Rebenchmarked Current Employment Survey Data for 2020: New York City Was Clobbered Last Year, But the Long Term Data Is Still Very Positive

The U.S. Bureau of Labor Statistics released rebenchmarked annual average Current Employment Survey data for 2020 and prior years on March 15th 2021.

https://www.bls.gov/sae/publications/benchmark-article/annual-benchmark-article.htm

More than any other year, there is reason to take the data with a grain of salt.  State departments of labor faced the challenge of collecting the data during a pandemic, while working at home.  An appointee of Mr. Transparency, Donald Trump, was in charge of the Bureau of Labor Statistics, during an election year.  The BLS was hacked by the Solar Winds computer virus late in 2020.  And this data source is most inaccurate during sudden shifts in the economy, due to the need to guesstimate the number of workers employed in new businesses and businesses that closed but were not surveyed.  Large revisions often follow and the unemployment tax records roll in.  There was more than one sudden shift, many businesses closed, and some opened in 2020.  That said, many people worked to produce the best data they could under the circumstances, and this post will discuss what it shows.  

It shows the biggest year-to-year private sector wage and salary job loss for New York City since at least 1950, and perhaps ever.  A job loss that was larger, on a percentage basis, than any U.S. area of any size save the state of Hawaii.  A job loss that was significantly larger than had been reported prior to rebenchmarking.  And yet there is another way to look at the data. New York City still had more private wage and salary jobs in 2020 than it had in any year prior to 2014 – and a boom in self-employment is on top of that.

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The first spreadsheet of data used in this post is here.

It starts in 1950, and is a newer version of a spreadsheet I first created back when I was at the NYC Department of City Planning, and found books with old NYC employment data going back that far.  Thus only I, and perhaps now you, have this historical data.

The data shows that NYC lost the staggering total of 517,500 private wage and salary jobs from 2019 to 2020.  The worst prior years were the 176,100 private jobs lost from 1990 to 1991, and the 149,900 lost from 1974 to 1975.  Those years were similar, in some ways, to 2020, in that they combined national recessions, local problems, and structural economic change.

New York City almost went bankrupt in 1975, and was in the middle of the flight of its low-wage manufacturing sector (garment, toys) to other parts of the country and overseas.  The Port of New York was moving to New Jersey.  And corporate headquarters were fleeing to fortress like suburban campuses, to get away from the city’s growing crime, social problems, rising taxes and declining public services.  In 1975, annual average private employment was 287,900 lower than it had been four years earlier.

In 1991 NYC was at the worst of the crack epidemic, with a soaring murder rate, homeless people everywhere, and tremendous fiscal problems.  Tens of thousands of “back office” “pink collar” secretarial, clerical and mid-management jobs were being wiped out — by office automation and the relocation of call centers and financial processing centers to other parts of the country.  In the financial sector, the professionals had already relocated to Midtown, leaving the back offices Downtown.  Now Downtown lost back office jobs.  It has never again had close to as many people working there as it had in the 1980s. 

There was also a revolution in retailing.  Department stores were being wiped out by “category killer” specialty big box retailers.  Many of the city’s prominent Department stores closed in January of 1991, after Christmas, when the city lost 300,000 private sector jobs in one month.  By 1992, annual average private employment was 311,900 lower than it had been four years earlier.

In 2020, annual average private employment was 313,900 lower than it had been four years earlier.

This spreadsheet shows the change in private employment from December 2019 to December 2020 – before and after the rebenchmarking.  In the “Download” tab one can find all the states, and every metro area the BLS reports on.

In “Chart Data” I reduced it to the larger metro areas and, in some cases small states as well, and put the worst off in this chart.

New York City lost 15.6% of its private sector wage and salary jobs over the year in 2020.  Only Hawaii, with a decrease of 20.2%, was worse off.  Other parts of the tri-state are were also hit hard, with decreases of 10.3% in the Downstate Suburbs, 8.9% in New Jersey (statewide), and 7.6% in Connecticut (statewide).  The New York-New Jersey metro area as a whole lost 12.5% of its private jobs, third worst among metro areas with at least 650,000 total private jobs.  The metro-wide job loss was nearly 1.1 million.  Upstate New York lost 9.3%, or 228,000 jobs.

Upstate and metro Detroit aside, the worst affected areas seem to fall into two categories.   Areas where the economy is driven by tourism – Las Vegas, Orlando, Louisiana, Miami.  And areas that had an influx of college-educated Millennials and office-based jobs in the 2010s, and in some cases soaring housing prices – metro Los Angeles, San Francisco, Minneapolis, Boston, San Diego, Chicago, Pittsburgh, Portland, Philadelphia, Silicon Valley, Washington, Seattle.  The places that fared the best?  Cheaper (or at least they were) metros such as Dallas-Fort Worth, Charlotte, Tampa, Austin, and Salt Lake City.  And states where government spending accounts for a large share of personal income – Alabama, Tennessee, Nebraska, Mississippi, Arkansas.

The annual rebencharking process increased New York City’s reported December 2019 to December 2020 private sector wage and salary job by 2.1 percentage points, from the decrease of 13.5% previously reported to the 15.6% loss now on the books.  That was far from the worst adjustment, as the Hawaii private job loss was increased by 5.0 percentage points and the Las Vegas loss increased by 4.9. Whatever models were used prior to 2020 apparently did not apply to last year, though if the rebenchmarking had gone in the other direction Donald Trump would surely claim that the larger decreases previously reported were a fraud intended to prevent his re-election.

Larger than previously believed job losses are now being reported almost across the board, with the exception of industrial areas such as Upstate NY, metro Cleveland, and metro Detroit.  Still, the revised job losses for these areas were bad enough.

Why was New York City hit so hard?  It is true that nowhere in the United States faced the sort of devastation from COVID-19 that New York City, and (to a lesser extent) the rest of New York State (* means NYC excluded) and New Jersey, faced in March and April 2020.

It is also true, however, that last summer New York City, and New York State and Jersey in general, were just about the safest places in the United States.

I, and many others, believe that COVID-19 just accelerated changes that were bound to happen eventually anyway, and were in some cases already underway. A national recession had already started, due to an unsustainable economy of Americans spending more than they earned and borrowing the difference.

https://larrylittlefield.wordpress.com/2020/03/17/federal-reserve-z1-data-for-2019-the-debt-driven-party-had-to-end-eventually-coronavirus-or-no-coronavirus/

And the excess concentration of economic activity in a small number of booming cities and metro areas that had become unaffordable was unsustainable as well.  As I wrote last year, New York City’s Millennial workers had been squeezed by stagnant wages and soaring housing costs for years

https://larrylittlefield.wordpress.com/2020/10/05/the-2019-american-community-survey-last-year-compared-with-prior-economic-peaks-nyc-and-the-u-s/

Meanwhile, policies to favor producers of public services at the expense of other workers led to higher taxes and worse public services, notably in the case of mass transit which many Millennials used even as elected officials defunded it.

https://larrylittlefield.wordpress.com/2020/11/22/bureau-of-economic-analysis-local-area-personal-income-data-for-2019-so-this-is-what-was-meant-by-the-fairest-city-in-america/

No wonder many young workers got fed up and left for more affordable places, when the shock of COVID-19 removed the idea that they “had to be” in NYC. In reality, New York City’s resident labor force had stopped growing in 2015.

Moreover, we may now experience structural change in the economy driven by information technology, similar to the economic changes that hit New York City back offices in 1991.

This spreadsheet shows annual average employment by sector, for New York City, the Downstate NY Suburbs, and Upstate NY, for each year from 1990 to 2020.  (When the industry classification system was changed in 2001, the federal government paid for CES employment data to be reclassified into the new system as far back as 1990).

That data shows thousands of jobs lost almost across the board from 2019 to 2020.  

There were significant percentage declines in nearly all sectors, and in all three areas of New York State.

Worst off was Leisure and Hospitality, a combination of the Arts, Entertainment and Recreation sector and Accommodation and Food Services sector.   It lost 196,300 wage and salary jobs (41.9%) in New York City, 51,700 jobs (26.5%) in the Downstate Suburbs, and 83,200 jobs (27.9%) in Upstate New York.  Other Services, including Personal and Repair Services were hit almost as hard, with decreases of 37,600 (19.2%) in NYC, 17,100 (18.5%) in the Downstate Suburbs, and 21,600 (16.9%) in Upstate NY. 

Looking at more detailed data for New York City alone, one finds wage and salary job decreases of 18,500 (39.7%) in Performing Arts, Spectator Sports, and Related Industries, 7,600 (43.4%) in Promoters of Performing Arts, Sports, and Similar Events, 2,400 (16.7%) in Museums, Historical Sites, and Similar Institutions, 16,000 (48.3%) in Amusement, Gambling, and Recreation Industries, 15,100 (48.1%) in Other Amusement and Recreation Industries, 26,800 (50.8%) in Traveler Accommodation, 132,500 (41.5%) in Food Services and Drinking Places, and 19,300 (30.4%) in Personal and Laundry Services.  

Related to tourism and entertainment, employment in the Air Transportation industry, which was bailed out, fell just 3,800 (11.8%), but employment in the Support Activities for Air Transportation industry fell 4,200 (39.6%).  And employment in the Motion Picture and Sound Recording industry fell by 16,200 (29.1%).

These are massive decreases, and the primary reason is obvious. These are the sectors and industries that were shut down, and/or that lost much of their patronage when tourism shut down.  But that isn’t the entire explanation.

The 2010s saw a huge shift from spending on goods to spending on services, including services associated with people gathering together. Gathering together with other adults outside the home is associated with the young and the old; middle-aged parents of children have neither the time nor the money to do so.  With the relatively large Millennial generation in the singles and couples phase of life, the relatively large Baby Boom generation reaching empty nesterhood, service consumption outside the home was turbocharged on the demand side.  On the supply side, extensive commercial real estate previously occupied by retail became available to restaurants and health clubs. Extensive money was available from desperate investors faces with zero percent interest rates.  And lots of cheap labor was available as Millennials swarmed into the labor force.  

As a result, there was widespread talk of hotel overbuilding and a restaurant bubble before COVID-19.  And I was already concerned that there were more performance venues being added that the city could support, before COVID-19, as I wrote here.

https://larrylittlefield.wordpress.com/2020/06/30/the-coronavirus-and-commercial-real-estate-will-new-yorks-arts-entertainment-and-culture-industries-collapse-leaving-their-venues-and-hotels-abandoned/

Now, as a result of COVID-19, there have been far more jobs and businesses lost in these sectors, far sooner and far faster, than would have otherwise been the case.   A snapback boom is certain to occur, as the smaller number of young adults in Gen Z return to the cities, travel resumes, and people once again seek the shared experiences they have been missing.  

But the level of employment in these industries will not return to the level of 2019.  People don’t have enough money, borrowed federal money aside, to support that level of activity, a larger share of the population has turned to cheaper homebody pursuits, and many businesses have been lost and not return.  We have seen this movie before, as video entertainment shifted from motion picture theaters to televisions.  There was a subsequent shift back from the home to communal settings outside it, and will be again, but not to the same extent.

One can predict the same trend for Retail Trade, a sector that was already in crisis in 2019, before COVID-19 even hit.  Online retailing was gradually expanding toward whatever share of total goods purchases makes sense for home delivery, munching one type of good after another, overcoming the inertia of people who were used to going to brick and mortar stores.  

And then, all at once, COVID-19 caused most retail stores to be shut down for a while, and wiped out that inertia.  From 2019 to 2020 Retail Trade wage and salary employment fell by 62,500 (17.9%) in New York City, 30,700 (12.6%) in the Downstate Suburbs, and 24,200 (7.4%) in Upstate New York.  

Looking at the more detailed data available for New York City employment in Food and Beverage Stores, which were deemed essential and never shut down, fell by 6,800 (8.3%), half the percentage decrease of retail overall, with Grocery Stores (such as supermarkets) down just 4,200 (6.6%). On the other hand, employment in Clothing and Accessory Stores fell by 23,400 (32.8%), General Merchandise Store employment fell by 7,300 (16.8%), and Miscellaneous Store employment fell by 5,400 (26.2%).

For years I’ve been trying to find the offsetting employment gains for Amazon.com and other e-commerce retail, and wondered how establishments such as fulfillment centers are classified.

https://siccode.com/business/amazon-com-27

Amazon.com” of Covina, CA 91722 operates primarily in SIC Code 5961 – Catalog and Mail-Order Houses and NAICS Code 454110 – Electronic Shopping and Mail-Order Houses.  Amazon.com is a small-sized business with medium revenue, that is new in its industry.

That is part of Retail Trade, which is how Amazon started.  But somehow employment growth in this industry is not as great as one would expect.

Nationwide, that industry added just 20,800 wage and salary jobs (5.2%) from 2019 to 2020, compared with a loss of 671,200 jobs (7.5%) in brick and mortar retailing other than Food and Beverage Stores.

https://siccode.com/business/amazon-com-inc

“Amazon.com Inc” of Seattle, WA 98109 operates primarily in SIC Code 7374 – Computer Processing and Data Preparation and Processing Services and NAICS Code 518210 – Data Processing, Hosting, and Related Services. Amazon.com Inc is a large-sized business with high revenue, that is well-established in its industry.

That is how Amazon actually makes most of its money now.

In any event, the Couriers and Messengers industry added just 2,600 wage and salary jobs (12.7%) in New York City from 2019 to 2020, despite all the additional deliveries.  Perhaps they are all gig workers, and thus not counted in the Current Employment Survey, which measures wage and salary employment.  The U.S. Postal Service was down another 300 jobs (1.7%), part of a long decline as the federal government continues to save money in NYC to spend elsewhere.

Coming off the pandemic lows, I believe there will be growth in Retail Trade employment as well, at least if retail landlords are willing and able to lease spaces at rents that struggling new businesses can afford.  It won’t go back to what it once was, obviously, but today there are probably more goods and types of goods being purchased electronically than will be the case in the long run, rather than fewer. And new types of activities can fill those spaces if rents fall low enough, as had been the trend pre-COVID-19, as I wrote here.

https://larrylittlefield.wordpress.com/2020/07/10/the-coronavirus-and-commercial-real-estate-is-retail-doomed-in-the-cities-and-suburbs-alike/

New York City, however, is going to lose even more office-based jobs in the future, rather than recovering all of those that were lost.  The 2020 decreases, while significant, were not as devastating as in other sectors, because those working at home are still being counted in their empty offices.  One can find the future somewhere between the desks that are being occupied and the jobs that are being counted.  And these are the jobs that bring in the most tax revenues.

From 2019 to 2020, wage and salary employment in the Financial Activities sector fell by 15,300 (3.2%) in New York City, 3,300 (3.1%) in the Downstate Suburbs, and 4,500 (3.2%) in Upstate New York.  And I’ll bet that many of those decreases were in “retail” type operations – bank tellers, stock brokers, insurance brokers, real estate brokers.  In New York City, Securities Brokerage (down 3,800 or 7.1%) and Real Estate and Rental and Leasing (down 9,400 or 6.9%) took the biggest hit.

Wage and salary employment in the previously booming Professional and Business Services sector fell by 62,900 (8.1%) in New York City, 22,300 (8.3%) in the Downstate Suburbs, and 24,500 (7.8%) in Upstate New York.  This includes the so-called TAMI industries – technology, advertising, media and information – that had been adding so many jobs. 

In New York City, however, the big percentage decreases were in the Management of Companies and Enterprises (headquarters) sector with a decrease of 12.6% (9,400).  The same types of establishments that fled New York City in the 1960s and 1970s, to (now abandoned) suburban campuses.  And the back-office Administrative and Support Services sector, with a decrease of 12.5% (31,100), including a decrease of 13.5% (12,100) in the Employment Services industry, which includes temps.  The same types of jobs that were automated or relocated to lower wage areas in the early 1990s.

Meanwhile, NYC wage and salary employment in the Professional, Scientific and Technical Services sector fell by just 4.8% (21,100).  Including a decrease of 6.6% (4,800) in the Advertising, Public Relations, and Related Services industry, but just 3.4% (2,600) in the Computer Systems Design and Related Services industry.

In all these industries, however, the number of people actually working in New York City is down by far more than the number being counted there, and some of those workers are not coming back.  Part of the reason is commuting, something Millennials who are moving to the suburbs may not want to do, at least every day.

“Work-from-home was a tipping point moment for commercial office real estate during the pandemic,” says Wharton’s Wachter. “And now there is no going back. Going forward there will be hubs of Silicon Valley and Wall Street workers geographically dispersed throughout the country, and mega cities will see rent and price declines as more affordable locations without onerous commutes and a lower cost of doing business become more attractive.”

The good news for millions of white-collar employees is that they can now work-from-home wherever they can still afford to buy a house. The bad news for commercial office space landlords is that thousands of companies aren’t re-upping their leases this year, leaving tens of millions of square feet of Class-A office space empty.  

Part of the reason may be taxes.  If a New York City company opens a satellite office in New Jersey of Connecticut, then its work-from home employees who live there could be assigned to that office, and pay income taxes to New Jersey and Connecticut rather than New York.

Condé Nast, which signed a 25-year lease with the Port Authority of New York and New Jersey for 1 World Trade Center space on May 17, 2011, withheld $2.4 million in rent in January and is seeking to reduce its square footage in the 104-story skyscraper, according to a bond document filed last month. The media giant’s rent dispute with 1 World Trade Center co-owners, the Port Authority and the Durst Organization, coincides with it exploring the possibility of shifting some of its operations across the Hudson River into New Jersey.

https://www.forbes.com/sites/lizfarmer/2021/03/18/sooner-or-later-the-supreme-court-will-be-forced-to-decide-the-tax-future-of-2-million-workers/?sh=1b7012051dbd

Many believe that if the court doesn’t rule decisively on this case, it’ll be forced to consider it again in the future because another state is likely to take up the mantle. Two likely candidates are New Jersey and Connecticut because they currently have to credit their residents with New-York-based jobs hundreds of millions of dollars in income tax revenue each year that they’d otherwise collect themselves.

 “Indeed, if there are any states that have a chance before the Court to invalidate a telecommuter tax rule, it is Connecticut and New Jersey, challenging the New York law,” wrote tax expert Roxanne Bland in a recent Tax Notes column.

According to an analysis by the Kroll Bond Ratings Agency, New Jersey would benefit to the tune of $528 million in telecommuter income tax revenue gained from New York. Connecticut would also get to clawback nearly $193 million in income tax revenue.

Then there is another factor.  White collar professional jobs may become automated or exported the way first manufacturing jobs, and then clerical jobs and call center jobs, were in prior New York City downturns.  As usual, Johnny of Granola Shotgun is ahead of the curve.

https://granolashotgun.wordpress.com/2020/06/29/blue-tinged-white-collars/

Today’s professional white collar workers are about to get the same treatment as steel and auto workers received in the 1970s and 80s.

In the comments.

Friends here in San Francisco are telling me about massive restructurings that have accelerated in the last few months along with Covid-19. Whole divisions of tech workers are being let go and immediately replaced by cheaper equivalents in Chennai and Bangalore. This process has been going on for years, but it has swung into hyperdrive recently. The H-1B visas aren’t needed anymore since India’s tech sector can absorb the work previously done by Americans in the same way China and Mexico industrialized enough to displace American blue collar jobs. I’m happy to see other countries raise up their populations and standards of living. But this doesn’t end well for the US…

Other areas never reinvented themselves and revived after those prior downturns, but New York City did and could again.  With offices occupied by people who still want or need to work together, and living a bike or subway ride away, and creating entrepreneurial new firms despite New York’s traditional political hostility to new businesses and new types of businesses, as I noted here.

https://larrylittlefield.wordpress.com/2020/06/23/the-coronavirus-and-commercial-real-estate-is-office-space-in-central-locations-obsolete/

And in any event, the valid and telling economic comparisons are those between similar years in an economic cycle, not between a peak and a bottom. Taking a long-term view, one reaches a very different conclusion – New York City hasn’t yet taken much of a hit at all.

From the 2008 employment peak to the 2019 employment peak, New York City had massive wage and salary employment growth in Leisure and Hospitality sector (up 156,800 (50.4%), the Professional and Business Services sector (up 168,800 or 28.0%), the Information sector (up 50,400 or 29.6%), and the Education and Health Services sector (up fully 319,100 or 43.3%). Even the Retail Trade sector (up 49,100 or 16.4%), and the Other Services sector (up 34,900 or 21.7%), added a significant number of jobs.  New York City’s 25.1% increase in private wage employment far exceeded those of the Downstate Suburbs (8.9%) and Upstate New York (3.2%).  In those other parts of New York State all of the net private sector employment gains (and then some) in the substantially government-funded Educational and Health Services sector.

And that’s not all.  The largest employment gains in NYC were not even counted as wage and salary employment at all, but rather were (for better or worse) self-employed positions in the booming “gig economy.”

Similarly, measuring from bottom to bottom (2009 to 2020), one finds private sector wage and salary employment increased by 12.7% (400,900) in New York City, compared with a mere 0.6% (10,000) gain for the Downstate Suburbs, and a decrease of 0.4% (93,400) for Upstate New York.  

Looking by sector in New York City, one finds that Retail Trade employment was 28,600 (2.0%) lower in 2020 than in 2009, and Leisure and Hospitality employment was 37,700 (12.2%) lower.  These sectors were due a correction due to excess growth, but are now expected to boom as shutdowns are lifted, as noted.

At the same time Information employment was 40,900 (24.7%) higher, Financial Activities employment was 36,900 (8.5%) higher, and Professional and Business Services employment was 140,300 (24.7%) higher.  Even if these gains are reversed due to internet driven structural change, NYC would probably have more office-based private sector wage and salary jobs than it did two cycles above.  Plus more self employment.  Google has been leasing more space in NYC, but half of those who work for the firm are contract workers.

Employment in the Educational and Health Services employment was fully 251,700 (33.4%) higher in 2020 than it had been in 2009.  More on that in my next post.

Looking even further back, and without even including the gig economy, one finds that the 3,545,500 private sector wage and salary jobs in New York City in 2020 was only 37,900 lower than the level of 2014 – and higher than any year prior to 2014.  For an older central city, already densely developed within fixed boundaries back in 1950, that is an incredible achievement.  New York City had 294,800 more private sector jobs in 2020, in a year of crisis, than it had at the legendary 1969 employment peak.

That 1969 peak of 3,250,700 private wage and salary jobs stood for decades as a barrier as unbreakable as the sound barrier before Chuck Yeager. Each time it was approached, in 1987, 2000, and 2008, housing prices soared, apartment rents soared, Manhattan office rents soared, congestion soared, and the quality of life fell. 

People and businesses began to leave, leading to echo booms elsewhere around the Northeast, until a bust hit – and eventually restored affordability. After the 1980s real estate crash, I assumed it would never happen again.  Instead it has happened twice more.

 http://njrereport.com/80sbubble.htm

Thanks to the online search capability of the New York Times, I was able to compile a list of articles that appeared in the New York Times during the real estate bubble from 1981 to 1988 and then from the resultant crash, from 1989 onwards.

All the readers that have seen the preliminary compilation gave the same remark, “It’s like deja-vu.”

Indeed, it is.  We’ve quickly forgotten the 80’s bubble that swept over the Northeast, in particular the New York Metropolitan area. We’ve convinced ourselves that “this time is different.”  Unfortunately, all we’ve proven is that we lack the ability to learn from history and our mistakes.

What would life be like in NYC if, after a period of further adjustment, private sector employment was stuck being no higher than it had been in 2014, or the year 2000?  People felt pretty good about NYC in 2000, did they not?  They certainly felt entitled to decent public services given the taxes they were paying.

Similarly, what will NYC subway service be like if post-COVID-19 ridership is stuck being no higher than it was in 2005, or 2000, or 1965, or 1960, or 1955?  Ridership was 17.7% to 23.9% lower in those years than it was at the peak in 2015.  And yet the subway was pretty good in 2000, and in 1960s, compared with the way it was in 1980 – or in 2015, or today.  Do New Yorkers have a right to expect that, or will they continued to be required to pay more for less?  And why?

The 1969 NYC private employment peak was not surpassed until 2011. It took 42 years. Similarly, the 2019 NYC private employment peak may not be surpassed for decades.  Especially since some of that 2019 employment may not have been real.

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In past years, I’ve used the release of rebenchmarked annual average CES data to analyze trends in New York state and local government.  I’ll defer that discussion to a second post, so it won’t get lost in the sauce.

1 thought on “Rebenchmarked Current Employment Survey Data for 2020: New York City Was Clobbered Last Year, But the Long Term Data Is Still Very Positive

  1. Pingback: Current Employment Survey Data for 2020: New York City Reduced our Public Services, but Annual Average Local Government Employment Barely Fell – while the Home Health Care Boom Stalled | Saying the Unsaid in New York

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