The Strategist

Japanese employers and American workers: Trump’s criticism of Japan is unreasoned

11/08/2017 - 11:48

On Monday, US President Donald Trump once again criticized Japan for trade, saying during a visit to Tokyo that the country's automakers should "try to produce their cars in the United States, and not send them" to the United States.

However, Japanese officials might note that they are already doing this by hiring tens of thousands of Americans, and that Japanese companies in the United States pay much more than the average American worker earns, Bloomberg writes.

In fact, 850,000 US employees of Japanese companies are paid more than US-based companies from any other country in the G7, with the exception of Germany, according to the Bureau of Economic Analysis of the United States for 2015

Japanese firms pay well, because they are focused on activities such as production, notes Naoki Hattori, an economist at the Mizuho Research Institute in New York.

In particular, Japanese automakers have about 87,000 workers in the US, according to a report from the Japan Automobile Manufacturers Association (JAMA) for 2016. Companies in manufacturing and wholesale (another area where Japanese companies are active) also pay higher wages than the US average.

In 2015, branches of Japanese companies in the US paid an average of about $ 84 thousand of annual compensation, including insurance payments and other bonuses, show calculations based on data from the Bureau of Economic Analysis. Meanwhile, the average annual remuneration in the private sector was about $ 64 thousand in 2015, according to the Bureau.

For several years, the authorities of Japan have been struggling to persuade companies to raise salaries in their country - this is what is missing to achieve the Bank of Japan's goal of inflation at 2%. At the same time, Japanese companies in the US are ready for more significant wage increases.

In 2015, branches of Japanese firms in the United States added remuneration by an average of 4.7% compared to the previous year, according to the Bureau of Economic Analysis. For comparison: according to the National Tax Administration of Japan, companies in the country increased their remuneration by an average of 1.3% over the same period.

Recall, US President Donald Trump promised to create 25 million jobs for 10 years, which will require an increase in the number of jobs by 208 thousand a month.


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