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“It’s a 401(k) World!”

May 18, 2013

Your Key to Success: the Wonderful, Wonderful World of 401 (k) s!

Gee, isn’t it great to realize you are standing on the cutting edge of an Exciting New Era?

Boy, Thomas Friedman’s recent op-ed column in the NY Times on Labor Day, “It’s a 401K World” really rekindled my fond memories of the wonderful world of 401(k)s. Let me explain to you how this wonderful New World works!

You see, I’ve worked for six different mental health organizations in the 28 years since 1985, Most of them were Community Health Centers (CMHCs), which typically are private, non-profit organizations with a community-based board of directors that has an exclusive contact with the state Division of Mental Health, part of the Department of Health, to deliver specifified service to clients in a specified catchment area. The last one I worked for covered a contiguous six-county area in rural western Colorado. Such organizations are funded by ever-fluctuating budget grants from the state legislature and by Medicaid billing.

Their primary clientele are the chronically mentally ill or “Spoomies” as they were often called. That term derives from “Severely and Persistently Mentally Ill” or SPMI for short. “We Have a Sliding Scale. No One is Turned Way for Lack of Funds’ the advertising says, but in practice they are given short shrift if the cant’ pay at least $75 an hour. When a client came in without medical insurance that covered mental health treatment and their income put them in the $35-45 an hour bracket on the sliding scale, I was routinely ordered to “see them once more and ship them out the door. Refer them to AA or the women’s’ support group across town that meets once every two weeks. Get rid of them!!” I was told the only mission of CMHCs was to “reduce hospitalization of the chronically mentally ill.” Indeed, institutionalization in the state hospital (now renamed) costs at least $300 a day, or $9000 a month so for much less than that, you can subsidize someone’s apartment and provide a variety of in-home supportive services, such a nurse coming in twice a day to administer medications and a case manager to coach the person on managing the tasks of daily life.

When I joined Four Corners Mental Health Center in Moab, Utah in late 1991, I learned they had driven a vanful of seven or eight “Spoomies” to Disneyland in California and back and billed the entire costs of the two-week trip to Medicaid as a “medical expense.” Howe they justified this was a mystery to me (and still is) but they did it. But if you weren’t’ on Medicaid, you were, as they say, S.O.L.

Well, we will get to the wonderful 401K retirement plan I last experienced in Colorado but first alittle context. Being accountable to, regulated by, and inspected by, the State Davison of Mental Health meant we flunky employees had all the obligations and responsibilities but none of the advantages of being State of Colorado employees. We had “site visits” once or twice a year to insure our paperwork and documentation were in the proper, ever-changing prescribed format (“If it’s not documented, it didn’t’ happen.”). We had to comply with all State directives. But our salaries as professionally-licensed “masters-level clinicians,” the only ones doing actual psychotherapy, were about two-thirds of what public school teachers with comparable levels of education and experience earned. Of course, we didn’t’ have summers off, we had no union; no tenure; we paid for our own required continuing education, which oftenr euqired traveling 300 miles eachw ay to Denver, and paying for hetels and restaurant meals; we weren’t part of the Public Employees Retirement system. In fact, we were at-will employees and frequently and hostilely reminded of our status, that “Each one of you can be let go at any time without reason, without recourse and without notice and don’t you forget it!” the effect on morale can easily be imagined. Like teachers and social workers, we were “captive professionals,” licensed, well-educated professionals who were still subordinate employees expected to sit down, shut up, and do what we were told, which of course negates the whole meaning of “professional.”

Colorado is one of those freedom-loving “right to work” states where you have no job security ever adn are at the mercy of your employer’s whims. When I went back to work at Midwestern Colorado Mental Health center in 2001 we were constantly reminded we were ‘at-will” employees and could be let go on a moment’s notice. In the summer of 2003 the agency abruptly fired (laid off) 20% of its total personnel, naturally most of them direct service employees. Of a total staff of about 75, less than 15 actually saw clients face to face. The rest were administrators, middle managers, and billing clerks. As noted, those hands-on, direct service employees who actually met with clients, and who survived the cut were frequently and pointedly reminded we were “at-will employees” who could be fired on a moment’s notice.

Two years after such supposed financial crises, every agency somehow found the money to build lovely and lavish new office buildings, build an apartment complex, purchase two new vehicles,and pay for trasnportation by private jet to interview psychiatrists from out of the area for part-time contract positions. Administrators control the purse strings, and when they have to cut, they cut direct service subordinates. When they have extra money, the expand the turf and perks of the administration.

So for 28 years I talked people out of suicide in the middle of the night, did individual and group psychotherapy with dysfunctional families full of child abuse and neglect and domestic valence, treated sex abuse victims, sex abuse perpetrators, people with chronic paranoid schizophrenia, people on parole, people with severe personality disorders, severely traumatized people, people with substance abuse issues, incarcerated individuals—in short all the people no one else wanted to deal with, especially at 2:00 AM.

Starting in the field as a psychotherapist in 1986 I made $16,000 a year. By 1991, that had risen to $19,000. Only after 1995 did it rise above $25,000 a year. It peaked at a little over $30,000 as a clinical supervisor in the laste 19990s. Until 2001, when I was offered $41,000 to become a Program Manager, doing administrative and clinical supervision, budgeting, community presentations and coordination, and program management, in addition to being a half-time psychotherapist. In practice, we were always shorthanded so I carried a full-time caseload in addition to my managerial and supervisorial duties. I gave workshops and trainings and was the only bilingual staff member in the agency. Within a year, my position was eliminated when 20% of the direct-service work force was suddenly laid off. I was offered, as a sop, a position as outpatient therapist in another office 25 miles away for 23% pay cut o $33K. this also meant an additional 50 mile commute each day without compensation, as well as the hefty pay cut. That meant an additional 250 miles a week or 1,000 miles a month commuting without compensation. (At the current state rate of 58.5 cents per mile, that’s an additional uncompensated expense of $585 per month, or $7,020 a year, in addition to the $9,000 a year pay cut. Sorry, I know I should be grateful for whatever crumbs the rich allow to fall from their table, and not whine! Think positive! Put on a happy face!

But I digress! Golly, gee whiz! I still haven’t’ gotten to the Wonderful 401(k) World Thomas Friedman celebrates.

Of course, Community Mental Health Centers have no retirement plans. This is the 21st Century, after all where, according to Thomas Friedman, the “tools of connectivity and creativity” have rendered such archaic things as pensions obsolete. “If you are self-motivated, this world is tailored for you!” he says. That’s it! My coworkers who got laid off were the ones who weren’t’ self-motivated. Since I only got demoted, I guess I was semi-self-motivated. “Your specific contributions will define your specific benefits much more.” Yeah, that makes sense. My specific contributions were just not enough to offset adminsitrative bungling or a certain administrators’ alcohol-soaked incompetence, so its’ my fault! I got what I deserved in this Social Darwinist survival-of-the-fittest world. If I’d just understood that better, I could’ve taught it to my clients: you get exactly what you deserve in this world! That would’ve made me so much better a psychotherapist!, instead of wasting my time with the unnecessarily complex, pretentious highbrow work of Bessel van der Kolk, James Masterson, Otto Kernberg, Heinz Kohut, Francine Shapiro, richard Chessick, Irivng Yalom, or Jay Haley. Jeez, I could just set my clients straight about how the real world operates and told them, “Sink or swim, buster! It’s all up to you! Welcome to the real world!” I didn’t realize psychotherapy was that simple. Silly me!

Yeah, the 401(k) plan the Mental Health Center offered: you could contribute whatever you want up to a certain limit, about $4,000 (12% of your gross income). After a few years, the agency will match your contribution up to a maxim um of 3% of your yearly salary. So if you are making, as I was the last year I worked there, after 19 years in the field, $33K a year gross before state and federal withholding, and before Social Security and Medicare withholding, the agency would contribute up to $990 per year. If you were very frugal and were able to tithe yourself, contributing $3,300 a year, you could accumulate almost $100,000 after only 30 years! And your employer would’ve contributed almost $29,700 in that same time, if the agency didn’t fold or you didn’t get fired, laid off, or had your job abolished. Let’s see…you could annuitize that and draw 5% (or $6,500 a year) from it. With that and Social Security (mine is about $970 a month) you’d be living high on the hog, right? Of course, if your Medicare supplemental insurance and prescription copays are like mine, they total about $4,000 a year out of pocket, so factor that in, leaving you with about $14,000 a year.

But look at the wonderful freedom the 401(k) gives you! You can choose between four (4) different entities to manage your contributions. You can choose Countrywide, Goldman-Sachs, Bernie Madoff’s Organization or Janus Funds to manage your money! It’s your freedom, your choice! Choose your poison. (OK,I’m exaggerating. But eachof the 4 choices had recent histories of defrauding investors). I researched each of the four on the internet and found that Janus Funds was the least poisonous. They had been exposed for gambling with investor’s money without their knowledge, and pocketing the profits, but not otherwise directly robbing the investors, so that made them the most innocuous of a bad lot.

Like all managers, they charge 3.5% per year in “administrative and managerial fees” to “manage” your account. Please note this exceeds the 3% maximum your employer contributes. And their 3.5% is computed not on this year’s contributions but on the cumulative total. So your employer’s contribution to your “retirement” will never be enough to cover the plan administrators’ fees. Net result for you: a growing net loss every year, guaranteed by the way the system is structured.

When the NY Stock Exchange was booming 14% to 18% a year in the period 2001-07, I noticed my 401(d) was growing by about 3.5% per year, coincidentally just enough to cover Janus Funds fees each year, keeping me even, year after year. In short, 401(k) are a bunko racket, made up only of your own contributions out of your own pay, mismanaged for a big fee by criminal organizations you are forced to choose between. So much for “freedom.”

Would it surprise you to learn that the only two people I’ve ever known to retire from a community mental health center in the last 30 years were married women whose husbands were the principle breadwinner of the family and who had a government pension, or a government-regulated, government-guaranteed, governed-inspected pension? Such women are the only people who can afford to make a career out of working for community mental health.

Welcome to the Brave New World of All-American Social Darwinism and the 401(k)Era of Freedom, Individual Intiative, and Selr-Reliance. Get excited about being an isolated, atomized, powerless individual negotaiting your way through a world of all-powerful rogue corporations.

I forgot to mention three things you need to know: (1)there are strict limits on the amount you can cotnribute every year (in my case, about $4000 a year) becausee they are tax-deferred; (2)your employer may decide to quit cotnributing at all, at any time they choose, as they often do; (3) also remember that $28 billion in employees’ retirement funds that disappeared in the Crash of 2008, so if something similar happens again during your lifetime, well, you’ll just become another unlucky duckk, a Martyr to Freeedom. You can console yourself by reflecting on how you are paying the price for our uniquely American Freedom.

Golly gee whiz! What an exciting new era of individual freedom and opportunity!

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