Don’t come to Japan for a master’s or doctoral degree in liberal arts: you’ll be dead broke and your starting salary will be less than a fifth of what it is in the US

2022-06-18 0 By

In an article published by Diamond Online on February 3, Hitotsubashi University emeritus Professor Yukio Noguchi analyzed the starting salary of graduate students in Japan, pointing out that a dysfunctional education system has reduced the starting salary to less than a fifth of the level in the United States.The average value salary in Japan is about 60 percent of that in the United States, but the starting salary gap for graduate students is much wider.What accounts for this gap?Graduate students in Japan earn about 2 million yen a year, compared with 17 million yen for business school graduates in the US!The wage gap between Japan and the United States, especially for graduate students, is even more noteworthy.According to a survey released by the Ministry’s National Institute of Science and Technology Policy on Jan 25, the following is the annual salary of doctoral graduates next year.Doctors and dentists earn less than 12 million to 15 million yen (670,000 to 830,000 yuan).Engineering graduates earned between 4 million and 5 million yen, social science and science graduates between 3 million and 4 million yen, and humanities graduates between 1 million and 2 million yen.And statistics have consistently shown that starting salaries for graduate students are low.According to the ministry of Health, Labour and Welfare’s report on the 2020 Basic survey on salary structure, the starting salary for male and female graduate students is 3.06 million yen per year.If medical school is not included, starting salaries are likely to be around 2 million yen a year.But what about in America?Starting salaries at top schools such as Harvard and Stanford are around $150,000, according to detailed data on graduate starting salaries on the school’s official website.That translates to about 17 million yen a year.This is 5.6 times higher than Japan s 3.06 million yen.Although this is a comparison between the top class in the United States and the average class in Japan, the gap is so wide that it is hard to describe.In fact, the average value salary in Japan is about 60 percent of that in the U.S. — 58.8 percent in 2019, according to the OECD — but the starting salary gap for graduate students is clearly even wider.Why the gap?One reason for the difference between Japan and the U.S. is that seniority-based pay systems still dominate in Japan, where starting salaries are low.According to the statistics of the State Taxation Bureau, the annual salary divided by age is shown in Figure 1.The highest salary for men aged 50 to 54 was 7.37 million yen, and that for men aged 20 to 24 was 3.07 million yen, a 2.4 times gap.Some say seniority-based pay, common during the boom years, has disappeared, but in reality the trend of pay rising with age is still very clear.In America, on the other hand, earnings tend to rise with age in the 20s and 30s, but level off after the age of 35 (see chart 2).In the US, 20-24 year olds earn $645 per week, while 45-54 year olds earn $1,154, which is 1.8 times the ratio.That’s much lower than Japan’s 2.4 times as seen above.The difference of $931 between 25- to 34-year-olds and 45- to 54-year-olds is only 1.24 times.So, as far as the United States is concerned, age has very little to do with it, especially after 30.In Japan, as people work longer and get older in an organization, they gradually move up the career ladder and their wages rise.In the US, by contrast, age is not a major factor from the age of 30 onwards and pay is determined by performance.In Japan, differences in educational attainment at a young age are small.Only children from wealthy families can go to graduate school in the United States, salaries vary considerably according to educational background.In the third quarter of 2020, college graduates earned $1,457 a week, compared with $793 for high school graduates, according to the Bureau of Labor Statistics.That’s a 1.84-fold difference.What about Japan?According to the 2008 Basic Survey on Japan’s wage structure, there was little difference between college graduates and 30-34 year olds who graduated from high school.For those aged 50 to 54, the annual salary is 1.35 times higher than that of college graduates (9.7 million yen) and high school graduates (7.2 million yen).So, in Japan, the financial rewards of going to college are not that great.In the United States, 75.0 percent of men and 102.0 percent of women attend college.The data were all in 2017;The figure above 100% is because it includes students outside school age.However, in Japan, according to the school basic survey, the college enrollment rate for men is 51.6 percent and for women 57.8 percent.Japan’s low college enrollment may be due to the fact that a college education is not financially affordable.However, even in Japan’s case, differences in educational attainment become apparent as people age.Thus, when comparing lifetime wages, there is a difference between those with a college degree or higher and those with a high school diploma.In other words, educational differences in Japan do not show up significantly in starting salaries, but rather over a long period of time.However, the results of university research did not appear until decades later.The older wage difference may be due to other factors than being a direct result of college education.Business and law schools in the US are expensive, but you can expect to pay off early on.So even if you borrow to pay for college, you can pay it back with a higher salary.In Japan, by contrast, it takes a long time to recover the benefits of a high school education.So in Japan, you have to come from a family of considerable financial means to go to graduate school, and you have to be able to live off your parents’ income and assets during your studies.American companies pay consideration for graduate education, while Japanese companies do not. In the United States, starting salaries for graduate students are high because companies recognize the value of graduate education.They treat people with graduate degrees as experts in their field and pay them well for their expertise.That is why starting salaries for business school graduates can be as high as y17m.The low starting salary for graduate students in Japan reflects the fact that Japanese companies do not expect graduate education to yield results.Many in Corporate Japan believe that a graduate degree is useless for corporate work.It has long been believed that the knowledge needed for a job can only be learned through on-the-job training.This is certainly true during periods of high growth.Japan’s rapid growth is catching up with the developed world.We know how to do that.There is no need to develop your own unique business model.So what companies are looking for is a university-level screening function to see if there is a certain level of knowledge and skills that can work in the company.This is particularly the case in the department of Law and Economics.Now, however, things are different.We must develop new technologies and create new business models to use them.The neglect of expertise, however, continues to this day.What is the purpose of higher education?Weak business education is one cause of stagnation and its persistence is not just the fault of business.Universities are also to blame.There is a deep-seated belief in Japanese universities that graduate schools are places to pursue truth and educate scholars, not business.There is a need to train academics, but there is also a need to educate professionals who are not academics.This is what Japan lacks and is the main reason there are no new business models and technologies in Japan right now.Japanese universities have too little contact with the changing economic world.This is reflected in the extreme weakness of business school education.As a result, Japan has failed at the most basic level of economic development.And the problem is too deep-rooted to be solved simply by piling money into a college fund.