Trying to understand international trade. Does, say, Honda pay auto workers that make Hondas here the same as those in Japan? I know it’s partly a matter of how we compare them, but in general, are autoworkers in Japan middle class? I presume them to be here (almost by definition).
I don’t have the real answer, but I believe that Japanese workers, which are all unionized, have better pay and benefits than their American counterparts, but it may depend on which job you are talking about. I would think that managers might be closer than say assembly line workers…
International companies don’t pay employees in different locations, let alone countries the same. That is part of the benefit of multinational corporations. When companies like Honda and Toyota pick U.S. locations, they have to look at everything from the composition of the local workforce to overall logistics but employee cost is a very large factor and they obviously want to maximize the curve for getting the best employees at the cheapest rates wherever they go.
Honda has U.S. assembly plants in Ohio and Alabama. Other foreign headquartered auto makers have tended to build their newer assembly plants in the South because of lower costs as well. Those factors also apply within a given country. Toyota USA is in the process of moving its massive headquarters from California to Texas because of employee cost, tax and other business considerations. Some of the existing employees in California will undoubtedly be given offers that let them keep their current salary if they are willing to move but new hires will get pay that is competitive in Texas but may not be in California.
It is difficult to compare pay between countries as different as the U.S. and Japan because the standard of living is so different. The currency exchange is easy to calculate but that still doesn’t tell you much about what that actually represents. You can look up average pay for employees at the U.S. assembly plants on websites like www.glassdoor.com and compare them with the Yen conversion but I don’t know enough about Japanese lifestyles to draw an accurate equivalence. You can be sure that Honda and others aren’t building assembly plants in the semi-rural South because they intend to pay Tokyo area wages in a much lower cost-of-living area.
Hence my question regarding general economic class levels.
I’m not sure what this has to do with international trade but…
No.
If you define middle class in Japan as those who can own a car, pay a mortgage, save for retirement, go on yearly vacation, etc., then yes.
Rank and file auto workers are middle class in both the U.S. and Japan at least in American terms. The problem is that the definition of ‘middle class’ in the U.S. is hopelessly broad and includes almost everyone that other than the far extremes on both sides of the curve.
You have to ask a much more specific question than that to get a good answer. I am not trying to be needlessly difficult or obtuse but you are asking something that can’t be done using a simple spreadsheet because it is all location specific. I casually looked up the pay for Honda auto workers in Alabama and I found that experienced people can expect to make 50K+ for moderate level positions. That isn’t great for most of the country but it isn’t bad at all for most of Alabama and could be really good if you also have a spouse that also makes roughly the same money. That would put the couple in the upper-middle class for that general area. They could own a ridiculously large home by Japanese standards plus maybe even a small vacation home on a lake nearby. Two cars are a necessity so they would have those as well and maybe even a smallish but nice boat. They may own lots of land as well and maybe even have a couple of horses.
Back in Japan, the equivalent couple has only only one working partner, the husband, because of cultural expectations that still insist that most wives stay home and remain subservient to their husbands. He makes more money than the American husband when you do a simple a Yen to dollars calculation but even his money can’t be used to buy equivalent things to his U.S. counterpart. Their city apartment is tiny but nice. They eat quite well and have good entertainment options but most things cost significantly more on an island nation. Owning significant amount of land or ever having a large house are out of the question because they aren’t available in a reasonable price range but the Japanese couple doesn’t want any of that either because it isn’t part of their culture.
Do you see why it is basically impossible to make direct comparisons among pay scales among different countries? It isn’t just about pure numbers. You also have to take cultural and personal expectations into account.
I’m going to define middle class as not rich, but not poor. Luxuries such as lots of free time to vacation, and/or the financial wherewithal to afford such things are not the province of the middle class. More cars in the driveway than are necessary is not middle class. Being able to feed a family is not poor. Having decent clothes to wear, living in places that are not in need of major repair is not poor. Being able to save some money from time to time is not rich, but not poor.
I don’t know any American, rich or poor, that has “lots of free time to vacation.” Well, except the unemployed.
What about the retired? Or do you consider that the same as unemployed?
I am sorry, that is not a good definition of anything. Families in Alabama almost always require multiple vehicles because of where they live whereas people in other parts of the developed world may not. There is almost no one starving in the U.S. or Japan just because of poverty alone and quality of clothing is all relative.
I can tell you that working for a major manufacturer like Honda means that almost everyone is ‘Doing OK’ in local terms if that is what you are looking for. They can afford houses, families, healthcare and even vacations.
I work as a manufacturing consultant in a different sector. Maybe this answer will make sense to you. Floor level (non-supervisor or above) manufacturing employees in the industry that I specialize in make about 50K - 80K at the mid levels plus full benefits including some with pensions with only a high school diploma. However, the work is fairly difficult physically and very exacting. The hours can also be brutal (anywhere from 5 am to midnight). None of them are truly hurting for money unless they did it to themselves and their benefits protect them against almost every possible life uncertainty. The ones in the states that I work in have different but roughly analogous life expectations. They aren’t going to be poor and they can afford everything they need but they also aren’t going to be living in the most expensive neighborhood around and sending their kids to private schools in Switzerland. That expectation is roughly the same across all of the more stable blue-collar positions in very large companies no matter where you are in the world.
I’m sure this was intentional hyperbole, but even leaving aside the retired (and there are a LOT of folks retired who have plenty of free time and the resources to vacation ‘lots’), I know plenty of folks who get sabbaticals and the like, and lots of folks who get between a month and a month and a half of vacation a year (granted, they have been with the government or various agencies for 20+ years, but then that’s the crowd I hang out with :p). Certainly you are right (assuming this was your point) that Americans get less vacation than just about every other industrialized nation (at least the 1st and 2nd world nations). The way it usually works from my own anecdotal experience is that Americans are usually paid more but get less benefits, including vacation…so it’s a trade off. Personally, I’d take a bit less pay for more vacation, but that’s not the work culture in the US.
I don’t know the answer to the OP…I don’t think that Japanese workers are paid differently when working in the US than when in Japan…my WAG is they get a differential and cost of living stipend if the cost of living is higher, and are paid their normal rate if it’s not, with the same benefits they would get in Japan, but that’s just a WAG on my part. I actually don’t know much about Japanese auto workers either in the US or in Japan (or in Europe for that matter), since I’ve never worked with them.
My Japanese brother-in-law works for Toyota in Japan in a factory. He’s close to retirement now, if not already retired. He went into Toyota out of high school, did not go to college.
In no particular order:
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He is married with no kids, but his parents lived with him for decades (he supported them because his father had lost everything in a swindle).
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He bought a house around when he was thirty, a very nice house in a Japanese suburb.
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He and his wife both have cars.
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His wife worked, but out of “desire to work” rather than “need money.”
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They visited us a couple of times in the U.S., and took other vacations. They were able to go to Bali on their honeymoon (not as far from Japan as from here, but not a cheap trip, either).
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His hobby is freshwater fishing.
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When the economic crisis hit a few years ago, his hours were severely reduced, but they had plenty of savings to make sure they were OK until things got better.
Solidly in the middle class.
For what it is worth, lots of Japanese factory jobs have also gone overseas now, and Japanese labor is viewed as comparatively expensive, even among Japanese companies.
I can’t speak for Toyota specifically, but I can talk about how my company that’s in the same industry does it. I work for a Michigan-based company, and have worked both short- and long-term in Mexico, Canada, and presently in China.
For us, short-term travel is typically under six months, with the expectation that the assignment is less than 12 months (there are tax implications if your initial expectation is greater than 12 months). Short term travelers usually opt for “business traveler” arrangement where the company pays the hotel, rental car and fuel, and provides a flat rate per diem per IRS and/or GOA schedules, and guaranteed travel home at a certain frequency. Business travelers are entitled to tax equalization if the trip is long enough that other governments want their money.
International assignments (long term, always greater than a year, usually two to three years or more) offer incentives based on “hardship” and other factors. An American in certain Chinese cities gets different amounts of hardship, but an American in Cologne will receive none. A cost of living supplement is paid based on an international basket of goods (yes, in China where Corn Flakes costs $9, we receive cost of living supplements). Instead of being forced to live in a hotel you can get an apartment, serviced apartment, house, or whatever accommodation suites the company-provided budget. For those of us who elected to keep our home-country houses, a home maintenance allowance is paid. Home leave for each family member (based on business class, 15 days of hotel stay, and rental car) are paid (and tax equalized!).
These benefits certainly aren’t limited to my company; these are competitive decisions made with the recommendations of consulting companies (e.g., Deloitte, Cartus, Brookfield, others) that specialize in all of these requirements for multinationals all over the world.
The base salary, indeed, is the same however!
According to this site in 2006 average wages in the US for Honda was 48,000 per year.
According to this site in 2007 the average wages for Nissan in Japan was equal to a little over 35,000 per year.
Nissan and Honda pay different levels of pay in Japan but they are probably in the same ballpark.
I have heard that benefits are much more expensive in Japan, but have no data on that.
There is a major Hoda plant in the UK. It is not in the lower-paid North, but in Oxford. This is because there was a ready made skilled workforce from a redundant plant by another car maker.
Wages and conditions are generally above the average for the area and vacancies are always oversubscribed by applicants.
An ex colleague worked there on the production line from when it opened until family reasons forced him to move away. Even then, he kept his job and commuted the 1½ hours each way for a couple of years.
He owned his own 3 bed house.
He raised three children who all went to university (though no private schools)
His wife worked in a school as a secretary, so not well paid, but with the school holidays off.
They ran two cars (both Hondas of course as they got a good discount)
Holidays - no idea - of course foreign and domestic holidays are the norm here.
He would not say he is ‘middle class’ by our definition but ‘blue collar’ by yours. However his standard of living is and was above average for employed people here.
Foreign car makers come to the UK because they like the tax breaks, the less restrictive labour laws and the access to the EU. Not to mention a good supply of people who are ready to work hard for a quality employer.
Well, except maybe in Switzerland.
I remember the “how they do it” videos when the large corporation I worked for in the early 90’s was pushing statistical process control/improvement, Just-in-time inventory, and all that wonderful Japanese management methodology that has made them the roaring economic powerhouse they are today…
The line workers in the actual large corporate factories did rather well. however, there was a large workforce of “contract” small businesses. IIRC, one was a small mom-and-pop setup manufacturing and assembling headlights for one of the car companies. For these companies, the big corporations applied the same lesson as Walmart - they would hook the company by contracting for more and more of their output, until the small fish was primarily working for them, so would not have enough alternative customers if they lost the contract; then they would squeeze them on price. Then they would make them an offer they couldn’t refuse, buy half or more of the company so the big corporation was paying itself. Meanwhile, of course, these small operations were the opposite of the iron rice bowl the employees of the big corporation - no lifetime job security, no good wages or benefits.
Speaking of which, since the economic downturn about 20 years ago (from which Japan has never really recovered) the number of well-paid lifetime corporate employees is much much lower. Like the USA, a lot of factories have closed, a lot of production moved to China or elsewhere.
Another thing I learned from reading, plus a discussion with a pair of Japanese girls in Scotland - many of those lifetime employment jobs, nobody covered for you during vacation - your work piled up; so they tended to have a lot of money, but took very short vacations - maybe 2 one-week vacations a year. (One girl was lucky, she was a schoolteacher and got summers off).
Another data point - I recall reading that the savings rate in Japan is quite high, because company pensions tend to be pathetic, and so are government old-age pensions.
Of all the countries to compare US workers to, perhaps Japan ranks very differently from any other first world.
I contracted for a Honda Plant last year and was the seldom-to-be-found janitor sleeping, eating and reading in my locked closet–only emerging for two hours each shift to actually perform my duties that would be noticed (and take my official lunch). I had friends that worked for Honda Proper, both as temps and full time.
It’s hella hard to get hired full time, they make everyone bust ass as temps starting out, and there are written, physical, medical and drug tests to take. Pass it and you can start your slave laborship at about $10 an hour. They did swing shift for everyone, then sorted everyone out into first-second. The plant has been open about 8 years at this point. They also owned everyone on Saturday-Sunday, if the plant so chose.
I will admit that once you make full time and pass what is essentially hazing, you can make some good money. I think 13-15 to start and it climbs as you put more time in.
The sad thing is, it is definitely a manufacturing facility right out of 1984. You are watched, there are snitches, they have bans on tobacco, cameras, and sometimes they simply don’t like the cut of your jib and many other things. You’re not supposed to smoke in your car, with the windows rolled up, they had patrols to catch such scofflaws. A lot of us did, and if it was daylight we had to drive three miles, park on the side of the highway and drive three miles back. I’m sure that did wonders for vehicle emissions and global warming. Their rule did not cause people to give up cigarettes. They have security that does hourly checks of the bathrooms for graffiti. That is rooted in a lawsuit that was filed that alleged racist graffiti was tolerated and management did nothing in response to it. Nonetheless, the graffiti did not stop, and just because you can establish an hour timeframe on when the graffiti was put up, does not mean you can even begin to gather a list of suspects as to who did it.
The sad part is that they put in a parts warehouse adjacent and connected by tunnels–which means these people are looked on as lesser and are paid lesser since they work for a contractor. You should assume any of these workers with children receive food stamps. If you don’t actually touch the assembly line and have a role in putting a car together, you’re not a Honda employee, you’re a contractor, and you probably receive shit pay. That goes for janitorial, cafeteria, groundskeeping, the warehouse, painters, maintenance, vermin control and so on. So having a Honda Plant is not exactly a big boon to a town, because only so many actually make good money, while the rest are contractors and temp workers.
And since you get to slice the bottom rung of the workers off by classifying them as contractors and not claiming them as Honda employees, you get to put the middle of the road employees that make the $15 an hour as the bottom, and artificially inflate the yearly with the mid-management, supervisors and oddballs that have been there years and years. If you actually had most of the people working on the premises as Honda employees instead of being contractors, I think you’d see those $50,000 a year numbers go way down. But that is my take on my local US plant, and I don’t know what goes on in Japan.
If that’s 400 people, that’s better than having 400 unemployed people, so it sounds like quite a big boon to a town to me.
Who operates the parts warehouse? If it’s not actually a Honda warehouse it seems a bit unfair to ding them for not paying its workers.