Though They Seem Rich, Japanese Scrape to Get By

I am going to give the figures, based on my family expenses for last year, about the cost of living in Tokyo.

It’s not a happy story. It proves that, despite propaganda to the contrary, average Japanese salaried workers are far from being wealthy, although their pay in dollar terms is now equivalent to or better than that of the average American. This is one reason why America finds it so hard to sell in Japan and to compete with Japan.

Last year, at the average yen-to-dollar exchange rate of 144 yen to $1, I needed the equivalent of $32,814 per annum take-home pay just to exist in Tokyo. (The current exchange rate is about 133 yen to $1.)

In the United States, this would be a very good net salary and I know I could live quite well on it. But in Tokyo, we really did just exist.

My Japanese wife and I live with our 2-year-old son in a 300-square-foot, 10-year-old, two-room apartment, which is a two-hour commute by train and bus from my work at a major Japanese company where I am a language consultant. Our condominium block is not an expensive foreign colony. The 24 other apartments are all occupied by Japanese families.

It costs us 108,000 yen ($750) a month for rent, and that is about average for Japanese-occupied rentals in Tokyo. Many foreign businessmen on assignment in Tokyo live in company-paid apartments or houses costing the equivalent of $5,000 or more each month. Not surprisingly, the Japanese can’t afford these places and neither can I.

The services for the year totaled 439,000 yen ($3,048) equaling in dollar equivalents: gas $493; electricity $493; water $694; telephone $937; TV license $83, and newspapers $347. Before you begin to think how extravagant we were to spend $254 each month on these things, let me explain what they mean in terms of life style.

The gas bill paid for a typical Japanese-style two-burner, table-top range (we don’t have a gas oven), a small single-burner, free-standing gas fire, which we move from room to room as warmth is required, an ancient over-the-sink “instantaneous” water heater and a similar shower unit in the bathroom. We don’t have any form of central heating or hot-water storage.

The electricity was for a neon strip light in the kitchenette/diner, two light bulbs in the living room/bedroom, a light bulb each in the toilet and bathroom, and a tiny 15-liter refrigerator. Our second-hand TV was used two hours a night--we don’t have a videocassette recorder, stereo, CD player, rice cooker or any other of the Japanese-made electrical goods so loved by consumers worldwide.

The water bill was for six showers a week, which we share together, and normal cooking and drinking requirements. We have a small manual washing machine that we use three times a week--not extraordinary when you have a young child.

The telephone, at $937 for the year, seems a bit excessive. My father died in late 1986 and I made a number of overseas calls early last year to my mother, who is 72 and lives alone; $402 was spent on just eight calls.

The $347 for newspapers over a year covers one Japanese and one English daily. We never buy any magazines and $28 a month doesn’t seem too bad for four hours reading while commuting each day.

Daily Expenses

Our daily expenses for the year came to $10,298 or $858 a month. This covered food eaten at home (the major expense), clothes and a few toys for our son, 12 lunches for the two of us eaten at very cheap restaurants, two prescription medicines and 10% of doctors’ fees.

Neither my wife nor I bought any clothes or shoes for ourselves during the year. We did not go to the movies. Nor did we buy each other birthday or Christmas presents. We went to no parties or bars. The only holidays we took were a one-day trip in my brother-in-law’s camper van to the seaside and another one-day journey to the mountains near Tokyo. We borrowed the van because we can’t afford a car--our apartment landlord wants an extra $243 per month in parking fees.

At home, we had beef about once a month but only one-half pound of cheap cuts on special offer, sliced thinly and shared among three, Japanese-style. The other protein sources were chicken, pork and tofu (bean curd), which are all relatively cheap. We didn’t economize on fruit and dairy products because they are essential to the health of babies and nursing mothers.

Another major expense was 50,000 yen ($347) a month for my pocket money. This just covers a monthly season ticket on the train to work, lunches in the subsidized company dining hall, postage for letters written home, shoe repairs, birthday presents for overseas relatives and a few odds and ends.

The only other expense was for pension, health and life insurance policies, which totaled 910,000 yen ($6,319) for the year.

That’s it. We needed 393,768 yen ($2,734) net pay every month to live a typical Japanese life that by any standards can only be called frugal and dull. What it means is that day after day and month after month for the last year I have just been going to work, coming home, eating, sleeping and paying bills. On this budget, there are no savings, outside entertainment, holidays or fun. There is also no spare cash for emergencies, education, household goods or buying a home.

These have been the facts of life in Tokyo. They are not exceptional; most salaried workers of my age (36) living here are in the same or a worse position.

But I can leave whenever I want; the salaried workers in factories across Japan cannot. They are compelled by the highest cost for basic living in the world to work the longest hours of any people in a developed country just to live a life that would kill most Westerners.

There are other interesting spin-offs from the high cost of living that explain why it is so hard for other countries to compete with the industrial power and economy of Japan.

The 4,725,216 yen ($32,814) minimum net wage that was necessary for existence in Tokyo last year is about what the average salaried person can manage to earn by working long overtime hours. This explains Japanese workers’ apparent and world-famous dedication to the company. In reality it is the low standard of living and high costs that drive the Japanese to work and keeps them there until 8 or 9 p.m.

Also, as working for as many hours as is possible enables a Tokyo family with one wage-earner just to exist, the only way for the family to improve its financial status is for both partners to work. Because Japanese society views the husband as the main wage-earner, the wife’s work becomes devalued to the level of “working for extras” or “play money.”

Japanese factories are full of married women with children at school. Although they work seven hours a day, the companies categorize them as part-timers and can therefore pay them only 500 yen an hour as opposed to men’s wages of about 1,500 yen an hour. This provides Japanese companies with a huge, cheap, dependent and compliant workforce. Is it any wonder that other developed countries find it so hard to compete on an equal footing with Japanese manufacturers in terms of production costs?

The inordinately high cost of basic necessities also explains why Japanese domestic consumption is so low and why Japanese consumers don’t buy large amounts of imported goods. It’s not that they don’t like imports. It’s because the average family can’t afford imports, which are always far more expensive than domestic products because the Japanese end of the distribution system grossly inflates the price and also because historically the government has acted to protect domestic industries against competitively priced foreign products.

The apparent disparity between the price of Japanese products exported and sold in America and the price of the same product in Japan has caused accusations of dumping Japanese goods on the American market at prices below the fair price in America.

A Mazda RX7 auto is priced at $14,000 in the U.S., but the same model sells in Tokyo for the equivalent of $24,000. Probably the fair and realistic price is the U.S. price. The higher price in Japan, which Americans cite as evidence of dumping, is actually a result of the policy by Japanese industry to keep Japanese consumers poor (and motivated to work even harder) by overcharging them for products. The spin-off benefit is that the excess profit from sales in Japan can be used to keep overseas prices low and maintain a market share in the face of a revaluing yen.

What are the final implications of this analysis for America in its trading relations with Japan?

I think it is that if Americans really want to enter the Japanese market, they have to tackle the problems faced by the average Japanese consumer. To do this, the American government will have to persuade the Japanese government that now it is in Japan’s best interest to favor consumers over industry. America will also have to persuade Japanese consumers that they should expect fair prices as a right. This latter point may be far more of a problem than it seems because, for historic and cultural reasons, Japanese put the rights of the group before those of the individual and the Western concept of fairness does not come into the equation.