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Bold increases in the minimum wage

Lafayette

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From the Economic Policy Institute -
Bold increases in the minimum wage should be evaluated for the benefits of raising low-wage workers’ total earnings

Excerpt:

Critics who cite claims of job loss are using a distorted frame.

Workers today paid the federal minimum wage of $7.25 per hour are making 25 percent less than their counterparts made in 1968, despite the fact that the nation’s productivity has roughly doubled since then. Concern that low-wage workers are being deprived of the wage increases their increased productivity should deliver has led local, state, and federal policymakers to propose minimum wage increases that exceed the minimum wage increases that took effect in the 1990s and 2000s.

In this paper we show that the need to “go bold” calls for a more standard policy evaluation framework that assesses the costs and benefits for low-wage workers rather than a singular focus on potential employment losses.

The existing research on minimum wage policies justifies bolder increases than in the 1990s and 2000s. Federal and state governments enacted more modest minimum wage increases in the 1990s and 2000s, and these increases did not lead to substantial employment losses. This suggests that we could have pursued larger increases with few negative consequences for low-wage workers.

Critics who cite claims of job loss to reject bolder minimum wage increases are using a distorted evaluation framework that focuses only on the potential costs of raising the minimum wage and ignores the benefits of raising low-wage workers’ total earnings.

Focusing on job losses ignores the high degree of churn in the low-wage labor market, giving the misleading impression that a given pool of workers would lose their jobs and have no earnings over an entire year. The more likely scenario is that what is lost are job hours, and that these lost hours are spread among the affected workers, who work a little less but earn more per year.

How many times - when raising wages is mentioned - the Replicants kneejerk with the same excuse. "That's gonna cost jobs!" When, in fact, what they are really afraid of is higher production costs for goods/services and thus lower profit margins.

What they either fail to understand or admit is that finite but deserved wage increases are not a profit-burden but an effective means of enhancing Demand by putting more Disposable Income into the hands of Consumers ...
 
From the Economic Policy Institute -
Bold increases in the minimum wage should be evaluated for the benefits of raising low-wage workers’ total earnings

Excerpt:



How many times - when raising wages is mentioned - the Replicants kneejerk with the same excuse. "That's gonna cost jobs!" When, in fact, what they are really afraid of is higher production costs for goods/services and thus lower profit margins.

What they either fail to understand or admit is that finite but deserved wage increases are not a profit-burden but an effective means of enhancing Demand by putting more Disposable Income into the hands of Consumers ...

Here is my question: If raising the minimum wage is generally a good idea and provides extraordinarily great societal and economic benefits both to producers, consumers, wage-earners and employers, and there truly are no downsides whatsoever (or those downsides are simply exaggerated) why are we talking about a minimum wage of $15.00 per hour? Depending on the location, that is barely enough for families to live on. Why not raise it to $50.00 per hour? Or $100.00 per hour? Wouldn't that cause an even greater amount of economic growth by putting even more money into the hands of consumers?
 
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Here is my question: If raising the minimum wage is, generally a good idea and provides extraordinarily great societal and economic benefits both to producers, consumers, wage-earners and employers, and there truly are no downsides whatsoever (or those downsides are simply exaggerated) why are we talking about a minimum wage of $15.00 per hour? Why not raise it to $50.00 per hour? Or $100.00 per hour? Wouldn't that cause an even greater amount of economic growth by putting even more money into the hands of consumers?

Because the minimum wage at $15/hour will in fact not inflate wages elsewhere to compensate, and at the same time give people a decent salary with which to exit poverty. (Especially in a country where the mean wage is $31K annually.)

You obviously did not know (or is the word care?) that 14% of American men, women and children live below the Poverty Threshold (of $25K/year for a family of four). That's the population of California and New Jersey combined ...
 
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Here is my question: If raising the minimum wage is generally a good idea and provides extraordinarily great societal and economic benefits both to producers, consumers, wage-earners and employers, and there truly are no downsides whatsoever (or those downsides are simply exaggerated) why are we talking about a minimum wage of $15.00 per hour? Depending on the location, that is barely enough for families to live on. Why not raise it to $50.00 per hour? Or $100.00 per hour? Wouldn't that cause an even greater amount of economic growth by putting even more money into the hands of consumers?

There are reasons that some people make more than others. It is debatable whether the income deviation can be explained just by value of their job skills or not. Min wage closes this spread, but due to mathematics the min wage has to be lower than the mean average wage. The mean average wage is somewhere around $60/hr (gdp / total work hours), so a $15/hr min wage is possible and probably beneficial, but a $60 min wage is not possible without destroying the needed deviation in pay between jobs.

In 1968 the min wage peaked, and it was equivilent to around $10.50/hr in todays dollars, and poverty was dropping. So we have proven that we can support at least a $10.50 min wage. We are a richer nation now than we were then, so surely we can handle a min wage a little higher than $10.50. How much higher is open to debate and only proveable by actually doing it. I wouldn't recommend big jumps though. Maybe something like a 10% increase per year until it becomes inflationary.
 
Because the minimum wage at $15/hour will in fact not inflate wages elsewhere to compensate, and at the same time give people a decent salary with which to exist poverty.

I am going to presume you meant "exit" poverty. And I do care about people exiting poverty. But I am not certain that a price floor on the price of labor is the way for large numbers of people to exit poverty, as it is understood that price floors consistently produce surpluses. In this instance, a price floor on labor can produce a surplus of labor, i.e., a high degree of unemployment. Perhaps you can show me that unemployment has fallen in areas where minimum wages have increased (and I do not mean short-term unemployment, but long-term unemployment). I am welcome to being convinced otherwise.

You obviously did not know (or is the word care?) that 14% of the American men, women and children live below the Poverty Threshold (of $24K/year for a family of four). That's the population of California and New Jersey combined ...

I understand. You want people who already work but for less than your ideal minimum wage to be paid more so that they may exit poverty. But I want people who are unemployed to find work. And generally a person who is unemployed for long periods cannot find work because they do not possess a skillset that is in high demand by employers (i.e., at the price that an employer would be willing to pay for their labor). And generally, the way you expand your skillset is on-the-job training. Now, what incentive does an employer have to hire an untrained worker and give them on-the-job training? Well, generally, the untrained employee can offer their labor at a low price; or for free sometimes (see unpaid internships). But when you put a price floor on the price of labor, and make it illegal for the unskilled unemployed to offer their labor at a lower price (which is generally the only bargaining chip they have when negotiating for employment) you make it ever less likely that they will find work unless they can find ways to expand their skillset and thus their chances to gain employment.

After all, would you hire someone at $15.00 per hour if their job skillset means that their productivity would only yield you $7.50 per hour starting out? In other words, you would stand to lose a great amount of money for hiring them? Perhaps if you had absolute faith in their ability to learn, their dedication to the job, and you were absolutely certain they weren't using you as a stepping-stone to a different, better paying job down the line, maybe. But more likely, you would look for someone who is already skilled enough where their productivity exceeds $15.00 per hour in order to make it profitable to hire them. Not because you are malicious or uncaring, but because you do not want to bankrupt yourself.

So I am against such a law not because it will necessarily increase unemployment (though it will for workers whose productivity does not match or exceed the new minimum wage), but that it stands to perpetuate unemployment for a large section of society who will never be able to climb their way out of poverty because they have been priced out of the labor market and employers have largely been disincentivized from hiring them.
 
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Here is my question: If raising the minimum wage is generally a good idea and provides extraordinarily great societal and economic benefits both to producers, consumers, wage-earners and employers, and there truly are no downsides whatsoever (or those downsides are simply exaggerated) why are we talking about a minimum wage of $15.00 per hour? Depending on the location, that is barely enough for families to live on. Why not raise it to $50.00 per hour? Or $100.00 per hour? Wouldn't that cause an even greater amount of economic growth by putting even more money into the hands of consumers?

That's actually a fallacy called failing to draw the line.

Of course there is an upper limit that if exceeded would cause undesireable side effects.

Just like charging workers to work for you wouldn't work. Owners would hire tons of workers then.

But they would starve to death. Or worse, go on welfare, right?

Everybody used to get richer at about the same rate. Until the mid seventies.

Then that general upward trend stopped except for e relative few at the top and corporations.

And those sectors have seen record profits and wealth accumulation.

When it became unnecessary to make sure your employees could buy your products, or make them in the first place they simply stopped. Went to the more profitable model.

And that is why wages for the vast majority have not changed, or fallen, for forty years.

That is why a minimum wage worker makes 75% of what their counterparts made in 1968.

People/corporations simply decided that they deserved the money more and kept it for themselves.
 
I am going to presume you meant "exit" poverty. And I do care about people exiting poverty. But I am not certain that a price floor on the price of labor is the way for large numbers of people to exit poverty, as it is understood that price floors consistently produce surpluses. In this instance, a price floor on labor can produce a surplus of labor, i.e., a high degree of unemployment. Perhaps you can show me that unemployment has fallen in areas where minimum wages have increased (and I do not mean short-term unemployment, but long-term unemployment). I am welcome to being convinced otherwise.



I understand. You want people who already work but for less than your ideal minimum wage to be paid more so that they may exit poverty. But I want people who are unemployed to find work. And generally a person who is unemployed for long periods cannot find work because they do not possess a skillset that is in high demand by employers (i.e., at the price that an employer would be willing to pay for their labor). And generally, the way you expand your skillset is on-the-job training. Now, what incentive does an employer have to hire an untrained worker and give them on-the-job training? Well, generally, the untrained employee can offer their labor at a low price; or for free sometimes (see unpaid internships). But when you put a price floor on the price of labor, and make it illegal for the unskilled unemployed to offer their labor at a lower price (which is generally the only bargaining chip they have when negotiating for employment) you make it ever less likely that they will find work unless they can find ways to expand their skillset and thus their chances to gain employment.

After all, would you hire someone at $15.00 per hour if their job skillset means that their productivity would only yield you $7.50 per hour starting out? In other words, you would stand to lose a great amount of money for hiring them? Perhaps if you had absolute faith in their ability to learn, their dedication to the job, and you were absolutely certain they weren't using you as a stepping-stone to a different, better paying job down the line, maybe. But more likely, you would look for someone who is already skilled enough where their productivity exceeds $15.00 per hour in order to make it profitable to hire them. Not because you are malicious or uncaring, but because you do not want to bankrupt yourself.

So I am against such a law not because it will necessarily increase unemployment (though it will for workers whose productivity does not match or exceed the new minimum wage), but that it stands to perpetuate unemployment for a large section of society who will never be able to climb their way out of poverty because they have been priced out of the labor market and employers have largely been disincentivized from hiring them.

I hate to say it, but most low level jobs don't take much training.

Can't believe it takes more than a couple days to learn how to run the fryer.

But even after mastering all the stations they don't get much more money.

So what are they "training" for after they learn the job? Why don't their wages climb toward semi-skilled when they have the semi-skilled chops?

Because the businesses have grown accustomed to the profit margins cheap labor provides.
 
Here is my question: If raising the minimum wage is generally a good idea and provides extraordinarily great societal and economic benefits both to producers, consumers, wage-earners and employers, and there truly are no downsides whatsoever (or those downsides are simply exaggerated) why are we talking about a minimum wage of $15.00 per hour? Depending on the location, that is barely enough for families to live on. Why not raise it to $50.00 per hour? Or $100.00 per hour? Wouldn't that cause an even greater amount of economic growth by putting even more money into the hands of consumers?

Your question is like asking "If a quarter-teaspoon of salt makes food taste better, why not add a tablespoon, or even a cup of salt?" Nobody on the Left is talking about such silly notions - that's only y'all on the Right blowing things way the heck out of proportion. We want enough of a raise in the minimum wage to make things better, but none of us want to go beyond that point.

It's the "Goldilocks principle" - the key is for the minimum wage to be neither too little nor too much, but just right.
 
From the Economic Policy Institute -
Bold increases in the minimum wage should be evaluated for the benefits of raising low-wage workers’ total earnings

Excerpt:



How many times - when raising wages is mentioned - the Replicants kneejerk with the same excuse. "That's gonna cost jobs!" When, in fact, what they are really afraid of is higher production costs for goods/services and thus lower profit margins.
You do understand the purpose of a business is to make a profit, right? Businesses are not private welfare services.
Lafayette said:
What they either fail to understand or admit is that finite but deserved wage increases are not a profit-burden but an effective means of enhancing Demand by putting more Disposable Income into the hands of Consumers ...
You "deserve" the wage your skills and abilities bring to the employer. EPI and their far left arguments carry little weight against observable facts.

Oh, and just for info - according to the Bureau of Labor Statistics only about 3% of all workers earn the federal minimum wage or less. They tend to be young, and work part time. For many this is their first job.
 
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I hate to say it, but most low level jobs don't take much training.

Can't believe it takes more than a couple days to learn how to run the fryer.

But even after mastering all the stations they don't get much more money.

So what are they "training" for after they learn the job? Why don't their wages climb toward semi-skilled when they have the semi-skilled chops?

Because the businesses have grown accustomed to the profit margins cheap labor provides.

Nope, because almost anyone can be a short-order fry cook. Most jobs that are presently paid at the minimum wage level are not high-skilled jobs, because they do not require a very high skillset (not no skillset mind you, just not a very high one). Which is why if fry cooks become too expensive for employers and profitability is slashed, they may end up getting replaced with robotic fry cooks which are cheaper in the long run and apparently do a better job. Which again goes to my point: If your labor costs more to your potential employer than that of purchasing and maintaining a robot to do the same work, and you have been barred from negotiating a wage below that of the cost and maintenance of a robot, has minimum wage helped you or harmed you? Why incentivizes the employer to hire you for more other than a robot except perhaps the simple spirit of charity?
 
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Because the minimum wage at $15/hour will in fact not inflate wages elsewhere to compensate, and at the same time give people a decent salary with which to exit poverty. (Especially in a country where the mean wage is $31K annually.)

You obviously did not know (or is the word care?) that 14% of American men, women and children live below the Poverty Threshold (of $25K/year for a family of four). That's the population of California and New Jersey combined ...

That (bolded above) assertion makes no sense at all. If manager/supervisor employee Jane now makes 3X the wage of (or $16/hour more than) entry level employee Joe (getting $8/hour) then why should that no longer be the case after Joe gets a state mandated raise (MW increase)?

If the realtionship between those two different employment positions (jobs), their skill level and pay is valid now then it should remain valid after the government takes action to "fix" things. There is no valid reason to give MW Joe a 100% pay increase and yet not give manager Jane a similar (if not equal) pay increase. After all, Jane is still doing a (3X?) more complex, skilled and valuable job than Joe is.

The same is true for those, like myself, that get a retirement income. I now get $21.6K/year in Social Security retirement income (about 50% more than a full-time MW job pays). If the MW were increased to $15/hour then I would end up trying to live on about 50% less than one with a full-time MW job gets. How, exactly, does that make any sense?

The federal MW should be adjusted for CPI inflation just as Social Security retirement benefits are. Had the original (1938) federal MW been adjusted for CPI inflation then it would be about $4.50/hour now. Perhaps the (doubled) 1939 MW could be used as the base year but to use the 1968 (highest ever, CPI inflation adjusted) MW value is nonsense.
 
From the Economic Policy Institute -
Bold increases in the minimum wage should be evaluated for the benefits of raising low-wage workers’ total earnings

Excerpt:



How many times - when raising wages is mentioned - the Replicants kneejerk with the same excuse. "That's gonna cost jobs!" When, in fact, what they are really afraid of is higher production costs for goods/services and thus lower profit margins.

What they either fail to understand or admit is that finite but deserved wage increases are not a profit-burden but an effective means of enhancing Demand by putting more Disposable Income into the hands of Consumers ...

Higher minimum wage doesn't mean lower profits. It means higher consumer costs as well.
 
That (bolded above) assertion makes no sense at all. If manager/supervisor employee Jane now makes 3X the wage of (or $16/hour more than) entry level employee Joe (getting $8/hour) then why should that no longer be the case after Joe gets a state mandated raise (MW increase)?

If the realtionship between those two different employment positions (jobs), their skill level and pay is valid now then it should remain valid after the government takes action to "fix" things. There is no valid reason to give MW Joe a 100% pay increase and yet not give manager Jane a similar (if not equal) pay increase. After all, Jane is still doing a (3X?) more complex, skilled and valuable job than Joe is.

The same is true for those, like myself, that get a retirement income. I now get $21.6K/year in Social Security retirement income (about 50% more than a full-time MW job pays). If the MW were increased to $15/hour then I would end up trying to live on about 50% less than one with a full-time MW job gets. How, exactly, does that make any sense?

The federal MW should be adjusted for CPI inflation just as Social Security retirement benefits are. Had the original (1938) federal MW been adjusted for CPI inflation then it would be about $4.50/hour now. Perhaps the (doubled) 1939 MW could be used as the base year but to use the 1968 (highest ever, CPI inflation adjusted) MW value is nonsense.

Can't they just get $8/an hour more?

We're supposed to be ejaculating over the extra ten bucks a week from the tax cut.

Maybe we don't need so many fast food places that rely on super cheap labor to make the profit they want.

Or they could accept less profit.
 
That's actually a fallacy called failing to draw the line.

Of course there is an upper limit that if exceeded would cause undesireable side effects.

Just like charging workers to work for you wouldn't work. Owners would hire tons of workers then.

But they would starve to death. Or worse, go on welfare, right?

Everybody used to get richer at about the same rate. Until the mid seventies.

Then that general upward trend stopped except for e relative few at the top and corporations.

And those sectors have seen record profits and wealth accumulation.

When it became unnecessary to make sure your employees could buy your products, or make them in the first place they simply stopped. Went to the more profitable model.

And that is why wages for the vast majority have not changed, or fallen, for forty years.

That is why a minimum wage worker makes 75% of what their counterparts made in 1968.

People/corporations simply decided that they deserved the money more and kept it for themselves.

I agree with much of what you say but feel that the basis (base year) for the CPI inflation adjusted federal MW should be 1939 instead of 1968.
 
I agree with much of what you say but feel that the basis (base year) for the CPI inflation adjusted federal MW should be 1939 instead of 1968.

CPI doesn't include housing.

I would suggest something based on cost of living.

If employers are mad at landlords for charging too much rent maybe something would be done in that regard.

That kind of thing.
 
From the Economic Policy Institute -
Bold increases in the minimum wage should be evaluated for the benefits of raising low-wage workers’ total earnings

Excerpt:

How many times - when raising wages is mentioned - the Replicants kneejerk with the same excuse. "That's gonna cost jobs!" When, in fact, what they are really afraid of is higher production costs for goods/services and thus lower profit margins.

What they either fail to understand or admit is that finite but deserved wage increases are not a profit-burden but an effective means of enhancing Demand by putting more Disposable Income into the hands of Consumers ...

We should start by acknowledging the bias of EPI. Everyone knows (or should know) what EPI is all about. It's a liberal think tank. It is going to present its ideas in whatever way supports the political position. Like any "think tank" or other "policy center".

Secondly, setting a universal price for anything is going to be clumsy about achieving its stated intent given the price for most things varies significantly depending on the part of the country. Urban coastal California and Washington D.C. tend to be extremely expensive such that $15 an hour still seems like peanuts in those places. Semi-rural Oklahoma and Arkansas and Kansas are extremely cheap places to live such that $15 an hour is overkill. It's not just profiteers benefiting from low wage work, and it's not just McDonalds and Walmart workers making low wages. It's all sorts of other workers, including municipal workers that pick trash and mow lawns in public spaces that are paid from tax revenues (taxes that tend to be regressive, no less). It's everyone generally. Making the price be higher makes prices generally be higher. It puts upward pressure on prices generally, including taxes and other fees set by government. The goal of increasing minimum wages is accomplishing wage inflation generally. Wage inflation generally causes higher prices. That money comes out of consumers' pockets as much as the higher wages go into consumers' pockets.

Note I am not saying raising a minimum wage will cause the sky to fall. But setting it federally should peg it to the lowest cost of living place in the country so that municipalities can raise their own minimums relative to the local cost of living. If it costs more than twice as much to live in coastal California than in semi-rural Arkansas, then it should not be seen as some atrocity that the minimum wage in coastal California is double what it is in semi-rural Arkansas. So if you want to raise the federal minimum, raise it to $8.00. A few years later, maybe raise it to $8.50. We don't need to holler for $15 minimum wages nationwide just because Seattle and San Francisco did it.
 
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Because the minimum wage at $15/hour will in fact not inflate wages elsewhere to compensate, and at the same time give people a decent salary with which to exit poverty. (Especially in a country where the mean wage is $31K annually.)
That pure nonsense.

Lafayette said:
You obviously did not know (or is the word care?) that 14% of American men, women and children live below the Poverty Threshold (of $25K/year for a family of four). That's the population of California and New Jersey combined ...
And raising minimum wage to some arbitrary level won't change that a bit - other wages and costs will react to higher MW but scaling costs and other wages up.
 
You do understand the purpose of a business is to make a profit, right? Businesses are not private welfare services.
You "deserve" the wage your skills and abilities bring to the employer. EPI and their far left arguments carry little weight against observable facts.

Oh, and just for info - according to the Bureau of Labor Statistics only about 3% of all workers earn the federal minimum wage or less. They tend to be young, and work part time. For many this is their first job.

Yes but the proposal is to raise the minimum wage to $15 and something like 42% of the workmforce makes less than that. For better or worse it would affect a lot of people.
 
Can't they just get $8/an hour more?

We're supposed to be ejaculating over the extra ten bucks a week from the tax cut.

Maybe we don't need so many fast food places that rely on super cheap labor to make the profit they want.

Or they could accept less profit.

Fast food is a poor example because, like the hospitality industry, it is a luxury item. If fast food prices went up by 25%, due to a mandated MW increase, then I could simply reduce (or eliminate) my spending in them but could still afford to feed myself. Many lower (less than $20/hour) wage jobs are not luxuries (grocery cashiers, stockers and produce delivery drivers) and the necessary price for those essential goods/services would definitely rise from a 100% MW increase making life much more difficult for retirees living on fixed incomes.
 
Yes but the proposal is to raise the minimum wage to $15 and something like 42% of the workmforce makes less than that. For better or worse it would affect a lot of people.
I agree, and it's likely the entire wage structure would over time adjust so that MW at whatever level would still have the same standing it has now - prices would increase, some folks would lose their jobs or have their hours cut, and in the end we'd see no real gain.
 
Fast food is a poor example because, like the hospitality industry, it is a luxury item. If fast food prices went up by 25%, due to a mandated MW increase, then I could simply reduce (or eliminate) my spending in them but could still afford to feed myself. Many lower (less than $20/hour) wage jobs are not luxuries (grocery cashiers, stockers and produce delivery drivers) and the necessary price for those essential goods/services would definitely rise from a 100% MW increase making life much more difficult for retirees living on fixed incomes.

Imagep once did the math for fast food and found that it really wouldn't raise the price per item much. Like a quarter per burger.

Most of this is propaganda in the service of greed.

It really is.

We are being slowly subjugated by greed.
 
CPI doesn't include housing.

I would suggest something based on cost of living.

If employers are mad at landlords for charging too much rent maybe something would be done in that regard.

That kind of thing.

My point is that keeping parity between those living on fixed retirement incomes, such as Social Security, and those working lower wage jobs is important - especially for their effect on (rental) housing costs. If a mandated 100% MW increase causes prices of most goods/services to go up 33% (a reasonable SWAG) then that screws over those that live on fixed retirement incomes.
 
Yes but the proposal is to raise the minimum wage to $15 and something like 42% of the workmforce makes less than that. For better or worse it would affect a lot of people.

How in the hell do people live on that?

Oh yeah. Social programs.

This while corporations and a few individuals are harvesting 85% of all new wealth created.

Can 15% even cover expansion in population at the current minimum wage level?

Or increases in wages as individual skills increase?

This is nothing new. It is the repetition of the pattern of history.

It eventually results in revolution or collapse. Every time.
 
Imagep once did the math for fast food and found that it really wouldn't raise the price per item much. Like a quarter per burger.

Most of this is propaganda in the service of greed.

It really is.

We are being slowly subjugated by greed.
Why is trying to make a profit "greed"? Taking the risks, working long hours, and making sacrifices deserves just compensation.
 
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