The Task Rabbit Economy
TaskRabbit.com markets itself as a Web service that matches clients seeking someone to do odd jobs with “college students, recent retirees, stay-at-home moms, [and] young professionals” looking for extra income. The company website calls it “a marketplace dedicated to empowering people to do what they love.” The name Task Rabbit doesn’t exactly suggest the dignity of work, and the love often takes humble forms. Customers hire Task Rabbits to clean garages, haul clothes to the laundry, paint apartments, assemble Ikea products, buy groceries, or do almost anything else that’s legal.
The San Francisco–based company, which has raised $38 million in venture capital since it was founded in 2008, makes its money by tacking on a 20 percent surcharge to the fees paid by clients. The firm performs criminal background checks on aspiring Rabbits, who then get access to chore requests posted by customers. Using the familiar metrics of the Internet, the more than 10,000 approved Rabbits are rated by past users. Early this year, Patricia Marx wrote a witty New Yorker piece titled “Outsource Yourself” on her experience hiring a Task Rabbit to purchase and deliver hors d’oeuvres for her book group. When Marx fell behind in her reading, she hired a second Rabbit to summarize the book for her (Proust’s Remembrance of Things Past, no less) and to ghostwrite some clever comments. She then retained a third Rabbit to bake madeleines.
Marx’s adventure reads like a cross between Woody Allen’s famous short story, “The Whore of Mensa” (in which a character hires a young Brandeis graduate to talk pseudo-intellectual to him), and a labor-market fantasy by Friedrich Hayek. But Task Rabbit is more than a hip, Web-based temp agency. It’s the reserve army of the unemployed made flesh. What’s diabolically brilliant and emblematic about the company is that prospective errand-runners bid against one another for jobs. To get an assignment, an aspiring Rabbit offers to do the chore for less money than he or she thinks other prospective Rabbits are bidding. That’s what makes it a metaphor for the new economy, a dystopia where regular careers are vanishing, every worker is a freelancer, every labor transaction is a one-night stand, and we collude with one another to cut our wages.
At the rate things are going, tens of millions of us could end up in the role of Task Rabbits. Not actual Task Rabbits, mind you. But temps, contract employees, casual day laborers, baristas, warehouse pickers at Amazon, fast-food workers, call-center operators, nurse’s aides, underemployed “consultants,” and adjunct professors all have one core trait in common with freelance errand-runners: They have lost bargaining power. Even people with regular paychecks are less likely than their parents to have decent pay, benefits, and job security. In its technology, the Task Rabbit economy is very 21st-century, but it brings back the 19th, an era when most people who didn’t farm or own property were casual labor.
The precarious labor market raises a host of questions. Is this trend economically efficient? Is it technologically inevitable? Must workers lacking advanced skills necessarily be relegated to a virtual hiring hall of low-paid day labor?
Further, in a relentlessly competitive global economy of intensified creative destruction, is job security no longer possible for employers to provide? Is a stable career a foolish aspiration? We hear that with lifetime employment defunct, workers should not only adjust to the need to pursue multiple jobs, skills, and careers but welcome the challenge. Do Task Rabbits love the freelance life, or are they quietly desperate people internalizing the new norms of job insecurity?
Finally comes the political question. To the extent that at least some of this erosion of decent work is optional, what will it take to restore an economy of living-wage jobs?
As we try to figure out why the United States is becoming an economy of ever more casual employment and how to reverse this trend, we had better get the answers to these questions right.
Somehow, despite the claims for efficiency, a hyper-competitive labor market has not yielded superior overall economic performance. On the contrary, the era of more-stable employment in the quarter-century after World War II had almost double the recent rate of economic growth. Even the postwar era had its Task Rabbits, of course. My mother, widowed with a small child, took a temp job selling classified ads from home. Young people baby-sat, delivered newspapers, and fetched groceries for old folks at subprime wages. Minorities were relegated to insecure domestic, janitorial, and farm labor. But the norm for prime-age (white, male) breadwinners was regular payroll employment.
Katherine Stone, a professor of labor law at the University of California, Los Angeles, studies the erosion of what she terms the “standard contract of employment.” She doesn’t mean a literal contract, though some workers had one, but a set of norms and assumptions. That contract included a regularized workweek and paycheck and the expectation of continued employment assuming satisfactory job performance. The social protections that were added throughout the 20th century—wage and hour laws, unemployment insurance, workers’ comp for injuries, apprenticeship programs, regulated fringe benefits, anti-discrimination rules, Social Security, the right to bargain collectively, health and safety standards—were predicated on the assumption of a standard workweek. To use Stone’s term, they were “layered” on top of the normal employment contract.
As Stone notes, regular employment promoted solidarity: “By giving workers the actual or potential experience of working together over extended periods of time, the standard employment contract taught them how to organize for industrial and political action.” None of this happened spontaneously or was an artifact of a particular stage of capitalism. It took political struggle and victories in Congress and on the shop floor.
As the standard contract of employment has eroded, the added protections of labor regulation have eroded along with it. What economists call “contingent” workers—casual labor—generally don’t get unemployment insurance, workers’ comp, or fringe benefits; they pay their own Social Security and can’t organize unions. The move to insecure, irregular jobs represents the most profound economic change of the past four decades. The $64 trillion question is whether this collapse in what used to be standard reflects a shift in fundamentals—or merely a shift in political power from labor to capital.
A large cottage industry of academic economists and policy advocates contends that America’s widening income inequality is primarily a reflection of new technologies and global competition that leave lesser-skilled workers far behind. So the main cure for widening inequality is said to be a better-educated and -trained workforce. The economist’s term for this supposedly inexorable trend is “skill-biased technological change.”
The foundation-funded Commission on the Skills of the American Workforce published an influential 1990 report, America’s Choice: High Skills or Low Wages. But as more and more people have completed college and upgraded their skills in the 23 years since, a better characterization of the U.S. workforce might be high skills and low wages. The 2007 sequel Tough Choices or Tough Times warned that “American workers at every skill level are in increasing competition with workers in every corner of the globe.” For these reports, the remedy is ever more stringent education standards.
There are several problems with the skills hypothesis, but here are the main ones. The four-decade transfer of income to the top had little to do with skill and more to do with opportunities for corporations to weaken labor and capture more of the national product. A recent study by the Economic Policy Institute concluded that deregulation of financial markets has allowed elites to extract abnormal profits that are neither checked by market competition nor restrained by rules—super-profits that economists call “rents.” In this case, rents were available thanks to the deliberate opacity of toxic financial products and trading strategies. Consider: Some of the most “skilled” financial engineers on Wall Street were rewarded with billions for costing the economy trillions. Measured against the economic consequences, the value of their skills was negative. A regulated labor market may be imperfect at aligning pay with skill, but a laissez-faire economy can be even worse.
Conversely, other highly skilled people, such as physicians and research scientists, have had fairly flat incomes. The relative premium to college education, the usual proxy for a skilled workforce, has increased more slowly since the 1990s. Further, there are many occupations in which people learn to work with advanced technology but receive no additional compensation. Today’s autoworker has an impressive set of computer skills but earns less than his father.
As the economist Robert Gordon points out, all of the major advanced economies have had essentially the same technological trends but widely differing income distributions. Further, there is no evidence that the economy’s rate of new demand for skills is above its historic trend.
According to a report from the blue-chip business group The Conference Board, jobs for architects and engineers have declined this year by 18,800, and jobs in computers and mathematics have dropped by another 35,500. Meanwhile, jobs have increased in such low-wage service occupations as transportation (by 36,200) and food service (by 18,800).
It’s important to appreciate the political and ideological function of the emphasis on worker skills. For conservatives seeking to divert attention from the true causes of inequality and low wages, the focus on skills promotes the scapegoating of public schools and places the blame for paltry pay and job insecurity on workers rather than on changes in the rules of the system. Blaming high overall unemployment on skills deficits also gives conservatives a basis for opposing fiscal stimulus.
Another oft-cited cause is the shift from manufacturing to services. The production economy has more jobs in the middle of the income distribution, while services has more at the extremes. So as we switch to services, an economy of extremes is only natural, right? But it’s not as if metal bending is inherently a high-wage job. The decent wages took strong unions. Before Franklin Roosevelt and the industrial labor movement, most factory jobs were in sweatshops. In much of the world, they still are.
Globalization is another popular explanation, but here again there is more than one possible set of rules for trade. The system created at Bretton Woods in 1944 deliberately constrained private financial speculation in order to promote domestic economies of full employment. John Maynard Keynes’s insight was that speculative flows of private capital pressure debtor nations to shrink their economies rather than pressing creditor countries to expand. The original International Monetary Fund was to help tide nations over during periods of payments imbalances. The World Bank was to provide public-development capital. Since the 1970s, however, the IMF, the World Bank, and the sister World Trade Organization have been used to demolish this managed form of capitalism, and globalization has become an enabler of laissez-faire. That, too, is optional. (The current penury of Greece, Spain, et al. proves Keynes’s point.)
The new economy is said to reward flexibility and innovation. But as labor-market policies in Northern Europe demonstrate, there is more than one road to greater efficiency, productivity, and competitiveness.
The two iconic versions of more egalitarian competitiveness operate in Sweden and Denmark. In Sweden, for more than half a century the formula has included full employment, continuous investment in the workforce, and a deliberate effort to narrow wage gaps (known as a “solidarity wage policy”). Government strives to provide a job for everybody who wants one. During regional or national downturns, it redoubles investment in public infrastructure and training. Workers can take retraining sabbaticals, opening jobs for other workers. Regional development and subsidies go to localities where old industries are in decline to help incubate new ones. The solidarity wage policy seeks to more nearly equalize earnings across industries and occupations, both as an end in itself and to promote job mobility so that a worker’s move to a new sector doesn’t entail an income loss. Over time, the entire economy becomes more productive.
The Danish version goes even further. Unemployed Danish workers can get up to two years of subsidized re-education and training, with compensation of up to 90 percent of their former earnings. Since the system produces security of employment rather than security based on a current job, Denmark boasts the world’s highest rate of voluntary turnover. This strategy is known as “flexicurity.” Workers can be flexible because they enjoy security of employment and earnings. Thanks to such policies, these nations have been able to have open economies with world-class multinational corporations based on skilled workforces. For purposes of the U.S. debate, what’s notable about the Nordic model is that it reconciles a well-paid labor force with economic dynamism, refuting the conservative claim that a supple labor market requires insecure workers.
Germany lies somewhere in between the Scandinavian and the U.S. systems. For decades, Germany has maintained a high-wage, highly competitive economy by investing heavily in its workers and promoting a model that rewards reciprocal loyalty between workers and firms. During economic downturns and bouts of regional or national unemployment, the federal government subsidizes reduced working hours and job-sharing, so that a skilled local workforce does not disperse. Germany pioneered co-determination on company boards, in which workers get a say in corporate governance. It has the world’s most comprehensive apprenticeship programs.
But here’s the bad news. In recent years, neoliberal global trends have reached even Northern Europe. Conservative governments in Stockholm and Copenhagen have cut taxes, reduced these social outlays, and promoted a more individualist ethic and set of national policies. Labor-market policies have become more punitive, with less subsidized retraining and more U.S.–style closely monitored job searches for the unemployed. Though both nations remain among the world’s most equal, low-wage work is starting to creep in. Labor market “reforms” in Germany, likewise, reduced unemployment protections and created a new underclass.
Once again, however, these shifts are not inevitable. There is nothing about new technologies that requires them to undermine job security and worker pay. Rather, the governing rules of the global economy—license for capital, no social standards in trade, international pressure to reduce domestic regulation—pull all of its players in a free-market direction, even the Swedes. Along with exploding financial products, these policies are among America’s more toxic exports.
In the mid-1970s, as the postwar social contract was beginning to unravel, the political scientist Andrew Martin wrote the classic essay “Is Democratic Control of Capitalist Economies Possible?” Martin concluded that because of the concentrated power of organized business and finance in a market economy, an egalitarian society was possible, but just barely. It required a strong labor movement, high voter turnout by the non-rich, and a labor or social democratic party that was the party of government most of the time. Political scientists speak of “American exceptionalism.” Maybe, Martin mused, it was more fitting to talk of Swedish exceptionalism. In the four intervening decades, global capitalism on the Anglo-Saxon model has become more ferocious and expansive, putting even the islands of greater security and equality at risk. “It may be,” Martin presciently wrote, “that the democratic control of capitalism has become impossible elsewhere because it remains impossible in the United States.”
But that conclusion may yet be too pessimistic. For there was a time, the era of the postwar settlement, when the stars were in alignment politically for a far more secure and egalitarian economy. If we can restore a more progressive politics, there is no purely economic obstacle to a far more secure society than the one we have.
Suppose we wanted to get serious about creating an American economy of greater employment security and higher wages, in which nobody who wanted to work full time would be poor. For starters, we’d need a national strategy of using every available policy tool.
Block the Low Road
The most important labor-market trend of recent decades has been a concerted effort by industry to cheapen jobs. Some of these maneuvers are legal. Many are not. Both kinds should be opposed by public policy and political action.
Wage theft has become endemic in the United States. Employers steal wages (typically from the poorest and most vulnerable workers) in a variety of ways. As Kim Bobo’s definitive Wage Theft in America recounts, employers steal tips, fail to pay required overtime, add bogus deductions to paychecks, and misclassify regular employees as contract workers in order to avoid paying Social Security, unemployment taxes, or workers’ comp. They illegally make workers “clock out” during slack times of the day and make them work “off the clock” at the end of shifts. They bill workers for uniforms and safety equipment, dropping their real wages below the legal minimum. Sometimes, they just flatly fail to pay wages owed.
All of these strategies for stealing worker wages take advantage of the absence or weakness of countervailing institutions to protect workers’ rights and enforce the law. The Labor Department, which is responsible for enforcing nearly all of these laws, has far fewer inspectors now than it did in the late 1930s and early 1940s when the Fair Labor Standards Act of 1938 became effective. Bobo reports that in 1941, the Labor Department had 1,769 wage and hour inspectors for 15.5 million covered workers and 360,000 employers. In 2011, it had just 1,000 inspectors responsible for 130 million workers in 7 million enterprises. Meanwhile, the government has managed to find several hundred billion dollars to hire many tens of thousands of new federal workers on homeland security.
When a wage-thief is caught, the “penalty” is to pay a portion of the wages that were stolen. This is not petty cash. Back-pay settlements with companies like Wal-Mart, State Farm Insurance, and Citigroup have run well into the millions and even hundreds of millions of dollars. As Bobo writes, “If you rob someone’s house, you will probably go to jail. If you rob someone’s wages, you might have to repay the wages. Or maybe not.” Imagine the deterrent effect if the worst penalty for someone caught robbing a bank were to have to give the money back.
The labor movement has been pressing Obama to take executive actions to assure that federal tax dollars do not underwrite substandard jobs via outsourcing. Wage theft is only the most glaring part of a low-road labor strategy that has become part of America’s standard business model. Policy should target outright theft but also promote a high road of regularized work. For instance, employers should be required to provide the same benefits to temps and part-timers that full-time workers receive, to discourage the strategy of redefining normal jobs as contingent ones. The Dutch version of “flexicurity” accords part-timers the same labor rights as full-timers, with the result that most part-time jobs in the Netherlands are considered good jobs, which in turn promotes healthy family life. In the typical Dutch family with children, two parents work one and a half jobs. (Yes, it’s mostly mothers who have the half-time jobs, but the percentage of fathers is slowly increasing.)
As labor costs (and incomes) rise with increased wages and productivity, it becomes all the more important to keep the economy at full employment so that workers displaced from bad jobs can get better ones. That’s a challenge for both macroeconomic and public-investment policy. Fiscal policies like the sequester cut in exactly the wrong direction. Instead we should be investing massively in a program of improved public infrastructure.
According to the American Society of Civil Engineers, the U.S. has a deficit of $3.6 trillion in basic infrastructure—roads, bridges, tunnels, water and sewer systems, and public buildings. That doesn’t even include the imperative to invest in systems to protect coasts against storm surges or retrofit buildings for energy savings or to create smart-grid electrical systems, greener waste disposal, and universal high-speed broadband. A multitrillion--dollar public investment would provide good, domestic jobs as it improves the productivity and growth rate of the economy. Tight labor markets by themselves improve labor’s bargaining power. One of the reasons wages are so low today is persistent joblessness and insecure work.
Economists like the late Hyman Minsky, the man famous for describing the dynamics of the 2008 financial collapse decades before it occurred, have made the point that the advocates of skills upgrading as the panacea for low wages have the sequence backward. As Minsky observed, we should start by keeping the economy at full employment. In that climate, workers would remain in the active labor market and skills upgrading would move them up the jobs ladder. But in an economy of high unemployment, it makes little sense to train people for nonexistent jobs, and training alone doesn’t get us back to full employment. Certainly, a skilled worker is likely to earn more than an unskilled one, other things being equal. But those other things matter a lot.
When World War II broke out, unemployment evaporated. The war production machine was the greatest jobs program ever but also the greatest skills program ever. Unemployed people with no skills—white, black, male, female—learned them on the job. Full employment came first, and it needs to come first once again.
The ongoing campaign of one-day strikes by fast-food workers includes a demand for a $15-an-hour minimum wage. At $7.25 an hour, the current federal minimum wage is far below the inflation-adjusted postwar norm of $10 an hour relative to the average wage. If the growth of the minimum wage had kept pace with the increase in hourly productivity, it would be roughly $19 an hour, enough to end poverty.
According to a D¯emos study, “Retail’s Hidden Potential,” raising wages so that all retail workers earned at least $25,000 a year (about a $12.25 hourly minimum wage) would cost $20.8 billion, or just 1 percent of the $2.17 trillion annual sales of large retailers. According to a University of California study, raising the minimum wage to $9.80 per hour would increase the cost of a hamburger by about 2 percent and would increase the cost of groceries by less than 1 percent.
Higher labor costs would indeed increase automation, eliminating lots of low-wage jobs in the short run and even some high-wage ones. But as long as we have macroeconomic and public-investment policies to keep the economy at full employment and labor-market strategies to promote job mobility, substituting capital for labor is what makes us more productive and richer in the long run. Without such policies, of course, workers suffer the effects of automation.
But the enemy is not automation; it’s the failure to use the fruits of automation to convert a wealthier economy to one of well-paid jobs. There’s nothing inherently “good” about a job assembling cars, pumping gas, or serving fast food. Society’s goal over time should be to replace low-end jobs with machinery and move people into better jobs. Hence the need for full employment as the cushion, as well as other policies to mandate good wages.
The Nobel laureate Wassily Leontief liked to tell a parable in which the economy becomes so productive that there is only one production worker left, and her job is to flip the switch. At that point, the pressing economic questions become distributive: Where does all that wealth go, and what does everyone else do for a living? The benefits of the automation can go to the factory owners, who become fabulously rich. Or the wealth can be spread around in the form of well-paid service jobs and leisure time. Unregulated markets tend to enrich mainly the owners.
Reregulation of Finance
As wage and salary income has become more precarious and more unequal, a steadily increasing share of the national product has gone to finance. Wage inequality and a shift of the total national income to capital are distinct but reinforcing trends. The more money Wall Street has, the more power it has to resist a regulated form of capitalism across the board. Reregulating finance would return banking to its historic function of being a servant of the rest of the economy rather than the master. The top 1 percent would have fewer opportunities to make off with so much of the national income, leaving more money for everyone else, and Wall Street would be proportionally weakened politically.
Social Standards in Trade
The conventional argument against labor and environmental standards in trade has been that citizens of Third World countries need to work for a pittance in order to help their countries get a foot on the ladder. “The central challenge in the poorest countries,” New York Times columnist Nicholas Kristof wrote in 2009, “is not that sweatshops exploit too many people, but that they don’t exploit enough.” The same arguments were made a century ago for domestic sweatshop labor. But once workers organized, better factory wages and conditions benefited them as well as the larger economy.
Labor standards in trade can put a floor under wages and working conditions and preclude the worst forms of a low-road business strategy. If every garment-factory owner had to pay a global minimum wage, the cost of a T-shirt might be a few cents higher, but trade once again would be based on factors other than a universal race to the bottom. Countries where citizens and workers have battled for a century to get decent social standards have every right to insist on a social tariff as a defense against conditions close to slave labor. Otherwise, we import the cheap standards along with the cheap products.
Professionalized Human Services. A related need is a national policy to convert all jobs caring for the old, the sick, and the young into good professional jobs. Nearly all human--service jobs are underwritten or subsidized by government. Public policy has a choice. We can define child-care and pre-kindergarten positions basically as baby-sitters or train and compensate people who work with preschoolers to the standards of schoolteachers.
If after-school and pre-K jobs pay, say, $40,000 a year rather than $8 an hour, our kids will benefit from a child-development--oriented experience instead of merely custodial care. Better-trained and -compensated professionals will produce better-educated students, and the whole society gains.
Nurse’s aide positions in eldercare facilities and hospitals, likewise, can either be minimum-wage jobs with little training and frequent turnover or they can be part of a continuum of well-trained health professionals. Studies of nursing homes have shown that increased training and pay improve patient outcomes and reduce adverse incidents such as falls and bedsores. The problem is that nursing homes rely heavily on Medicaid reimbursements, which are too low to allow decent pay for nurse’s aides. Professionalizing these occupations will require different national priorities.
In America, our threadbare welfare state has come to connote benefits for the officially certified poor. A more useful phrase and concept is the old-fashioned British term: social income. It’s the income that all of us receive as citizens, not just as workers. If everyone receives universal health benefits, a retirement package, paid parental leave, access to professionalized child care and to higher education without crippling debt, the effective income distribution becomes more equal and a society in which people change jobs frequently is less onerous to the individual.
By historical accident, the United States ended up with a partial welfare state in which most benefits were either directly job-related (health care, retirement), predicated on the assumption, in Katherine Stone’s term, of a standard employment contract (unemployment insurance, collective-bargaining rights), or were for the needy. The great exceptions are Social Security and Medicare, which are for everyone. In Europe, the welfare state is better defended, because more benefits (child care, pre-K, universal health insurance) are for everyone.
In an economy of increased job mobility, this link between employer and social benefits has become perverse. A system of employer-based benefits not only creates more vulnerability for citizens but also adds incentives for employers to shift to casual work in order to save the company money. Although the Affordable Care Act, which exempts many part-time employees, intensifies the shift to contingent work as an employer strategy of tax-avoidance, corporations were shifting to temp, part-time, and contract work long before Obamacare. As a source of health coverage, government should be more than the default provider; employers should be removed from the equation entirely. Today’s economy will continue to have more job mobility than the mass-production, stable--corporation economy of the postwar era. The more labor transition we have, the more our social benefits should be universal and tax-supported.
To finance a national policy of using public investment to keep the economy at full employment, upgrading human-service work, and universalizing social income, we would need roughly an additional trillion dollars more revenue a year. That’s about 6 percent of gross domestic product. Simply reverting to the pre–George W. Bush tax code would provide almost half of that each year. Getting serious about collecting taxes from offshore tax evasion by corporations and individuals would produce another $100 billion to $200 billion yearly. A financial--transactions tax would raise at least another $200 billion and reduce purely speculative activity on Wall Street. If we did increase taxation as a share of GDP from its current level of about 17 percent to 23 percent, that would still leave the United States among the more lightly taxed of advanced capitalist nations.
The Right to Unionize
One of the unenforced laws on the books is the Wagner Act, which guarantees the right to organize or join a union without the risk of retaliation. Today, if you try to organize a union, you are likely to be fired. One of the best defenses against wage theft and other management abuses is a union. If you had all of the other policies advocated in this article, maybe you wouldn’t even need unions. But without stronger unions, we are unlikely to get the other policies. Organized labor needs to be understood both as a set of collective--bargaining institutions and as a social movement cum political force. Even though most of America is suffering from work and income anxiety, what’s missing is not the policy tools but the politics.
If we pursue this suite of policies, the American economy in the Internet age will still be more dynamic, supple, and innovative than its postwar counterpart was. There will still be plenty of people who deliberately choose to have multiple careers, plenty of eager freelance entrepreneurs, and lots of odd jobs for Task Rabbits. But more young professionals will be working in the professions for which they were expensively trained rather than picking up other people’s laundry. More college students will be spending time at their studies rather than seeking low-wage strategies for paying the bills. More retired people will be able to afford retirement rather than running errands or bagging groceries. More moms (and dads) will be staying at home with their children thanks to paid parental leave. More parents will be enjoying part-time jobs with the same pay scale and social benefits as full-time ones rather than rushing out to assemble someone else’s Ikea crib at minimum wage or less—and paying other workers minimum wages to watch their kids.
Even Task Rabbits would gain. In a tight labor market, clients who needed odd jobs performed would have to pay decently. Without a reserve army of “distributed workers,” clients would have to bid wages up, instead of enjoying the spectacle of anxious Rabbits bidding them down. Being empowered to do the work we love is the right slogan. It just doesn’t describe the Task Rabbit economy.
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