00:19:22,600
Speaker 9: two hundred and seventy five billion dollar shortfall in senior

329
00:19:22,640 --> 00:19:26,200
Speaker 9: housing development. I still think a lot of the challenge is, frankly,

330
00:19:26,240 --> 00:19:28,760
Speaker 9: just projects don't pencil. So if you think about what's

331
00:19:28,760 --> 00:19:31,880
Speaker 9: happened there, you're looking at construction costs that have gone

332
00:19:31,920 --> 00:19:34,960
Speaker 9: up by twenty five or thirty percent, Debt that used

333
00:19:34,960 --> 00:19:38,360
Speaker 9: to be three or four is now seven or eight,

334
00:19:38,800 --> 00:19:41,520
Speaker 9: and so when you put those two together, your cost

335
00:19:41,560 --> 00:19:45,720
Speaker 9: of development has gone up pretty substantially. At the same time,

336
00:19:45,800 --> 00:19:48,520
Speaker 9: you're looking at what's happened to margins over that time.

337
00:19:48,560 --> 00:19:51,320
Speaker 9: Will occupancy has been down and the cost of labor

338
00:19:51,400 --> 00:19:54,160
Speaker 9: has gone up. But if you dig deep and go

339
00:19:54,240 --> 00:19:57,400
Speaker 9: down market by market, street corner by street corner, there

340
00:19:57,440 --> 00:20:02,399
Speaker 9: are areas where occupancies high rates are high, and the

341
00:20:02,480 --> 00:20:06,160
Speaker 9: construction costs the equation pencils, and so we're really seeing

342
00:20:06,200 --> 00:20:09,280
Speaker 9: people kind of sharpen their pencils and really go hunting

343
00:20:09,800 --> 00:20:14,320
Speaker 9: for those areas that can work today. And the number

344
00:20:14,320 --> 00:20:17,160
Speaker 9: of those areas that work are going to increase as

345
00:20:17,240 --> 00:20:18,119
Speaker 9: demand explodes.

346
00:20:18,720 --> 00:20:20,760
Speaker 1: But if investors are going to be in a position

347
00:20:20,840 --> 00:20:24,080
Speaker 1: to move in to serve that exploding demand, there have

348
00:20:24,200 --> 00:20:27,840
Speaker 1: to be enough projects in development now just waiting for

349
00:20:27,920 --> 00:20:31,000
Speaker 1: the capital and the go ahead. Tena gall at Meryl

350
00:20:31,080 --> 00:20:34,000
Speaker 1: Gardens says she's ready to move as soon as it

351
00:20:34,040 --> 00:20:34,639
Speaker 1: makes sense.

352
00:20:35,560 --> 00:20:38,919
Speaker 7: It really kind of halted our development, and so, for example,

353
00:20:39,000 --> 00:20:42,240
Speaker 7: I've got two pieces of land today that are entitled

354
00:20:42,240 --> 00:20:44,320
Speaker 7: and ready to go, but I can't financially make them

355
00:20:44,320 --> 00:20:47,160
Speaker 7: work yet. And from an investor standpoint, there's a lot

356
00:20:47,200 --> 00:20:49,439
Speaker 7: of people who want to get involved in the sector

357
00:20:49,480 --> 00:20:52,280
Speaker 7: because they're seeing what's happening down the road, But right now,

358
00:20:52,320 --> 00:20:54,280
Speaker 7: the cost of capital is just too much for us.

359
00:20:54,400 --> 00:20:56,960
Speaker 7: At this point, we're starting to see it come down,

360
00:20:57,960 --> 00:21:01,640
Speaker 7: but it's not quite where we can a project work yet,

361
00:21:01,720 --> 00:21:03,560
Speaker 7: so we're always looking for pieces of land that makes

362
00:21:03,560 --> 00:21:04,560
Speaker 7: sense to me.

363
00:21:04,720 --> 00:21:07,639
Speaker 9: That's the kind of the scary scenario is that there's

364
00:21:08,000 --> 00:21:11,760
Speaker 9: markets and segments of the market across the country that

365
00:21:11,920 --> 00:21:16,520
Speaker 9: have you know, frankly no excess capacity, and so the

366
00:21:16,600 --> 00:21:20,760
Speaker 9: impact that could have on seniors and our entire society

367
00:21:21,160 --> 00:21:23,560
Speaker 9: is pretty significant. So I think that, at the end

368
00:21:23,600 --> 00:21:25,439
Speaker 9: of the day, is the thing that I worry the

369
00:21:25,480 --> 00:21:26,000
Speaker 9: most about.

370
00:21:26,760 --> 00:21:28,959
Speaker 1: All of which means those in the industry see an

371
00:21:29,000 --> 00:21:32,520
Speaker 1: opportunity for investors to get into the senior living game

372
00:21:32,760 --> 00:21:37,120
Speaker 1: now in anticipation of that silver tsunami.

373
00:21:37,040 --> 00:21:40,160
Speaker 9: At a time when the industry needs more capital, more

374
00:21:40,200 --> 00:21:42,640
Speaker 9: debt financing to be able to go out and meet

375
00:21:42,640 --> 00:21:45,720
Speaker 9: this need. You know, we're seeing market participants that have

376
00:21:46,200 --> 00:21:51,040
Speaker 9: become exhausted or maybe been beaten during this cycle, and so,

377
00:21:51,359 --> 00:21:54,119
Speaker 9: you know, really I think there's a call to action

378
00:21:54,359 --> 00:21:58,560
Speaker 9: for the nation's banks, for the nation's asset allocators, LPs,

379
00:21:58,600 --> 00:22:01,119
Speaker 9: pension funds, whoever they might be, to look at this

380
00:22:01,280 --> 00:22:03,960
Speaker 9: not only as an opportunity to generate an incredible return,

381
00:22:04,400 --> 00:22:09,040
Speaker 9: but also an opportunity to really help the industry meet

382
00:22:09,080 --> 00:22:12,280
Speaker 9: the needs of society. And so I really am hopeful

383
00:22:12,320 --> 00:22:14,959
Speaker 9: that that will happen. But to the extent that we

384
00:22:15,040 --> 00:22:17,720
Speaker 9: have challenges there, that's something that you know, I'm quite

385
00:22:17,760 --> 00:22:18,200
Speaker 9: worried about.

386
00:22:18,640 --> 00:22:22,119
Speaker 1: For all the challenges the senior housing industry faces, it

387
00:22:22,200 --> 00:22:26,520
Speaker 1: also offers substantial rewards financial and otherwise.

388
00:22:26,920 --> 00:22:30,600
Speaker 7: When I jumped into senior living, I didn't think I

389
00:22:30,640 --> 00:22:32,840
Speaker 7: would be in it for very long. To be honest,

390
00:22:33,080 --> 00:22:35,040
Speaker 7: I thought, oh, I'll give this a try. I see

391
00:22:35,080 --> 00:22:37,080
Speaker 7: what it's about. Everybody told me, you know, the people

392
00:22:37,160 --> 00:22:40,399
Speaker 7: are really nice in the industry, and I thought it

393
00:22:40,440 --> 00:22:42,920
Speaker 7: would be like a six month gig. And I literally

394
00:22:43,000 --> 00:22:44,520
Speaker 7: woke up in August and I've been doing it for

395
00:22:44,640 --> 00:22:48,280
Speaker 7: thirty years. And here's why I love it. It matters.

396
00:22:49,200 --> 00:22:51,600
Speaker 7: I get to make a difference in people's lives every

397
00:22:51,760 --> 00:22:55,600
Speaker 7: day and it's pretty significant. So for me, it's like

398
00:22:55,880 --> 00:22:58,480
Speaker 7: working with the team members. If I treat my team

399
00:22:58,520 --> 00:23:00,640
Speaker 7: members great, I know they treat my REDID it's great.

400
00:23:01,320 --> 00:23:05,280
Speaker 7: And simultaneously it's a business. We make money doing it,

401
00:23:06,480 --> 00:23:08,280
Speaker 7: so that's why all of it. That's why I think

402
00:23:08,280 --> 00:23:09,920
Speaker 7: as an industry is going to be around a long

403
00:23:09,920 --> 00:23:10,320
Speaker 7: long time.

404
00:23:11,040 --> 00:23:13,719
Speaker 1: And that, of course is a good thing for Marilyn

405
00:23:13,760 --> 00:23:16,119
Speaker 1: Bergstrom at Morano, I like.

406
00:23:16,200 --> 00:23:20,119
Speaker 6: Everything just this day as is. I mean everything right

407
00:23:20,200 --> 00:23:25,359
Speaker 6: now is just absolutely perfect. Kids, grandkids coming for dinner

408
00:23:25,560 --> 00:23:29,359
Speaker 6: and spending time here. It's a place that people like

409
00:23:29,520 --> 00:23:33,719
Speaker 6: to come to. In fact, even without being invited. They

410
00:23:34,080 --> 00:23:36,000
Speaker 6: just will call up and say, oh, can I come over?

411
00:23:36,240 --> 00:23:40,240
Speaker 6: And that's a really good feeling. It's like being in

412
00:23:40,359 --> 00:23:41,160
Speaker 6: your own home.

413
00:23:43,200 --> 00:23:45,760
Speaker 1: Coming up. Taking a hard look at funding for the

414
00:23:45,920 --> 00:23:49,560
Speaker 1: US Department of Education that's ahead on Wall Street Week.

415
00:24:02,160 --> 00:24:06,360
Speaker 1: This is a story about doing without recognizing our limits

416
00:24:06,440 --> 00:24:10,080
Speaker 1: and facing the consequences of testing them, particularly when it

417
00:24:10,160 --> 00:24:14,320
Speaker 1: comes to things we care deeply about, things like education.

418
00:24:16,880 --> 00:24:17,439
Speaker 4: Now, I'm going to.

419
00:24:17,440 --> 00:24:21,240
Speaker 10: Close the Department of Education and move education back to

420
00:24:21,400 --> 00:24:22,399
Speaker 10: the States, and.

421
00:24:22,480 --> 00:24:25,840
Speaker 1: We're going to do it fast. In campaigning for president

422
00:24:25,960 --> 00:24:29,280
Speaker 1: this year, Donald Trump made eliminating the Department of Education

423
00:24:29,400 --> 00:24:33,080
Speaker 1: a priority for his new administration, which could help with

424
00:24:33,200 --> 00:24:37,119
Speaker 1: his plan to reduce government spending overall. But what would

425
00:24:37,200 --> 00:24:40,040
Speaker 1: that entail and what would it mean for the nearly

426
00:24:40,240 --> 00:24:44,199
Speaker 1: fifty million US public school students. The Department of Education

427
00:24:44,400 --> 00:24:47,920
Speaker 1: was created under President Jimmy Carter in nineteen eighty and

428
00:24:48,080 --> 00:24:50,920
Speaker 1: started with three thousand employees and a budget of just

429
00:24:51,040 --> 00:24:55,520
Speaker 1: over fourteen billion dollars. Today, it employs forty four hundred

430
00:24:55,560 --> 00:24:58,280
Speaker 1: employees and its budget has grown to over eighty two

431
00:24:58,359 --> 00:25:02,280
Speaker 1: billion dollars. That it's just its operating budget, it's also

432
00:25:02,359 --> 00:25:06,280
Speaker 1: responsible for dispersing over two hundred and forty billion dollars

433
00:25:06,359 --> 00:25:10,639
Speaker 1: for schools and student resources from kindergarten through grad school,

434
00:25:11,119 --> 00:25:13,200
Speaker 1: with the lion's share of it coming in the form

435
00:25:13,240 --> 00:25:16,160
Speaker 1: of student loans and grants for higher education.

436
00:25:16,560 --> 00:25:20,399
Speaker 11: The federal government needn't be doing many of these things,

437
00:25:20,520 --> 00:25:22,240
Speaker 11: and you know, we're going to have to get into

438
00:25:22,280 --> 00:25:26,760
Speaker 11: a mode where the federal government limits itself to must

439
00:25:26,840 --> 00:25:27,399
Speaker 11: do items.

440
00:25:27,560 --> 00:25:31,040
Speaker 12: This is like standard Republican orthodoxy. Abolish the Department of Education,

441
00:25:31,119 --> 00:25:34,520
Speaker 12: blah blah blah, and it's you know, okay next. Obviously,

442
00:25:34,600 --> 00:25:37,159
Speaker 12: this seems a little more serious this time, but you know,

443
00:25:37,280 --> 00:25:39,280
Speaker 12: time will tail. The Congress obviously is going to have

444
00:25:39,359 --> 00:25:40,280
Speaker 12: its by to the apple.

445
00:25:40,480 --> 00:25:44,080
Speaker 1: Before we can even consider eliminating the Department of Education,

446
00:25:44,640 --> 00:25:47,200
Speaker 1: we need to understand exactly what it does.

447
00:25:47,760 --> 00:25:51,480
Speaker 12: The Department of Education is responsible for a lot of

448
00:25:51,520 --> 00:25:55,320
Speaker 12: funding for higher education and K twelve education. Actually, about

449
00:25:55,359 --> 00:25:58,160
Speaker 12: seventy five percent of the department is focused on higher

450
00:25:58,280 --> 00:26:01,800
Speaker 12: education through the form of a nanchel Aid pell grants

451
00:26:02,080 --> 00:26:05,200
Speaker 12: support for college and university students. The rest of the

452
00:26:05,280 --> 00:26:10,399
Speaker 12: House is focused on elementary and secondary education through Title

453
00:26:10,480 --> 00:26:13,879
Speaker 12: one funding and the Office of Special Education. There are

454
00:26:13,920 --> 00:26:17,480
Speaker 12: other things like Career and Technical Education, and the Office

455
00:26:17,480 --> 00:26:20,840
Speaker 12: of Civil Rights that supervises and oversees things like Title nine.

456
00:26:21,040 --> 00:26:24,640
Speaker 1: Margaret Spellings served as the eighth Secretary of Education under

457
00:26:24,680 --> 00:26:29,120
Speaker 1: President George W. Bush. She now heads the Bipartisan Policy Center,

458
00:26:29,400 --> 00:26:33,040
Speaker 1: a think tank based in Washington, d c. American public

459
00:26:33,080 --> 00:26:36,040
Speaker 1: schools receive only eleven percent of their funding from the

460
00:26:36,080 --> 00:26:39,199
Speaker 1: federal government, but the lion's share of money coming from

461
00:26:39,200 --> 00:26:41,639
Speaker 1: the Department of Education has nothing to do with K

462
00:26:41,880 --> 00:26:46,359
Speaker 1: through twelve public schools. It goes instead for college educations.

463
00:26:46,680 --> 00:26:48,480
Speaker 12: The first thing that has to happen is a clear

464
00:26:48,560 --> 00:26:51,560
Speaker 12: ryde diagnosis of where the biggest bang for the buck

465
00:26:51,680 --> 00:26:55,280
Speaker 12: can be found, and I would commend the higher ed

466
00:26:55,359 --> 00:26:59,200
Speaker 12: side of the house probably is the riper work.

467
00:27:00,119 --> 00:27:03,640
Speaker 1: Daniels ran the USOMB the state of Indiana as governor

468
00:27:03,800 --> 00:27:07,480
Speaker 1: and Purdue University as president. As a vocal critic of

469
00:27:07,520 --> 00:27:10,560
Speaker 1: the Department of Education. He doesn't seem much downside to

470
00:27:10,680 --> 00:27:12,159
Speaker 1: eliminating it all together.

471
00:27:12,640 --> 00:27:14,480
Speaker 11: When you look at it through a competency lens, it

472
00:27:14,480 --> 00:27:19,840
Speaker 11: has failed utterly at its mission. Look at the National

473
00:27:19,880 --> 00:27:24,320
Speaker 11: Assessment of Educational Progress SCURSE today versus back at the

474
00:27:24,359 --> 00:27:26,560
Speaker 11: time of its inception. I think it'd be a great

475
00:27:26,640 --> 00:27:29,840
Speaker 11: object lesson to the country if we actually stop doing

476
00:27:30,000 --> 00:27:34,600
Speaker 11: anything federally that's important. You would see, as I've sometimes

477
00:27:35,280 --> 00:27:38,400
Speaker 11: glibly said, you'd be amazed how much government you'd never miss.

478
00:27:38,560 --> 00:27:39,239
Speaker 1: You would not miss.

479
00:27:39,600 --> 00:27:43,720
Speaker 11: You'd hear the screams of the clients and recipients of

480
00:27:43,840 --> 00:27:48,560
Speaker 11: the money, but the average person would not see any

481
00:27:48,640 --> 00:27:52,240
Speaker 11: difference in their lives, and that might embolden the country

482
00:27:52,359 --> 00:27:57,280
Speaker 11: to support other trimming and reductions and modernizations of the

483
00:27:57,359 --> 00:27:59,679
Speaker 11: kind we really need. The Department of Education is doing

484
00:27:59,720 --> 00:28:03,440
Speaker 11: something it ought not be doing. Other things it's doing

485
00:28:03,520 --> 00:28:06,919
Speaker 11: that might be legitimate, and I'll say helping somehow finance

486
00:28:07,000 --> 00:28:10,240
Speaker 11: student education is doing so poorly that someone else should

487
00:28:10,240 --> 00:28:12,200
Speaker 11: do it. There's a lot of suggestion move that whole

488
00:28:12,359 --> 00:28:15,560
Speaker 11: loan mess over to the treasury. Another idea would be

489
00:28:15,560 --> 00:28:18,440
Speaker 11: to sell it to the private sector. But in any event,

490
00:28:18,520 --> 00:28:21,520
Speaker 11: they have failed utterly and clearly should be out of

491
00:28:21,600 --> 00:28:25,120
Speaker 11: that business. What does it leave, perhaps to support state

492
00:28:25,200 --> 00:28:30,440
Speaker 11: and local educators in doing what has always been really

493
00:28:30,560 --> 00:28:34,640
Speaker 11: in their province. You could support them financially without all

494
00:28:34,760 --> 00:28:38,480
Speaker 11: the incumbrances that come with a federal department, and without

495
00:28:38,520 --> 00:28:38,920
Speaker 11: its cost.

496
00:28:39,760 --> 00:28:43,280
Speaker 1: The DOE contribution to K through twelve. Public school budgets

497
00:28:43,360 --> 00:28:46,360
Speaker 1: may be modest, but talk to someone who runs those schools,

498
00:28:46,840 --> 00:28:50,520
Speaker 1: someone like Sherry Cammys, superintendent of the Baldwin, New York,

499
00:28:50,720 --> 00:28:56,680
Speaker 1: Union Free School District, and you get a somewhat different sentence.

500
00:28:57,080 --> 00:29:00,080
Speaker 1: How big is the budget of your school district? How

501
00:29:00,160 --> 00:29:01,920
Speaker 1: much of it comes from their department education?

502
00:29:02,600 --> 00:29:06,360
Speaker 10: So our budget coming from federal funding is just under

503
00:29:06,400 --> 00:29:10,200
Speaker 10: two million dollars a year, which represents one point one

504
00:29:10,400 --> 00:29:12,080
Speaker 10: four percent of our total budget.

505
00:29:12,680 --> 00:29:15,360
Speaker 1: What does that mean if that money went away? How

506
00:29:15,360 --> 00:29:17,920
Speaker 1: would it aff affect Baldwin School students?

507
00:29:18,400 --> 00:29:20,680
Speaker 10: So it sounds like it's a small amount of money,

508
00:29:20,720 --> 00:29:23,480
Speaker 10: and it sounds like a small percentage, but in fact,

509
00:29:24,040 --> 00:29:26,920
Speaker 10: it is a lot of money for us. Our federal

510
00:29:27,160 --> 00:29:30,760
Speaker 10: money helps support the programs that we run for our

511
00:29:30,800 --> 00:29:34,600
Speaker 10: students with disabilities, It helps us run programs for our

512
00:29:34,680 --> 00:29:37,480
Speaker 10: Title I students, which are students that are below the

513
00:29:37,520 --> 00:29:40,479
Speaker 10: poverty line, and it helps us with these students who

514
00:29:40,480 --> 00:29:43,720
Speaker 10: are most in need in our school community. At that

515
00:29:44,000 --> 00:29:46,520
Speaker 10: one point one four percent, that is a timping point.

516
00:29:46,680 --> 00:29:49,640
Speaker 10: If we lose that money, we lose programs and we

517
00:29:49,760 --> 00:29:51,640
Speaker 10: lose the ability to support those students.

518
00:29:51,960 --> 00:29:53,960
Speaker 1: If that money went away at the federal level, is

519
00:29:54,040 --> 00:29:56,320
Speaker 1: it possible that you could get it replaced at the

520
00:29:56,360 --> 00:29:57,880
Speaker 1: state level or even the local level.

521
00:29:58,280 --> 00:30:00,560
Speaker 10: A good percentage of our state funding coming from the

522
00:30:00,600 --> 00:30:03,920
Speaker 10: federal government as well. So when you think about the

523
00:30:04,080 --> 00:30:07,920
Speaker 10: flow of funds, if the state gets less money, then

524
00:30:07,960 --> 00:30:10,240
Speaker 10: the school district is going to get less money in

525
00:30:10,360 --> 00:30:13,880
Speaker 10: terms of our aid from the state. If the federal

526
00:30:13,960 --> 00:30:16,040
Speaker 10: government gives less money, then we're going to see less

527
00:30:16,080 --> 00:30:17,920
Speaker 10: money coming directly from the federal government.

528
00:30:18,360 --> 00:30:20,400
Speaker 1: Quite apart from the role of the Department of Education

529
00:30:20,520 --> 00:30:24,760
Speaker 1: and doling out funds to public schools, educators like Camis say,

530
00:30:24,840 --> 00:30:27,720
Speaker 1: it's also important that we have a federal agency that

531
00:30:27,840 --> 00:30:32,080
Speaker 1: focuses specifically on education and acts as an advocate for

532
00:30:32,280 --> 00:30:33,640
Speaker 1: education in Washington.

533
00:30:34,200 --> 00:30:38,120
Speaker 10: So obviously the funding is important, but the way that

534
00:30:39,080 --> 00:30:43,520
Speaker 10: the Department of Education understands education, the way that it

535
00:30:43,640 --> 00:30:47,840
Speaker 10: advocates for public school systems, is imperative. The majority of

536
00:30:48,080 --> 00:30:51,080
Speaker 10: kids in our country go to school in public schools,

537
00:30:51,200 --> 00:30:54,480
Speaker 10: and public schools, in fact, are the bedrock of democracy

538
00:30:54,760 --> 00:30:59,360
Speaker 10: for this country, and so when you think about eliminating

539
00:30:59,400 --> 00:31:03,480
Speaker 10: the Department, you're really also talking about eliminating the greatest

540
00:31:03,560 --> 00:31:07,640
Speaker 10: advocate for public schools and for our nation's children. I

541
00:31:07,680 --> 00:31:10,320
Speaker 10: guess my question would be, is that really what we

542
00:31:10,440 --> 00:31:14,040
Speaker 10: want to do? Do we want to put the role

543
00:31:14,400 --> 00:31:19,080
Speaker 10: of education in the hands of somebody who maybe that's

544
00:31:19,160 --> 00:31:23,000
Speaker 10: not their primary goal or it's not of primary importance.

545
00:31:23,640 --> 00:31:26,920
Speaker 10: For me personally, I think our kids are the most

546
00:31:27,000 --> 00:31:31,160
Speaker 10: important thing that we treasure and value in our nation,

547
00:31:31,520 --> 00:31:35,000
Speaker 10: and so for me, I want to make sure that

548
00:31:35,440 --> 00:31:36,840
Speaker 10: our children are taken care of.

549
00:31:37,480 --> 00:31:40,160
Speaker 1: The money provided by the Department of Education for local

550
00:31:40,200 --> 00:31:43,720
Speaker 1: public schools may make a difference. It's advocacy on behalf

551
00:31:43,760 --> 00:31:47,240
Speaker 1: of public school students may be important, but that doesn't

552
00:31:47,320 --> 00:31:49,840
Speaker 1: begin to address the bulk of the over one hundred

553
00:31:49,880 --> 00:31:53,520
Speaker 1: and seventy billion dollars going to college student aid in

554
00:31:53,600 --> 00:31:56,400
Speaker 1: the form of loans and grants every year. What about

555
00:31:56,440 --> 00:31:58,800
Speaker 1: that student loan program? Does it make money for the

556
00:31:58,920 --> 00:32:00,960
Speaker 1: US government or lose mone No, it's.

557
00:32:00,880 --> 00:32:03,479
Speaker 11: Losing hundreds of billions of dollars. When the federal government

558
00:32:03,560 --> 00:32:08,600
Speaker 11: under President Obama took it over nationalized, essentially, we were

559
00:32:08,640 --> 00:32:11,960
Speaker 11: told it was going to make money, but that's proven

560
00:32:12,000 --> 00:32:14,720
Speaker 11: to be the reverse of the truth. It's quite possibly

561
00:32:14,800 --> 00:32:18,800
Speaker 11: the this is a this is a stiff competition. It's

562
00:32:18,800 --> 00:32:23,280
Speaker 11: at least a contender for the most catastrophically failed federal

563
00:32:23,360 --> 00:32:25,000
Speaker 11: domestic program that we've seen.

564
00:32:25,760 --> 00:32:27,640
Speaker 1: The story is a bit different when it comes to

565
00:32:27,720 --> 00:32:31,800
Speaker 1: those grants for less fortunate students, though Daniel sees room

566
00:32:31,880 --> 00:32:35,360
Speaker 1: for reform there as well and isn't sure the Department

567
00:32:35,400 --> 00:32:37,680
Speaker 1: of Education is needed to administer them.

568
00:32:38,080 --> 00:32:42,840
Speaker 11: I think the pel grant program, properly aimed, is very,

569
00:32:43,000 --> 00:32:46,040
Speaker 11: very worthy, and you know, could honestly be expanded if

570
00:32:46,080 --> 00:32:50,320
Speaker 11: you didn't have all the rest of the department to

571
00:32:51,120 --> 00:32:55,680
Speaker 11: pay for. Once again, though the money could be and

572
00:32:55,760 --> 00:32:58,680
Speaker 11: the program could be decentralized, doesn't need to be command

573
00:32:58,760 --> 00:33:00,840
Speaker 11: and run command and controls from Washington.

574
00:33:01,360 --> 00:33:03,880
Speaker 1: And then there's the basic question of whether we should

575
00:33:03,880 --> 00:33:06,440
Speaker 1: be urging so many of our high school graduates to

576
00:33:06,560 --> 00:33:09,800
Speaker 1: go to four year colleges. To begin with, there's been

577
00:33:09,800 --> 00:33:11,680
Speaker 1: a lot of emphasis on everybody going to college, to

578
00:33:11,760 --> 00:33:14,400
Speaker 1: go four year college. Is it time to revisit that anyway?

579
00:33:14,640 --> 00:33:17,760
Speaker 12: I think it absolutely is, and it's being revisited all

580
00:33:17,800 --> 00:33:21,360
Speaker 12: over the country. And one of the things that the

581
00:33:21,480 --> 00:33:24,440
Speaker 12: new nominee for the Secretary has been a strong support

582
00:33:24,480 --> 00:33:29,600
Speaker 12: of apprenticeship programs. We have workforce programs scattered throughout the

583
00:33:29,640 --> 00:33:32,840
Speaker 12: federal government. The ones that are focused in high schools

584
00:33:32,880 --> 00:33:37,520
Speaker 12: and community colleges live at the Department of Education. Many

585
00:33:37,600 --> 00:33:39,240
Speaker 12: of them live at the Department of Labor.

586
00:33:39,520 --> 00:33:43,520
Speaker 11: There are twice as many Americans who started college and

587
00:33:43,560 --> 00:33:48,880
Speaker 11: didn't finish, many of them because of the that went

588
00:33:48,920 --> 00:33:51,600
Speaker 11: down the student loan path we talked about. There are

589
00:33:51,680 --> 00:33:54,440
Speaker 11: twice as many such people as all the eighteen to

590
00:33:54,520 --> 00:33:56,880
Speaker 11: twenty two year olds on college campuses. And if we

591
00:33:56,960 --> 00:33:59,720
Speaker 11: could help find more of those people than we do today,

592
00:34:00,120 --> 00:34:02,960
Speaker 11: help them get to a new skill, a new credential

593
00:34:04,640 --> 00:34:08,360
Speaker 11: that would allow them to advance themselves in life, I

594
00:34:08,400 --> 00:34:11,480
Speaker 11: think that could be money well spent, better than much

595
00:34:11,520 --> 00:34:12,760
Speaker 11: of what we do presently.

596
00:34:13,280 --> 00:34:15,640
Speaker 1: With all the disparate views about the value of the

597
00:34:15,680 --> 00:34:19,359
Speaker 1: Department of Education and whether it should be preserved, there

598
00:34:19,440 --> 00:34:23,120
Speaker 1: is one thing everyone appears to agree on, the purpose,

599
00:34:23,719 --> 00:34:27,360
Speaker 1: which should be to prepare students to join the modern workforce.

600
00:34:27,840 --> 00:34:30,200
Speaker 12: As I talk to business leaders around the country, here

601
00:34:30,360 --> 00:34:33,040
Speaker 12: is a part of the Bipartisan Policy Center that you know,

602
00:34:33,160 --> 00:34:36,440
Speaker 12: you hear it from every CEO. Every single entity is

603
00:34:36,560 --> 00:34:38,840
Speaker 12: worried about the quality of their workforce. That is what

604
00:34:39,000 --> 00:34:41,239
Speaker 12: is going to drive their growth, and that's what it's

605
00:34:41,280 --> 00:34:43,920
Speaker 12: going to drive our country's growth too, And so yeah,

606
00:34:44,000 --> 00:34:46,560
Speaker 12: I think it is a national imperative. Can we have

607
00:34:46,880 --> 00:34:50,760
Speaker 12: a lighter hand, Can we be more about a research agenda?

608
00:34:50,880 --> 00:34:53,840
Speaker 12: Can we be more about you know, data and accountability

609
00:34:54,000 --> 00:34:56,799
Speaker 12: as opposed to telling them what to do, telling them

610
00:34:56,840 --> 00:34:59,680
Speaker 12: what we desire instead? Yeah, I think there's you know,

611
00:34:59,760 --> 00:35:03,160
Speaker 12: we're constantly recalibrating the federal role.

612
00:35:05,480 --> 00:35:08,279
Speaker 1: So if I'm a CEO of a big company or

613
00:35:08,400 --> 00:35:11,200
Speaker 1: I'm a big investor, what does this all mean for me?

614
00:35:11,440 --> 00:35:14,160
Speaker 1: Why do I care about what you do every day?

615
00:35:14,520 --> 00:35:20,680
Speaker 10: So the relationship between public schools and industry and CEOs

616
00:35:20,719 --> 00:35:25,920
Speaker 10: and industry is underrated. There is a direct link to

617
00:35:26,080 --> 00:35:29,480
Speaker 10: what we do and what industry does. If I'm a

618
00:35:29,560 --> 00:35:33,560
Speaker 10: CEO of a company, I want the most prepared, the smartest,

619
00:35:34,440 --> 00:35:39,240
Speaker 10: the most independently thinking, critical thinkers that I could possibly employ.

620
00:35:41,600 --> 00:35:43,879
Speaker 1: That does it for us? On Wall Street Week, I'm

621
00:35:43,960 --> 00:35:47,279
Speaker 1: David Weston. We'll see you again next week for more

622
00:35:47,400 --> 00:35:48,839
Speaker 1: stories of capitalism.