It has taken a couple decades, but Tokyo has finally raised the minimum wage enough to lift almost 20 million workers above levels close to, or even below, the poverty level. When the minimum wage was raised to ¥961 in 2022, 20 million were earning less than that. The real (price-adjusted) minimum wage has doubled since 1978. This has improved both lives and consumer purchasing power, the latter indispensable to economic recovery. Equally important, a higher minimum wage did not destroy jobs, as was inaccurately predicted by business lobbies.

 

A minimum wage raises the income not only of those below it but of millions somewhat above it. As the minimum wage rose, the share of full-time women in the low-paid category--two-thirds of the median pay level--plunged from almost half (45%) in 1985 to just 18% these days.

 

Unfortunately, the benefits of the minimum wage were offset by companies who replaced regular full-time male workers at one wage with non-regulars and women whose hourly pay is much, much less. As a result, the real median hourly wage of full-time workers is no higher today than it was in 1993. Among all workers (regular and non-regular) the average real hourly is 10% below its level in 1997.

 

To raise the income of the majority of workers, it will help to raise the minimum to ¥1,500, but additional steps are also needed.

 

For details, see https://richardkatz.substack.com/p/japans-minimum-wage-miracle

 

Richard Katz

The Contest for Japan's Economic Future