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But although experts estimate that sequestration could cost the country about 700,000 jobs, Wall Street does not expect the cuts to substantially reduce corporate profits — or seriously threaten the recent rally in the stock markets.

“It’s minimal,” said Savita Subramanian, head of United States equity and quantitative strategy at Bank of America Merrill Lynch. Over all, the sequester could reduce earnings at the biggest companies by just over 1 percent, she said, adding, “the market wants more austerity.”

As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966. In recent years, the shift has accelerated during the slow recovery that followed the financial crisis and ensuing recession of 2008 and 2009, said Dean Maki, chief United States economist at Barclays.

Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, he said, but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation.

Minmum wages

Lifted from comments from Christina Romer’s post at Economist View

In response to a previous comment, Mark Sadowsky states:

“On a global basis our low wage folks are vastly overpaid.”

Most low wage workers in the US are employed in food preparation, personal care, farming, building maintenance and health support:

Other than farming, in which the US has a comparative if not an absolute advantage, none of these occupations produce tradable goods or services. In other words, most of our low wage workers are not competing with the rest of the world’s.