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There's a pervasive believe that raising the minimum wage would increase inflation, you'd think that considering Japan has tried nearly everything else, they wo

by soperj 5y ago

There's a pervasive believe that raising the minimum wage would increase inflation, you'd think that considering Japan has tried nearly everything else, they would try raising that. It's currently about $8 usd an hour.

1cvmask 5y ago
Japan also has very low unemployment and the average salaries are much higher. Yet the government still faces opposition to raise the national minimum wage: https://www.reuters.com/world/asia-pacific/japan-pms-push-higher-minimum-wage-faces-uphill-battle-amid-pandemic-2021-04-22/ https://www.reuters.com/world/asia-pacific/japan-pms-push-hi...
getoj 5y ago
There's a massive regional variation in the effective minimum wage - in Tokyo the average hourly wage for an arubaito (a part-timer with no job security) is 1,203 yen. The average in Fukushima is just 948 yen [2], and the national minimum wage is 930 yen. Increasing the national minimum wage would do serious damage to local employers in underserved regional centers, and barely move the needle in Tokyo. [1]https://townwork.net/tokyo/jikyuu/ https://townwork.net/tokyo/jikyuu/ [2]https://townwork.net/fukushima/jikyuu/ https://townwork.net/fukushima/jikyuu/
- soperj 5y ago
  Thanks for that, wasn't actually sure on the specifics since I'm not from Japan. Why would it do so much damage to these employers? Why can't they just increase the cost of their goods?
  - anamax 5y ago
    If my income goes up by 10% and my expenses go up by 10%, am I better off or worse off? If I had savings, I'm probably worse off. (Yes, I may get more interest going forward, but that won't make up for the value lost by my principal.) If my taxes go up by more than 10%, I'm worse off.
    - soperj 5y ago
      Are you arguing against inflation? Because that's not what were talking about. Given that inflation is the goal, why is the answer always to give a lot of money to those who are well off vs. increasing the wage for the bottom end?
      - anamax 5y ago
        The claim was that an income increase was necessarily a good thing. I'm pointing out that if your expenses go up more than your income, you're worse off, even ignoring inflation's effect on savings.
Phil_Latio 5y ago
In the long term, inflation is driven by wages in relation to productivity. Also known as unit labor cost. Japan is basically the worst country in this regard. So yes, wages lag behind productivity. But just raising the minimum wage once doesn't work. The wages should properly increase every year - more than the productivity. If you want an inflation of 2%, wages should increase by productivity + 2%.

by soperj 5y ago

1cvmask 5y ago

Japan also has very low unemployment and the average salaries are much higher. Yet the government still faces opposition to raise the national minimum wage: https://www.reuters.com/world/asia-pacific/japan-pms-push-higher-minimum-wage-faces-uphill-battle-amid-pandemic-2021-04-22/ https://www.reuters.com/world/asia-pacific/japan-pms-push-hi...

getoj 5y ago

There's a massive regional variation in the effective minimum wage - in Tokyo the average hourly wage for an arubaito (a part-timer with no job security) is 1,203 yen. The average in Fukushima is just 948 yen [2], and the national minimum wage is 930 yen. Increasing the national minimum wage would do serious damage to local employers in underserved regional centers, and barely move the needle in Tokyo. [1]https://townwork.net/tokyo/jikyuu/ https://townwork.net/tokyo/jikyuu/ [2]https://townwork.net/fukushima/jikyuu/ https://townwork.net/fukushima/jikyuu/

soperj 5y ago
Thanks for that, wasn't actually sure on the specifics since I'm not from Japan. Why would it do so much damage to these employers? Why can't they just increase the cost of their goods?
- anamax 5y ago
  If my income goes up by 10% and my expenses go up by 10%, am I better off or worse off? If I had savings, I'm probably worse off. (Yes, I may get more interest going forward, but that won't make up for the value lost by my principal.) If my taxes go up by more than 10%, I'm worse off.
  - soperj 5y ago
    Are you arguing against inflation? Because that's not what were talking about. Given that inflation is the goal, why is the answer always to give a lot of money to those who are well off vs. increasing the wage for the bottom end?
    - anamax 5y ago
      The claim was that an income increase was necessarily a good thing. I'm pointing out that if your expenses go up more than your income, you're worse off, even ignoring inflation's effect on savings.

Phil_Latio 5y ago

In the long term, inflation is driven by wages in relation to productivity. Also known as unit labor cost. Japan is basically the worst country in this regard. So yes, wages lag behind productivity. But just raising the minimum wage once doesn't work. The wages should properly increase every year - more than the productivity. If you want an inflation of 2%, wages should increase by productivity + 2%.