Proposal to increase Taiwan's minimum wage by 30%

Credit Suisse Global Wealth 2016

http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=AD6F2B43-B17B-345E-E20A1A254A3E24A5

It says:
GDP Per Adult in USD
Venezuela 16,890
Taiwan 32,647
United States 75,992

Wealth Per Adult
Taiwan 112,470
United States 274,509

Debt Per Adult
Taiwan 24,479
United States 53,173

Median Wealth Per Adult
Taiwan 49,964
United States 35,516

Median wealth per adult in Venezuela is below Zimbabwe.

Our Korean neighbors would probably say something like kekekekekekekekekekekekekeke.

At least in theory there should be an accompanying waistline deflation :slight_smile:

Anyway, it’s only about 10%, innit? According to Wikipedia it’s already NT120, so that’s about 10%.

@JB_IN_TW: personally, I would say it’s not a bad thing, it’s just a pointless thing. Setting price floors (for anything) has various well-known effects - not theoretical ones, real ones - but raising the standard of living isn’t one if them. As everyone else said, businesses will adjust things to suit, most likely overcompensating in the process, which means people earning minimum wage end up with exactly the same spending power as they had originally. In fact it’s slightly worse than that because people with no money tend to buy things from low-margin businesses, so the prices they see will go up, while the prices that richer people pay will be less affected.

I lived through the introduction of minimum wage in the UK, and it made not one jot of difference to minimum wages, or to the spending power of low earners. I’d done a few shitty jobs in the few years immediately prior, and my wages - set by “the market” - were IMO reasonable for the job I was doing. They were in the same ballpark as the government numbers laid down a couple of years later.

I earn more money now not because a benevolent government told the rich people to give me more, but because I made a concerted effort to become more valuable.

2 Likes

I see that. As I see it, the economic armageddon predicted is just a scare tactic. If a factory makes personal massagers, their labor goes up instantly. That does not mean all their costs will go up, especially if their materials costs do not rise. The higher labor cost can get absorbed somewhere else, without a drastic increase in per unit sale prices. Also, higher wages theoretically mean more people can afford the personal massagers.

Prices go up for a number of reasons, independent of wages.

On page 109 of the GW Databook median wealth per adult is stated for Taiwan as $63000 and US $44777.

The same page also includes percentages for wealth;
Adults with less than USD10,000: TW 19%, US 34%, Venezuela 95.3%
Adults with less than USD100,000: TW 62%, US 63.2%, Venezuela 99.7%

http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=AD6F2B43-B17B-345E-E20A1A254A3E24A5

Even with low wages Taiwanese somehow still manage to grow their wealth.

Americans tend to buy too much stuff they don’t need, resulting in credit card debt. I’m sure that’s one factor.

2 Likes

If anything it only means that America is very unequal, even more unequal than here. If you check the statistics of Canada or Japan their wealth distribution is far more even.

That and Americans spend more. They probably aren’t really bothered with saving up. They make 6 figures every year and spend it all on luxury stuff.

It’s interesting although a lot of it is probably how household wealth is calculated and the influence of property prices and relatively low debt levels.
In Taiwan I’m guessing that all the numbers are taken from household registration figures and then they divide by the number of people in the household book, which means the parents wealth is also allocated into their adult kids wealth.
Just spitballing here.
Taiwanese are also very very into investing in insurance products and saving which seems to have worked out well for many.

This helps to deal with the disconnect of lower wages in TAiwan.

Now remember the US is a huge country with massive income inequality. The median probably should deal with that better than average though.

The 3 main reasons being…

  1. Student Loan Debt
    $1.44 trillion in total U.S. student loan debt
    44.2 million Americans with student loan debt
    Student loan delinquency rate of 11.2% (90+ days delinquent or in default)
    Average monthly student loan payment (for borrower aged 20 to 30 years): $351
    $50,868 Average US Student loan Debt
    https://studentloanhero.com/student-loan-debt-statistics/

  2. Credit Card Debt- Many Americans spend more than they earn
    Ave Household CC Debt 16,000.
    Though there is a big movement away from this I believe. Lots of shows, blogs, youtube channels, books, and speakers about getting out of Debt, investing, saving for retirement and solid financial advice being prevalent since 2007 such as Dave Ramsey.

  1. Medical Costs- High Insurance cost or debut from medical bills.

Of course this is changing after the 2008 crash but slowly.
Also many went into Bankruptcy during the housing crisis in 2007 and Banking Crisis in 2008

Taiwan’s numbers might change as the real estate prices start declining here and the bubble bursts. So much money in TW is tied disproportionately into real estate first vs Stocks/Funds, Bonds, Commodities. Don’t know a single young adult that has any inkling of a retirement plan in Taiwan other than to buy a house…which is unaffordable and not a retirement plan.

That’s fascinating, where are you getting these numbers from?

https://studentloanhero.com/student-loan-debt-statistics/

The Credit Suisse report includes properties, and the share of real assets is also shown. The ratio is not higher here than in other countries. It’s just particularly low for America.

http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=AD783798-ED07-E8C2-4405996B5B02A32E

Taiwan Credit Suisse P55. 2016 Taiwan.

Asian tiger

Taiwan’s average level of wealth, at USD 172,800, is well above that of most countries in the Asia-Pacific region, and similar to that of Western Europe. From USD 108,600 at the turn of the century, wealth per adult grew to USD 162,200 in 2010, with no drop during the global financial crisis, although currency depreciation has caused dips in several years after 2010. Over the entire 2000 – 2016 period, wealth per adult grew by 59% in USD terms, and by 95% using constant exchange rates.
Taiwan has a high saving rate and well-developed financial institutions, so it is not surprising that the composition of household wealth is skewed towards financial assets. The latter now make up 64% of total assets. Debt is relatively modest, equaling 13% of gross assets.
Compared to the world as a whole, Taiwan has high average wealth and only moderate wealth inequality. While 20% of the adult population have wealth below USD 10,000, that is not high compared to 73% worldwide. 38% percent of adults in Taiwan have wealth over USD 100,000 which is almost five times greater than the worldwide average of 8%. The large number of Taiwanese with high wealth reflects high mean wealth, rather than high wealth inequality: looking across countries, Taiwan’s wealth Gini coefficient of 74% lies in the moderate range, and is one of the lowest among emerging- market economies.


United States 2016 Credit Suisse P46
Record spell continues

The US economy and its financial markets continued to perform well in 2015 – 2016, leading to an eighth successive year of rising wealth. Average wealth was USD 206,000 in 2000, and rose fairly steadily until 2006, before falling during the global financial crisis. Wealth per adult has now fully recovered, and is 19% above the 2006 level. There is some uncertainty about future interest rates and stock market prospects, but otherwise the signs are mostly positive for household wealth.
The USA has a high proportion of assets (72%) reported as financial, partly because it includes business equity wholly as a financial asset. Adopting the more usual procedure of treating unincorporated enterprises as part of the household sector, the share would be around 64%, which is still relatively high. This reflects the fact that, compared with many other OECD countries, the USA has more economic activity in the private relative to the public sector. The USA also has more outward foreign investment. Debts of USD 56,800 per adult are not extreme by international standards.
US wealth distribution has a high fraction of adults with wealth above USD 100,000 compared to the world as a whole. The percentage of people with wealth at higher levels is even more striking. The USA has the most members of the top 1% global wealth group, and currently accounts for 41% of the world’s millionaires. The number of UHNW individuals with wealth above USD 50 million is six times that of the next country, China.

Always good to look at the numbers.
I’d rather see median assets than average though.

Property went up 3x in 10 years so it’s a major part of the sudden 40% wealth increase (very low interest rates >)

What you’re describing sounds like hyperinflation, like when a government prints too much money irresponsibly. Minimum wage affects a much more isolated segment of the population (depending how small or huge the increase). Most people’s jobs are not affected, because most people don’t work anywhere near minimum wage. It affects those just entering the job market, or poor, we’re talking about burger flipping jobs. It hurts the very ones it’s meant to help. Often, if a boss has to hire more expensive, these job offers will decrease and create greater competition, and so boss’s will hire a more trained, experienced, or otherwise professional contender.

Well, that’s just all cheery with roses and nursery rhymes, except for one thing, how are you gonna get trees to grow money? What do you mean higher labor cost can get absorbed somewhere else besides sale prices? The biggest expense for any company is their labor, and that’s the most logical place it’s gonna get absorbed. Taxes meant for businessmnn rarely affect the businessman, it always comes back to the customer. If you raise the price of materials, or wages, or rent, thinking it’s a rich tax, it always ends up expressing itself and redounding back to the consumer.

Our middle class has all but dropped out. Especially the Black middle class has just about disappeared under Obama. The white middle class is much dwindled too since maybe 2005. It’s not all Obama, the dollar sank from 2002 to 2007 crises, and that’s capital, that’s real wealth of your everyday Joe. Of course it hasn’t risen at all under Obama but got worse, so he isn’t exculpated.

It’s also true that during bubbles, low interest rates, people’s compass get lost and they think they are wealthier than they are and spend recklessly when they wouldn’t do so under normal interest rates.

We are much more equal when capitalism is working and the middle class is strong.

Free market Capitalism does not work, it will not work, it has never worked. Period.
Source: The real world. Welcome to it.

I am going to test something here…I think I know the answer, but lets see…

You credit Trump with the massive uptick in the stock market, that you say only fell during Obama’s two terms to record lows, correct? Also, you credit Trump with the record dip in unemployment, because Obama had record high unemployment, correct? On January 19th, one dollar would get you .94 Euro. Today, that same dollar would get you .85 Euro. I am going to hazard a guess that you will blame Obama for that, too.

Have you ever worked in the service sector? Minimum wage is hardly reserved for “burger flippers.”

Business, in the real world, rarely follows logic. Haven’t I already explain this to you?

Tell you what. You own a business, and I will. Allow the government to raise the minimum wage. You make the necessary adjustments to yours, as per the textbooks, theories, and Rush Limbaugh dictate. I will do what previous experience dictates. Come back later, see who is ahead.