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Old 04-01-2012, 05:22 PM  
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Forget Subway, you want to work at JCPenny's. Startng salary 1st Year: $53M per Month

By KAREN TALLEY

Ronald Johnson, who joined J.C. Penney Co. JCP -0.70% as chief executive in November, received $53.3 million in total compensation from the retailer last year.

Mr. Johnson, a former Apple Inc. executive, received a base salary of $375,000 and $52.7 million in stock awards, according to a regulatory filing. Mr. Johnson's performance-based bonus was $236,000, which the company said was pro-rated based on his period of service during the fiscal year. He also received compensation valued at $13,000 for personal use of the company's aircraft.

Myron "Mike" Ullman, whom Mr. Johnson replaced, received $34.6 million in compensation. Mr. Ullman received $1.49 million in salary, $11.4 million in stock awards and $3.6 million in stock option awards. Mr. Ullman's performance-based bonus was $1.9 million and the change in the value of his pension plan was $857,000. Mr. Ullman also received $15.3 million in "other compensation" that included a $10.1 million "transition services," payout, $4.8 million for stock options that would have been forfeited and $363,000 for personal use of the company's aircraft.

J.C. Penney brought on a number of other executives during the year, including a president, a chief operating officer and a chief talent officer, all of whom received multi-million dollar signing bonuses.

The company is in the midst of trying to reinvent itself, eschewing its old way of constant daily promotions and relying largely on single prices and offering numerous "stores within stores."

In its annual report filed earlier this week, the new strategy is listed under "risk factors." The company says there is no guarantee it will be able to get its new approach in place and if it doesn't, the business and financial results could be adversely affected. Penney also says changes to its pricing strategies could result in "a prolonged decline" in sales.

http://online.wsj.com/article/SB1000...413344804.html
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Old 03-06-2013, 04:31 PM   #76
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Originally Posted by patteeu View Post
That's fine. That feeling you have seems to be class envy to me more than any well thought out economic cause and effect observation.
If you think it's class envy, then you obviously didn't understand what I wrote. I've provided reasoning for my opinion. And the only thing you've responded with is denial of the current economic problems and accusations of class envy.

I'm far from alone with this opinion. There is a great deal of info available.

One of the best sources explaining this is a book called The Price of Inequality, by Joseph E. Stiglitz. PhD in Economics from MIT. I highly recommend it if you're honestly convinced that nothing is wrong with the current economy and income inequality isn't playing a major part. This book is full of well thought out economic cause and effect, with plenty of sourced material. If you read that book and still manage to keep your oblivious outlook, I'll eat my hat.

Here's a quickie review:

Quote:
In his latest book, The Price of Inequality: How Today's Divided Society Endangers Our Future, Stiglitz argues that widely unequal societies don't function effectively or have stable economies and that even the rich will pay a steep price if economic inequalities continue to worsen.

In the current system, top income earners who make their money through capital gains and stock dividends pay lower effective tax rates than the average person. Those capital gains tax rates were first lowered during the Clinton administration, when Stiglitz led the Council of Economic Advisers.

"I very strongly opposed [lowering the tax rate]," he says. "I thought it was wrong because it increased inequities in our society and it encouraged speculation, and [I thought] that it would not lead to faster real economic growth. And unfortunately, all three of those concerns came to be true. ... And that has led to a period in which the growth of inequality has been higher than it has ever been and led to the kind of instability that led to the great [economic] crisis."

The past 30 years have been markedly different for the middle class, says Stiglitz. Income levels have dropped, and fewer and fewer people are climbing to new income brackets.

"The nature of our growth today is markedly different than in the decades after World War II," he says. "There, we had shared prosperity. More recently, what we've had is exactly the opposite. ... Right now, most Americans are worse off than they were 15 years ago. There has not been shared prosperity."

"People come from Wall Street and go into government and then leave government and go back into Wall Street. When you have this kind of revolving door, it's not just that their interests are not well-aligned with the public; it's that their mindset is captured by the industry from which they come. They see their interest — the interest of Wall Street — as if it were in the public interest. We call that cognitive capture. But you also see it through campaign contributions which affect both the administration and Congress. It's the interaction of the two which is so strong. Because the administration might say, 'Oh, we think we ought to do it differently, but we won't be able to get it through Congress.' Unfortunately, some parts of the administration are so influenced by the financial sector that they take a more active role and see the world through the eyes of the financial sector. There used to be an expression, 'What's good for General Motors is good for the United States and vice versa.' I think increasingly, given the strength of the financial sector, many thought, 'What was good for the financial sector was good for the economy.' And they're obviously wrong in their judgment."
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Old 03-06-2013, 05:31 PM   #77
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Originally Posted by Fish View Post
If you think it's class envy, then you obviously didn't understand what I wrote. I've provided reasoning for my opinion. And the only thing you've responded with is denial of the current economic problems and accusations of class envy.

I'm far from alone with this opinion. There is a great deal of info available.

One of the best sources explaining this is a book called The Price of Inequality, by Joseph E. Stiglitz. PhD in Economics from MIT. I highly recommend it if you're honestly convinced that nothing is wrong with the current economy and income inequality isn't playing a major part. This book is full of well thought out economic cause and effect, with plenty of sourced material. If you read that book and still manage to keep your oblivious outlook, I'll eat my hat.

Here's a quickie review:
So you've read an entire book on this subject and you still can't articulate a reason for your opinion? You haven't provided any reasoning at all. You see "economic differences over the last decade or so" and jump to a conclusion about what's "obviously" happening. Those economic differences could be due to plenty of things other than a concentration of wealth. I ask you to explain why you've zeroed in on wealth inequality as the cause and you tell me you're not going to play that game. That's fine, but it's not an argument.
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Old 03-06-2013, 05:46 PM   #78
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Originally Posted by patteeu View Post
So you've read an entire book on this subject and you still can't articulate a reason for your opinion? You haven't provided any reasoning at all. You see "economic differences over the last decade or so" and jump to a conclusion about what's "obviously" happening. Those economic differences could be due to plenty of things other than a concentration of wealth. I ask you to explain why you've zeroed in on wealth inequality as the cause and you tell me you're not going to play that game. That's fine, but it's not an argument.
I can't do the reading and thinking for you pat. I've offered up my opinion supported by info and links, and suggested where to find more. That's as far as I'm able to go with regards to your understanding.
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Old 03-06-2013, 07:31 PM   #79
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Originally Posted by Fish View Post
I can't do the reading and thinking for you pat. I've offered up my opinion supported by info and links, and suggested where to find more. That's as far as I'm able to go with regards to your understanding.
I've already recognized that.
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Old 03-07-2013, 12:20 AM   #80
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It would be nice if just once people could take the partisan blinders off and realize that rising income inequality is bad for everyone - even the rich in the long run. This country has become a full-blown kleptocracy. They keep us distracted with petty partisan issues while they pick all of our pockets.
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Old 03-07-2013, 07:34 AM   #81
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Too many firms are going "everyday low price" format. It's dumb. Promotions work. People are psychological buyers. Some will go to WalMart for the first format, but others want the "deal." This new CEO proved he lacked any sense of originality trying to lamely copy WalMart. Hope he fails miserably for being thoughtless and spineless.
There are different reasons for applying an everyday low price strategy. I studied this. There are major implications for operations because it dramatically makes it easier to forecast your inventory. When you do high-low pricing, you spend a shitload of money trying to adjust for massively fluctuating inventory. It also reduces advertising costs and while you don't hit the sales shoppers, you hit shoppers who want to buy lots of stuff in one convenient run versus bouncing around and price comparing.

I haven't studied JCPenney. That could be the wrong strategy for JCPenney, but that doesn't make it a thoughtless or spineless strategy. Getting into a price war isn't always good business. In fact, to me, it's a bailout for stores that often have no creativity.

Oh, and how can anyone defend this crap? He's tanking the company and getting rewarded for it. This is not difficult. I have no problem with executives making a shitload of money on merit-based compensation, not when they make a ton of money on a company that is bleeding because of his or her leadership.
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Old 03-07-2013, 09:10 AM   #82
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Originally Posted by suzzer99 View Post
It would be nice if just once people could take the partisan blinders off and realize that rising income inequality is bad for everyone - even the rich in the long run. This country has become a full-blown kleptocracy. They keep us distracted with petty partisan issues while they pick all of our pockets.
Why is it bad for everyone? Is it also bad that we have global income inequality and should the global 1% (including ~67% of the US population) transfer more of their wealth to the global poor to level things out?
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Old 03-07-2013, 09:32 AM   #83
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Why is it bad for everyone? Is it also bad that we have global income inequality and should the global 1% (including ~67% of the US population) transfer more of their wealth to the global poor to level things out?
I think we have to stop using the term 1 pct. I am not resentful of success nor inheritance. My bigger concern is when job creators raid companies they serve and earn a disproportionate amount of wealth at the expense of growing the companies they are supposed to serve. That institutional fix alone creates jobs that create tax revenues and keeps less people reliant on entitlements.
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Old 03-07-2013, 09:35 AM   #84
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Originally Posted by chiefzilla1501 View Post
I think we have to stop using the term 1 pct. I am not resentful of success nor inheritance. My bigger concern is when job creators raid companies they serve and earn a disproportionate amount of wealth at the expense of growing the companies they are supposed to serve. That institutional fix alone creates jobs that create tax revenues and keeps less people reliant on entitlements.
What "institutional fix"?
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Old 03-07-2013, 10:03 AM   #85
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What "institutional fix"?
Fixing executive compensation. Incentives are very poorly aligned with economic growth. That should be painfully obvious in this recession.
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Old 03-07-2013, 10:18 AM   #86
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Fixing executive compensation. Incentives are very poorly aligned with economic growth. That should be painfully obvious in this recession.
I don't know why they have to be aligned with growth. Just a couple of years ago we heard what a success Obama's plan was because it limited the number of jobs lost. How do you know these execs didn't prevent company performance from sinking lower and causing more job loss?

Are you going to go on a company by company basis, examine all their financial statements, their long term and short term goals, and then dictate which ones are being over paid? Or are you talking about setting some arbitrary cap on earnings?
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Old 03-07-2013, 10:20 AM   #87
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The economic recovery of the 2000s—from the peak in 2000 to near the end of 2007—middle America didn’t benefit from the economy’s growth. Over that time period, the economy grew by nearly 18 percent, as measured by gross domestic product, yet median household income fell by 0.6 percent. Further, over the past few decades, with the exception of the full employment years of the late 1990s, the U.S. economy became increasingly unequal. The incomes of the families at the top grew by an average of 1.2 percent per year between 1979 and 2009, while those at the bottom saw incomes fall by 0.4 percent per year.

The conservative narrative is that rising inequality is just fine for America because the gains for those at the top will eventually trickle down to middle America. But that’s not what’s happened over the past few decades. In fact, just the reverse occurred.

An economy top heavy with wealth is not good for our country or our economy. Inequality isn’t just bad for the 99 percent who’ve been left behind; it is actually responsible for some of the biggest problems facing Americans today—high home foreclosures, high unemployment, and an inability to get ahead. It’s critical that we reverse it.

Take, for example, the housing bubble of the 2000s. It was facilitated in no small part by exotic mortgages that were sliced and diced and sold to investors who pushed home prices to hitherto unknown heights. And when it popped, millions of American families—through no fault of their own except the decision to buy a home—were left with mortgages greater than the value of their homes. High rates of foreclosure still plague our economy.

What is less-often discussed (until recently) is the role that inequality played in making the Great Recession and the subsequent slow recovery happen in the first place. Inequality has been rising for decades for most Americans in the form of stagnating incomes for the majority and sky-rocketing incomes for those at the very top. When income stopped growing, families responded by working more and borrowing more. As consumer activist Elizabeth Warren (with her daughter Amelia Warren Tyagi) documented, American’s debts are the direct result of a hollowed out middle class. Families borrowed to make ends meet, to cover health care costs, to put a child through college, and to purchase a home in a neighborhood with good schools.

The financial sector was only too happy to oblige. Increasingly unencumbered by regulation and flush with cash, Wall Street created a variety of new ways to extend credit. Basically, America didn’t get a raise and the financial sector said, “Don’t worry, buddy, we’ll loan you the money to pay the bills.” Of course, the whole thing was unsustainable. Thus came the Great Recession and the struggle ever since among everyday Americans to make ends meet,
But we can reverse this destructive course—if we understand what we are up against.

Recent research by economists Michael Kumhof and Romain Rancière at the International Monetary Fund shows that investors were recycling their higher incomes into loans, a process that is inherently unstable in the face of stagnant incomes for low- and moderate-income households. As demand dries up because of stagnating incomes, those at the top have great incentives to expand credit to keep up purchasing power, but if incomes do not recover, this, as we have seen, is an unstable system.

Wall Street also used its burgeoning wealth to benefit their industry, not the nation as a whole. Recent research by University of Chicago Booth School of Business professors Atif Mian, Amir Sufi, and Francesco Trebbi shows that higher campaign contributions from the financial services industry are associated with an increased likelihood of voting for legislation that transfers wealth from taxpayers to that industry.

Sky-high incomes for those in finance allowed them to sell loans to the 99 percent and buy legislation that transfers wealth from taxpayers to themselves. And, on top of all this, these same sky-high incomes increasingly encouraged the best and the brightest young people to enter finance instead of engineering, medicine, or teaching, all which enhance our economy’s productivity.

But we know what works for all Americans. Growth that works for all of us keeps going. IMF economists Andrew Berg and Jonathan Ostry find that inequality is associated with poorer economic outcomes. They examined how long spells of sustained economic growth lasted across 174 countries. What they found was striking: The more equal the country, the longer it was able to sustain economic growth.

http://www.americanprogress.org/issu...t-sustainable/

Here's that study of 174 different countries, and how economic inequality made a difference in their economy:

http://www.imf.org/external/pubs/ft/...11/sdn1108.pdf



Quote:
The key result from the joint analysis is that income distribution survives as one of the most robust and important factors associated with growth duration. As Figure 3 demonstrates, a 10-percentile decrease in inequality—the sort of improvement that a number of countries have experienced during their spells—increases the expected length of a growth spell by 50 percent. Remarkably, inequality retains a similar statistical and economic significance in the joint analysis despite the inclusion of many more possible determinants. This suggests that inequality seems to matter in itself and is not just proxying for other factors. Inequality also preserves its significance more systematically across different samples and definitions of growth spells than the other variables. Inequality is thus a more robust predictor of growth duration than many variables widely understood to be central to growth.

The estimates of the effects of inequality mainly rely on cross-country variation, because generally inequality is fairly stable through time for a given country. But sometimes income distribution does change dramatically, as in the United States, China, and a number of developing countries over the past few decades. And the estimates suggest that such changes may have significant effects on expected growth duration.

[...]

Inequality is partly the outcome of market forces (Welch, 1999), but this does not suffice to justify policy inaction. In general, if increasing inequality were somehow a natural counterpart to the development of a market economy, then one would expect richer countries to be more unequal, but they are not—if anything the reverse is true. Rather, much of the vast cross-country and time-series variation in income inequality cannot be rationalized as an efficient market outcome. Some, for example, seems to be related to historical landholding patterns. These patterns—notably the prevalence of plantation versus smallholding agriculture—have little to do with current economic realities, but they seem to have set in motion human capital accumulation paths and societal organizations that continue to drive income distribution in the present day. Consistent with the evidence presented in this note, countries with more of this sort of ―structural‖ inequality tend to grow more slowly (Easterly, 2007).

It would clearly be taking these results too far to conclude that an all-out effort to reduce inequality is the key to sustaining growth. Sometimes the positive direct effect of certain policies on growth may outweigh their negative effects on income distribution. For example, the initial reforms that ignited growth in China involved giving stronger incentives to farmers. Overall, this increased the income of the poor and reduced overall inequality as it gave a tremendous spur to growth. However, it probably led to some increased interfarmer inequality, and efforts to somehow resist this component of inequality would likely have been counterproductive (Chaudhuri and Ravallion, 2006).

There is nonetheless surely policy scope to improve income distribution without undermining incentives—perhaps even improving them—and thereby contribute to lengthening the duration of growth spells.
They admit that it's not clear exactly what to do, and caution is needed in deciding what to do. But addressing it somehow could be very beneficial to economic growth.
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Old 03-07-2013, 10:32 AM   #88
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The conservative narrative is that rising inequality is just fine for America because the gains for those at the top will eventually trickle down to middle America. But that’s not what’s happened over the past few decades. In fact, just the reverse occurred.
Where does the author of your article get this? That's not the conservative narrative. He's conflating the changes that have taken place in our economy as a result of such factors as globalization with the conservative narrative on tax policy.
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Old 03-07-2013, 10:38 AM   #89
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The economic recovery of the 2000s—from the peak in 2000 to near the end of 2007—middle America didn’t benefit from the economy’s growth. Over that time period, the economy grew by nearly 18 percent, as measured by gross domestic product, yet median household income fell by 0.6 percent. Further, over the past few decades, with the exception of the full employment years of the late 1990s, the U.S. economy became increasingly unequal. The incomes of the families at the top grew by an average of 1.2 percent per year between 1979 and 2009, while those at the bottom saw incomes fall by 0.4 percent per year.

The conservative narrative is that rising inequality is just fine for America because the gains for those at the top will eventually trickle down to middle America. But that’s not what’s happened over the past few decades. In fact, just the reverse occurred.

An economy top heavy with wealth is not good for our country or our economy. Inequality isn’t just bad for the 99 percent who’ve been left behind; it is actually responsible for some of the biggest problems facing Americans today—high home foreclosures, high unemployment, and an inability to get ahead. It’s critical that we reverse it.

Take, for example, the housing bubble of the 2000s. It was facilitated in no small part by exotic mortgages that were sliced and diced and sold to investors who pushed home prices to hitherto unknown heights. And when it popped, millions of American families—through no fault of their own except the decision to buy a home—were left with mortgages greater than the value of their homes. High rates of foreclosure still plague our economy.

What is less-often discussed (until recently) is the role that inequality played in making the Great Recession and the subsequent slow recovery happen in the first place. Inequality has been rising for decades for most Americans in the form of stagnating incomes for the majority and sky-rocketing incomes for those at the very top. When income stopped growing, families responded by working more and borrowing more. As consumer activist Elizabeth Warren (with her daughter Amelia Warren Tyagi) documented, American’s debts are the direct result of a hollowed out middle class. Families borrowed to make ends meet, to cover health care costs, to put a child through college, and to purchase a home in a neighborhood with good schools.

The financial sector was only too happy to oblige. Increasingly unencumbered by regulation and flush with cash, Wall Street created a variety of new ways to extend credit. Basically, America didn’t get a raise and the financial sector said, “Don’t worry, buddy, we’ll loan you the money to pay the bills.” Of course, the whole thing was unsustainable. Thus came the Great Recession and the struggle ever since among everyday Americans to make ends meet,
But we can reverse this destructive course—if we understand what we are up against.

Recent research by economists Michael Kumhof and Romain Rancière at the International Monetary Fund shows that investors were recycling their higher incomes into loans, a process that is inherently unstable in the face of stagnant incomes for low- and moderate-income households. As demand dries up because of stagnating incomes, those at the top have great incentives to expand credit to keep up purchasing power, but if incomes do not recover, this, as we have seen, is an unstable system.

Wall Street also used its burgeoning wealth to benefit their industry, not the nation as a whole. Recent research by University of Chicago Booth School of Business professors Atif Mian, Amir Sufi, and Francesco Trebbi shows that higher campaign contributions from the financial services industry are associated with an increased likelihood of voting for legislation that transfers wealth from taxpayers to that industry.

Sky-high incomes for those in finance allowed them to sell loans to the 99 percent and buy legislation that transfers wealth from taxpayers to themselves. And, on top of all this, these same sky-high incomes increasingly encouraged the best and the brightest young people to enter finance instead of engineering, medicine, or teaching, all which enhance our economy’s productivity.

But we know what works for all Americans. Growth that works for all of us keeps going. IMF economists Andrew Berg and Jonathan Ostry find that inequality is associated with poorer economic outcomes. They examined how long spells of sustained economic growth lasted across 174 countries. What they found was striking: The more equal the country, the longer it was able to sustain economic growth.

http://www.americanprogress.org/issu...t-sustainable/

Here's that study of 174 different countries, and how economic inequality made a difference in their economy:

http://www.imf.org/external/pubs/ft/...11/sdn1108.pdf





They admit that it's not clear exactly what to do, and caution is needed in deciding what to do. But addressing it somehow could be very beneficial to economic growth.
So the argument that income inequality is bad is based on the idea that the people at the lower end can't restrain themselves enough to live within their means and those meanies at the top are all too willing to offer credit to people who are, as a group, not creditworthy? What a bunch of bullshit.
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Old 03-07-2013, 10:43 AM   #90
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Originally Posted by blaise View Post
I don't know why they have to be aligned with growth. Just a couple of years ago we heard what a success Obama's plan was because it limited the number of jobs lost. How do you know these execs didn't prevent company performance from sinking lower and causing more job loss?

Are you going to go on a company by company basis, examine all their financial statements, their long term and short term goals, and then dictate which ones are being over paid? Or are you talking about setting some arbitrary cap on earnings?
I support greater regulation of board structures as they should serve shareholders, not the executives they compensate. I support any regulation that creates transparency of how much executives make instead of the rubix cube it is today. I support greater shareholder power to oust ineffective boards and executives. And I don't support caps, but there has to be better thought around the ridiculous golden parachutes an executive can earn of he or she tanks a company.

I don't trust government to fix this. Rather, I would like for the private sector to set up task forces to fix the problem. Or perhaps educational institutions with compensation expertise.

Incentives are tricky. But right now, they are too often based on short term profit goals and not long term value. Sometimes not based on anything. And again... You can try to make excuses that some executives actually drive value but results are harder to quantify. B. S. The fact that executives are by and large compensated the same or often much better while the majority of companies are not growing or shrinking in this economy indicates an institutional problem. If incentives were aligned, you'd see massive cuts in bonus pay during a recession. You certainly wouldn't see the kind of bonus hikes.
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