"I wouldn't necessarily call him septic . . . "
My favorite line of the week*, overheard as two doctors walked by as I sat in the ER at Georgetown with the young master, who has managed to break both of his pinkies this week playing soccer -- in separate incidents. How the hell do you break two fingers in two consecutive games in a sport where you can't use your hands? With both of them splinted and taped to his adjoining fingers, he looks like someone who didn't pay the first installment on a loan from the mob. (*Honorable mention goes to the doctor walking by carrying the book Emergency Medicine Secrets - I don't know why, but this seemed vaguely disconcerting.)
I'm living the middle aged dream right now. Monday it was shuttling my mother-in-law (who is a sweetheart by the way) to different doctors and then today it was the kid. In between I went to one meeting yesterday which involved 240 miles of driving, a forty minute traffic jam due to a truly nasty truck crash on I-95 (in which someone broke more than his pinkies), and then several hours devoted to discussing pension benefit cuts, followed by a conference call this morning with another client to cut more pension benefits, and then this afternoon, before rushing off to the ER, a brief interlude in the office to a write a notice to union members of yet another client explaining -- yes, you guessed it -- more upcoming cuts in pension benefits.
Basically my clients are all suffering the results of the stock market debacle of the Bush years -- when the S&P 500 "returned" -27% -- the only cumulatively negative eight year period since 1929-36. The ill effects of the collapse of the markets has now been compounded by the cratering of the construction market. These pension plans are funded by a combination of employer contributions -- keyed to hours worked -- and investment income. Needless to say, hours in some groups have declined close to 50% over recent norms.
Defined benefit pension plans -- that is traditional pension plans that pay a fixed monthly benefit for your life and the life of your spouse -- are funded based on actuarial calculations that, in construction at least, assume that investments over time will return 7 to 7.5% per year. For my entire career from 1985 to 1999, this was not a problem. Cumulative returns for most plans far exceeded this mark, resulting in pension improvements. Now, most of these plans are in a fight for survival -- a fair number may well not make it, and many which do will do so on the basis of vastly inferior benefits than they once had, including in many instances huge cuts to early retirement benefits.
And yet the people who have these plans are still in most instances lucky. Compared to their brethren who just have 401(k) plans, these workers can at least reasonably assume their level of income as retirees. A huge chunk of workers with only 401(k) plans will simply never really be able to retire, as their accumulated savings will not provide any kind of decent income. There is, I am afraid, an enormous crisis brewing in terms of the cohort of workers my age lacking the ability to retire. Those who thought the inflated values of their homes would get them through have had that rug pulled out from under them as well. In this environment, we should be talking about enhancing Social Security not cutting it or privatizing it. Otherwise we are going to be looking at an ancient workforce and a labor market in which the aspirations of younger workers are increasingly stifled, a result that is good for no one.
I am going to try to come back to this issue a number of times going forward. It strikes me as one of the great festering social problems that is being totally ignored in our insane and insipid political discourse.