Since the economy of the United States slid into recession in mid-2008, the monthly unemployment rate has hovered between the high-6 percent range to the mid-9 percent level. It is the most protracted period of high unemployment that the nation has experienced since the depression decade of the 1930s. The rate for August 2011 was 9.1 percent — the same as for the month before. Worse yet, the unemployment projections by the Obama Administration indicate that there is no expectation that the annual rate of unemployment will fall below 8.5 percent until at least 2014. [Lee, p.1] In human terms, the August unemployment rate translates into 14.0 million unemployed workers.
The depth and length of the economic downturn has already led federal policymakers to implement fiscal policy remedies (i.e., government spending and tax cuts) of unprecedented proportions. These efforts have been intended to enlarge labor demand by stimulating aggregate spending in the lagging economy. Likewise, the Federal Reserve has pursued an expansionary monetary policy (i.e., increasing the money supply) that has driven interest rates to historically low levels and held them there longer than has ever before been imagined. Despite the massive scale of these policy initiatives, they have been of little avail. Throughout this troublesome period, however, the nation’s immigration policies — which have been under criticism for over 40 years for being at odds with the nation’s labor market trends — have remained untouched by policymakers. Annual immigration levels have remained at historically high levels without any seeming notice of the economic downturn affecting the economy.
Worse yet, the changes in extant immigration policy that have been suggested by special interest advocates during these years of travail would, if implemented, invariably worsen conditions in the labor market for American workers. Examples of some of these counterintuitive ideas are: grant an amnesty to all illegal immigrants; expand non-immigrant visas for skilled foreign workers, or for unskilled foreign workers or for foreign agricultural workers; reduce government spending on immigration enforcement agencies and their personnel in order to cut federal spending; cease making worksite raids to locate illegal immigrant workers; stop invoking civil and criminal penalties against employers who hire illegal immigrant workers; give permanent residency cards to “all foreign students” who graduate from U.S. colleges with majors in mathematics or science so that they can seek jobs in the United States; arrange summer jobs in the United States for foreign students in order that they may afford to study at American colleges and universities during the academic year; and limit deportations of apprehended illegal aliens to only criminal aliens. It should be obvious that it is counterproductive to suggest that immigration levels be increased and protective enforcement measures be reduced during periods of high and often rising unemployment. The last thing that an economy that is experiencing lagging labor demand needs are policies that promote increases in the supply of labor.
In comparison with the last era of sustained high unemployment (i.e., the “Depression Decade” of the 1930s) when both fiscal and monetary policies were extensively used, the most distinctive difference between then and now was that there was virtually no immigration during that entire decade. Only 528,421 legal immigrants entered the United States over the decade of 1931-1940. Even the low annual ceiling for legal immigration permissible at the time (i.e., about 154,000 immigrants a year) was often not met. In addition, many states and local municipalities during the Depression took active steps to pressure illegal immigrants to exit their communities and the country. [Briggs, (2003), p.94] Hence, it is actually believed that in some years during the 1930s, net annual immigration may have been negative (i.e., emigration exceeded immigration).
In sharp contrast, 13.1 million immigrants (legal and illegal) entered the United States between 2000 and 2009 even though the number of employed persons declined by about a million jobs over that time span. Over the two-year period of 2008 and 2009 (when the recession formally hit), 2.4 million new immigrants entered the country while over 8.2 million jobs were lost. [Camarota, 2010], p.1]
Thus, the critical labor market policy difference between these two periods of economic distress is the fact that in the 1930s immigration was essentially neutral with regard to its impact on the labor market over the entire period; whereas, during the recent decade, immigration flows were both high and sustained regardless of the fact that employment opportunities were contracting and unemployment was rising much of the time.
For over 40 years, policymakers have recognized that the nation’s immigration system is not congruent with the evolving labor market trends of its economy. Yet successive congresses and administrations have been reluctant to undertake the difficult task of policy reform. The divergence stems from the passage of the Immigration Act of 1965, which has had unexpected consequences. [Briggs, (2003), Chapter 10] There was absolutely no intention at the time of its enactment to cause any significant increase in the level of immigration to the United States. Instead, the goal was explicit: end the overt discrimination manifested by the “national origins” admission system that had been in place since 1924. No one at the time from either political party wished to return to the mass immigration experiences of the late 19th and early 20th centuries. But that is exactly what happened.
In the decade that followed passage of the legislation in 1965, congressional hearings as well as emerging experiences quickly exposed the fact that something was awry. Responding to mounting public discontent, President Jimmy Carter recognized what the most egregious problem was: the massive violation of the law by the entry of illegal immigrants. He proposed a legislative agenda to address the issue in 1977. It included such unprecedented measures as civil and criminal penalties on employers who hire illegal immigrants as well as a general amnesty for those illegal immigrants presently in the country. Enhanced border enforcement was also called for. Congress, however, responded to his initiative by saying that there were serious problems with the other components of the immigration system as well (i.e., policies pertaining to legal immigrants, refugees, political asylum applicants, and non-immigrant (i.e., temporary) foreign workers). All aspects of the prevailing system needed to be studied as all were contributing to the unexpected results that had manifested themselves since 1965. Congress concluded that, before it could act, it needed a special commission to give it advice.
Hence, the Select Commission on Immigration and Refugee Policy was created in 1978. It was a 16-member body chaired by Rev. Theodore Hesburgh (President of Notre Dame University at the time and formally Chairman of the U.S. Civil Rights Commission). The principle conclusion of the Commission’s report issued in March 1981 was that the immigration policy of the United States was “out of control.” A comprehensive set of reforms was offered covering all phases of the nation’s immigration laws and its administrative system.
The sad story of what happened once Congress sought to act on the recommendations of the Hesburgh Commission has been told elsewhere. [Briggs, pp. 179-185] Suffice it to say the comprehensive approach to reform proved too controversial for Congress to handle. After two dramatic failures in 1982 and 1984, a “piecemeal approach” was taken.
Illegal immigration was chosen as the first issue. The result was passage of the Immigration Reform and Control Act signed by President Ronald Reagan in November 1986. The Select Commission had estimated that there were between three to six million illegal immigrants present in the U.S. economy at the time. The legislation offered most of them an opportunity to legalize their status. About 2.7 million illegal immigrants did so amidst charges of extensive document fraud and lax oversight of the approval process. A system of employer sanctions imposed at the work site and enhanced border enforcement measures were also enacted. Subsequent experience, however, showed that these deterrent efforts would be effectively scuttled by inadequate federal funding of the enforcement provisions and by the widespread use of counterfeit documents by a continuing surge of illegal immigrant job seekers.
Unfortunately, Congress falsely believed that the “back door” to the U.S. labor market had been closed so it felt justified in opening the “front door” to more legal immigrants. This was done by the enactment of the Immigration Act of l990, which was signed by President George H. W. Bush. But just to be sure that they had not acted too precipitously, the legislation called for the creation of another public commission to carefully study for several years the impact of immigration policy on the nation’s labor force and economy.
Known as the U.S. Commission on Immigration Reform, its report was released in September 1997. Composed of nine members, it was initially chaired by Cardinal Bernard Law (of the Archdiocese of Boston). He, however, was replaced in 1993 by Barbara Jordan (Professor of Public Policy at the University of Texas at Austin and a former member of Congress) who was appointed by President Bill Clinton after he defeated President Bush in the election of 1992. The major conclusion of its final report was that the nation’s immigration policy “must give due consideration to shifting economic realities” by adopting “a significant redefinition of priorities” for admitting legal immigrants and by recognizing that curtailing illegal immigration is the “most immediate need” for policy remediation.
As the Jordan Commission had issued a series of interim reports preceding its final report, all of its recommendations were known before the final report was released. Not surprisingly, its findings became involved in the presidential politics preceding the 1996 election campaign. Consequently, comprehensive legislation based on the significant policy recommendations of the Commission was again undermined on the floor of both the House of Representatives and the Senate during the spring of that year. Literally all provisions dealing with reform of legal immigration, refugees, temporary foreign workers, and political asylum applicants were stripped from the bill. A greatly modified version of the original bill (with even its provisions pertaining to illegal immigration severely watered down) was passed (i.e., the Illegal Immigrant Reform and Immigrant Responsibility Act of 1996).
Hence, the recognized labor market deficiencies of the nation’s immigration policies remained unaddressed before the onslaught of the economic downturn in the next decade.
Before discussing the specific policy changes offered by the aforementioned commissions that the politicians have persistently chosen to ignore, it is essential to recognize the implicit finding that underlies both of these reports. Namely, the level of immigration itself has major consequences on the labor supply (i.e., wages and job opportunities for individual workers as well as income and employment patterns for the overall economy). It is a basic principle of the academic study of labor markets as well as the pragmatic reality that the nation’s labor movement has learned from experience. Specifically, Samuel Gompers (founder and long-time president of the American Federation of Labor) long ago enunciated the lesson in his autobiography: “Immigration is, in its fundamental aspects, a labor problem.” [Gompers, p.157] Virtually all immigrants join the labor force as soon as they enter the country; afterward, most of their spouses do too; and eventually so do their children. The number of foreign-born workers in the labor force, therefore, is important at any time — as is its trend over time.
Since the passage of the Immigration Act of 1965, the level of immigration has grown annually. In 1965, the foreign-born population of the United States was 8.5 million persons. Prior to that year, the number had been declining since 1930 (when it had totaled 14.2 million persons). The percentage of the population who were foreign-born in 1965 was 4.4 percent — the lowest rate in all of American history. This percentage had been falling since 1910 (when it was 14.7 percent). By 2010, the foreign-born population had soared to 36.7 million persons (or 12 percent of the total population).
As for the comparable labor force data, the foreign-born labor force in 1970 (the closest year for which such data is available) was 4.3 million foreign-born workers (or 5.2 percent of the labor force — which is the lowest percentage in U.S. history). [U.S. Census Bureau, p.1] By 2010, however, the foreign-born labor force had swelled to 23.9 million workers (or 15.8 percent of the labor force). The immigrant labor force had snowballed in size since 1965. Before that year, the number was small and of declining relevance; by 2011, however, that number has become a major and increasing component of the nation’s labor force.
Relatedly, in 2010, the unemployment rate for foreign-born workers was 9.8 percent for the year — which was higher than the rate for native-born workers (9.6 percent). [Bureau of Labor Statistics, (2011), p. 1] Hence, immigration is one of the factors pulling up the national unemployment rate. It is not surprising, therefore, that both of the public commissions that have studied the issue of immigration policy reform have wrestled with the basic issue as to the appropriate size of the immigrant population and labor force.
When the Hesburgh Commission issued its final report in March 1981, the legislative ceiling for the admission of legal immigrants and refugees was 290,000 persons a year (plus immediate family members). It recommended a “modest” increase to 350,000 such persons a year (plus immediate family members). The unemployment rate for 1980 was 7.1 percent. Recognizing that immigration affects labor market conditions, the Hesburgh Commission pragmatically stated that the nation should take a “modest approach” when it comes to the number of legal immigrants and refugees it admits each year. It stated that this was “not the time” for an expansion in legal immigration or of temporary (i.e., non-immigrant) workers. It said that it was specifically rejecting “the arguments of many economists, ethnic groups, and religious leaders for a great expansion in the number of immigrants and refugees to be accepted by the United States.”
Likewise, when the Jordan Commission issued its final report in 1997, it concluded that the existing level of immigration (in effect since the passage of the Immigration Act of 1990) of 675,000 legal immigrants a year plus a variable annual number of refugees (it was 78,000 persons that year) was too high. It recommended that the total admission should be 550,000 immigrants and refugees a year. [U.S. Commission (1995), pp. 11-12] It should be noted that the unemployment rate in 1997 was 4.1 percent.
Congress did not heed this advice. Accordingly, the level of legal immigration remains today what it has been since 1990, and refugee admissions are still a variable number. The economic conditions in the country, however, have gravely deteriorated since that time.
Both of the aforementioned commissions recommended considerably lower levels of immigration than what existed at the time of their respective studies. If these lower levels were viewed as being consistent with the national interest when the nation’s unemployment rates were much lower than they are now, the levels of immigration and refugee admissions currently in place in 2011 (when unemployment is much higher) obviously do not serve the national interest. The “economic reality” is that the annual flow should be reduced by at least the 30 to 35 percent reduction recommended by the Jordan Commission.
The predicate of both commissions for all of their recommendations was that there must be a significant reduction in the scale of illegal immigration. It was the “first priority” of their entire reform efforts. Nothing else makes sense unless strict enforcement of immigration law is recognized as the foundation upon which all other reforms rest.
Illegal immigration affects both the flow of immigrant workers into the labor market and the stock of immigrant workers already in the labor market. As of March, 2010, the illegal immigrant population is estimated to number 11.2 million persons (or 3.9 percent of the population) — virtually unchanged from the year before. [Passel and Cohen, p.1] Of this aggregate number, eight million illegal immigrants were in the labor force (or 5.2 percent of the labor force) that year. Over half of the number of immigrants who entered the United States since the year 2000 are believed to have done so illegally. An estimated 300,000 to 500,000 illegal immigrants a year flow into the U.S. economy (although some of these persons voluntarily return to their homelands and some are deported each year).
The preponderance of illegal immigrants in the labor force are believed to be unskilled. They tend to work in what economists call “the secondary labor market” of the economy. Here they join with the sizeable number of unskilled citizens and permanent resident aliens who also work in this same sector. They compete for the low-paid, high-turnover, minimally protected, and usually non-unionized jobs on the bottom rungs of the economic ladder. A disproportionate number of minorities, women, and youth are in this sector of the labor market. It is they who bear the burden of the direct economic costs of competition with illegal immigrant workers (i.e., depressed wages, increased unemployment, reduced incomes, and an expanded level of poverty).
Although there is no official measure of the unemployment rate of illegal immigrants, it is the case that the unemployment rates for the low skilled adult work force (both of citizens and illegals) is the highest rate there is for all adult workers in the U.S. labor force. (Note: This issue will be elaborated in the next section below.) The unemployment rate in July 2011 for adult workers without a high school diploma was 14.1 percent (26.3 percent for adult African American workers and 11.3 percent for adult Hispanic workers). It is estimated from Census data that 57 percent of adult illegal immigrants in the labor force have less than a high school diploma. [Camarota, (2007), p.31] Hence, the sizeable illegal immigrant labor force adds a significant number of job seekers to the low-skilled labor force — a segment of that is already in chronic surplus.
The quickest way to make an impact on the nation’s high unemployment rate, therefore, would be to do what both the Hesburgh and the Jordan Commissions urged: make enforcing the nation’s immigration laws a first order of business. It is startling that policy makers do not even mention this issue of immigration enforcement when they speak of policies that can increase employment opportunities for citizen and permanent resident aliens. It seems to be forgotten that immigration policy is the nation’s most fundamental labor law — it defines who is legally eligible to work. Currently, there are eight million persons working or looking for jobs that should not even be in the country to say nothing of being in the labor force.
To accomplish this objective, public policy needs only adhere to the unanimous recommendations given by the Jordan Commission. It called for “a comprehensive strategy” based on enhanced border and visa management to reduce both illegal entries and visa “overstayers;” improved worksite enforcement of employer sanctions; and the speedy removal of those apprehended illegal immigrants from the country. As the Commission summed up what defines a credible immigration policy, the “yardstick” should be: “people who should get in, do get in; people who should not get in, are kept out; and people judged deportable are required to leave.” [U.S. Commission (1997), p. xvi] Adherence to this standard would not only improve working conditions for low-skilled citizen workers, it would reduce the nation’s unemployment rate literally overnight.
One of the most troublesome characteristics of the entire post-1965 inflow of legal immigrants and refugees has been the disproportionately high number of adults (i.e., persons over the age of 25) who are poorly educated. As shown in Table 1, the educational attainment level of the foreign-born population has two divergent concentrations. At the high end (college graduates and advanced degree graduates), the percentages of the native born (28.1 percent) and the foreign born (26.8 percent) with such degrees are essentially the same. But at the bottom (those adults with less than a 9th grade education and those with a 9th grade education to less than a 12th grade education), the native-born (11.4 percent) and the foreign-born (32.3 percent) populations are far apart. [Dockterman, (2011), Table 23]
Of course, some of the difference is accounted for by the high incidence of illegal immigrants among the foreign-born labor force. But that only explains part of the problem. The major explanation for the difference is that in 1965 when the “national origin” admission was terminated it had to be replaced by something else. The something else became “family reunification.” Presently, family reunification accounts for 71 percent (or 480,000 persons) of the legally admitted immigrants each year. Another 11 percent (or about 75,000 persons) also are admitted on criteria that are unrelated to their human capital endowments (i.e., diversity, investor and special immigrants). Thus, 82 percent of all legal immigrants are admitted irrespective of their educational attainment levels, their skill levels, or their ability to speak English. Immediate family members (spouses, minor children, and elderly parents) are admitted within the ceiling, although their numbers are not limited. The “ceiling” is pierceable if there is a conflict in any given year.
Most of the immigrants today come from less economically developed nations (52 percent come from Mexico, Central America, South America, and the Caribbean; 24 percent from countries in South and East Asia, 3 percent from the Middle East, and 3 percent from Africa). Many of these source countries are among the poorest in the world. Opportunities for education and skill training are sparse.
Even the remainder of those who are legally admitted (i.e., 140,000 persons or 18 percent of the total) under the employment-based criterion actually overstates the real number of actual workers admitted. This is because the number includes all “accompanying” spouses and children of such workers. This category also permits up to 10,000 of these slots a year to be used to fill “unskilled” jobs. In addition, there is, of course, no skill or educational prerequisite for the tens of thousands of persons admitted as refugees (73,000 persons in 2010) or as asylum applicants (21,000 persons in 2010) each year who are overwhelmingly drawn from many of the poorest countries on the planet.
Because human capital endowments are not required for the admission of most legal immigrants, it is not surprising that so many adult immigrants lack education and skill credentials. Nor is it any surprise that the foreign-born labor force is disproportionately concentrated in the less-skilled sector of the economy, nor that their unemployment rate exceeds that of the native-born labor force. As discussed earlier, it is the low-skilled segment of the economy that has the highest level of unemployment. Moreover, it is the large number of native-born workers who are also unskilled and poorly educated that bear the brunt of the competition for jobs in this sector who are most adversely impacted by such a large inflow of immigrant job seekers.
Obviously, changes in the admission system designed to reduce the inflow of so many poorly educated and less skilled workers would also contribute to a lessening of the national unemployment rate. Changing the system so as to admit better skilled immigrants could re-direct a flow of better qualified immigrant workers toward better quality jobs where there is more demand.
It is, of course, not possible to end the family reunification system entirely. No one would propose separating immediate family members from the adult family heads. The right of nuclear families to immigrate together should always be preserved. But the United States admission system extends immigration rights to the extended family members of a citizen or permanent resident alien. If the citizen or resident alien is unskilled and poorly educated, it is likely that his/her siblings and relatives will be too. It is this link to the admission of extended relatives that contributes to such a large number of poorly educated and unskilled immigrant workers each year into the U.S. labor market.
The premise of the recommendations of the Jordan Commission was its unanimous conclusion that Congress must “give due consideration to shifting economic realities.” To this end, it called for a revamping of the legal immigration system by shifting “the priorities of the admission system away from the extended family toward the nuclear family and away from unskilled toward the higher-skilled immigrant.” To do this, it called for elimination of the following family-based admission categories: adult unmarried son and daughters of U.S. citizens; adult married sons and daughters of U.S. citizens; adult unmarried sons and daughters of permanent resident aliens; and brothers and sisters of U.S. citizens. In this same vein, it recommended the elimination of the admission of “unskilled workers” from the employment-based admission category and the total elimination of the diversity lottery category (because it is not skill-based). Furthermore, the Commission recommended that the employment-based category itself be reduced by 40,000 visas a year (many of whom would be “accompanying” family member visas) and by capping refugee admissions (thus reducing the number of unskilled persons admitted from a usually higher number) at 50,000 slots a year.
Unfortunately, none of these recommended changes have been made by Congress to date. All of them should be. The vast number of legal immigrants continue to be admitted without regard to any human capital criteria. Such is always the case for refugee admissions. It does not mean that they have none but, rather, that whatever human capital attributes they possess are incidental to their eligibility for admission. As the majority of those eligible are coming from many of the poorest nations on the planet, a substantial portion of the legal immigrant flow lacks the skills, education, and language proficiencies consistent with the needs of the contemporary labor market. In contrast, the unskilled labor sector of the economy with its high unemployment rates continues to receive a disproportionately high share of the legal immigrant inflow. The national interest is not being served by the maintenance of the status quo (as the Jordan Commission made clear).
Although special interests have continued even during this period of economic downturn to plead for programs to admit foreign workers in large numbers to meet some alleged shortage of workers, both the Hesburgh and the Jordan commissions emphatically rejected these proposals. [Briggs, (2004) pp.5-6] If they made no sense during earlier times when the economy was in much better shape, why would anyone propose efforts to enlarge the labor supply with foreign workers during periods of protracted economic decline when jobs are so scarce?
Both commissions found that foreign worker (or “guestworker”) programs depress wages for citizen workers; stigmatize certain jobs; are hard to administer and to monitor; are difficult to stop, disrupt local community services, and encourage illegal immigration. Guestworker programs have no place on the immigration reform agenda no matter when they are proposed, good times or bad, or by whom.
Seemingly there is no time when various pressure groups do not favor offering amnesty (or “legalization” or a “pathway to citizenship”) for those non-citizens who have defied the nation’s immigration laws and entered the U.S. population and labor force. The original amnesty in 1986 had a justifiable basis. Namely, prior to that year, it was illegal for non-citizens to enter the United States without inspection or to overstay the terms of a legitimately issued visa; but it was not illegal for an employer to hire such persons. This paradox gave a mixed message to would be illegal immigrants as to whether they were welcome or not.
As discussed earlier, the Immigration Reform and Control Act of 1986 ended all of the uncertainty. It became illegal for employers to hire such persons and for non-citizens to work without explicit legal permission. Civil as well as criminal penalties were established for violators. Thus, it was believed at the time that a deterrent to future illegal immigration was now in place. But what to do with all the illegal immigrants already in the country who had entered before, when the nation’s immigration laws were ambiguous? The answer was that a one-time offer of amnesty would be given.
The Hesburgh Commission had recommended that an amnesty be part of its reform proposals but with a big caveat: namely, the enforcement mechanism also had to be in place (i.e., the employer sanctions system, enhanced worksite inspections, increased border management personnel) and seen to be effective before the amnesty provisions were to become operational. The final report of the Commission clearly stated the following:
“The Commission believes that a legalization program is a necessary part of enforcement, but it does not believe that the United States should begin the process of legalization until new enforcement measures have been instituted to make it clear that the United States is determined to curtail new flows of undocumented/illegal aliens.” [Select Commission, p. 82]
The Commission warned that, “without more effective enforcement” measures actually being in place, “legalization could serve as a stimulus to further illegal immigration.” In other words, if there are more illegal immigrants in future, they undoubtedly will believe that they too should be eligible to receive an amnesty.
Congress, of course, did not listen. It enacted both employer sanctions and amnesty at the same time and then reneged on its pledge to take enforcement of employer sanctions and enhanced border management seriously. Amnesty was granted to 2.7 million illegal immigrants and illegal immigration continued in the years that have followed without any seeming interruption. Worse yet, over the next 15 years, amnesty became political candy to succeeding congresses and administrations. There were five more special group amnesties, benefitting another three million illegal immigrants, enacted between 1994 and 2000. [Briggs, pp.162 and 285]
But with millions more illegal immigrants continuing to enter the country and the stock of their numbers estimated to be 11.2 million persons in 2010 advocates and opportunistic politicians continue to press for another amnesty — despite the dire condition of the nation’s labor market. Amnesties may be a politically popular way to suddenly reduce the nation’s illegal immigrant population and labor force, but it legitimizes the presence of this pool of workers in the labor market. It also increases their access to limited public services and allows these workers freedom to seek jobs anywhere in the economy. Moreover, it would grant family reunification rights to all of their siblings and relatives, which would only exacerbate the immigrant inflow of even more unskilled and poorly educated job seekers.
It should be noted that the Jordan Commission made no mention of the need for any more amnesties in its final report.
The flaws with the nation’s immigration policies that adversely affect the labor market have long been documented. The economic downturn has greatly accentuated these shortcomings to the detriment of the nation’s well-being. Making all of these changes now should be the first step in any serious “jobs strategy.” If they made sense at the times they were offered by two prominent national commissions, it is intuitively obvious that they be implemented when the economic conditions of the nation have materially worsened.
What has been missing in the past has been the political will to hold immigration policy accountable for its economic consequences. These commissions have shown the path to real reform; but their words of wisdom have been to no avail.
If all other public policies that impact the labor market are expected to meet the test of serving the national interest, why should immigration policy continue to be exempt? It is long past time for immigration policy to become part of the solution to the nation’s labor market problems and to cease being one of its causes. The economic downturn mandates that these policy changes be made.
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