An hourly wage of 40,000 yen is possible: The mindset of an annual salary system

Let's think about hourly wages.
Please take a look at the Twitter post below.
It is dated 2016, so it is quite old, but the sound of an hourly wage of 40,000 yen has a tremendous impact.

People working for 1,000 yen an hour are likely the majority. By comparison, 40,000 yen is exceptionally high. It's not about the 40,000 yen itself, but I have always believed that it is possible to increase one's hourly wage, so I strongly agreed with this Twitter post.

The following is an excerpt from Mako-san's note.

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Gento Kono's YouTube

When I looked up Gento Kono, I found the following YouTube video.

"If you study for 1,000 hours and your future annual income increases by 1 million yen, the hourly wage for your study time is 1 million yen × 40 years ÷ 1,000 hours = 40,000 yen per hour. Why doesn't everyone study that much?"

This way of thinking is really great!

In the YouTube video, it is explained as follows.

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Kono-san's argument is that "if you study, your hourly wage will go up."
I really empathize with this point.

When I tell acquaintances about this story,
they say the simulation I set up is unreasonable...
they say you can't just get into the University of Tokyo by studying...
they say it's a story about special people and lacks reproducibility...

I was surprised by how many people, instead of trying to grasp the essence of the conversation, would rather play it safe over such trivial matters. I feel like I caught a glimpse of why Japan is becoming increasingly poor.

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Examples of increasing your hourly wage

My wife's hourly wage is 2,500 yen. She is a part-time pharmacist. Thanks to her efforts, she earns more than the standard hourly rate.

Last year, there was a part-time job opportunity for COVID-19 vaccinations. This job could only be performed by doctors, pharmacists, and nurses.

It was more of a public contract project than a part-time job. I was offered 50,000 yen per day, which comes out to 7,500 yen per hour. For doctors, it was 15,000 yen per hour. By working 6 days a month, I earned about 300,000 yen.

It might be surprising, but this is an example of an hourly wage increase resulting from study. I believe this is what Gento Kono was talking about on his YouTube channel.

It is not just about academic background or qualifications from your student days; self-study after entering the workforce often leads to skill improvement, which in turn leads to higher hourly wages (i.e., higher salary).

You have likely seen friends get promoted and advance their careers by mastering essential skills as working professionals.

I also hold a pharmacist license. Perhaps because my annual income is about 2 million yen higher than others, it might be equivalent to an hourly wage of 40,000 yen.

I also hold a Financial Planner qualification. While accurate verification is difficult, here is a rough estimate:

・Time invested in obtaining the FP qualification: 30 hours
・Asset management gains achieved after obtaining the FP qualification: 10 million yen
・10 million yen ÷ 30 hours = 300,000 yen per hour

Surprising!!

To increase your annual income

I have talked a lot about hourly wages, but the goal is to increase your annual income. While increasing your hourly wage is one factor in raising your annual income, another important factor is "time".

The hourly wage mindset: (Evaluated by time)
・Thinking that you should work all your time to increase your annual income
・Trying to reduce your time off to work because you feel that leisure time is a waste

The annual salary mindset: (Evaluated by results)
・Thinking rationally about how to produce results in the shortest amount of time
・Realizing that working long hours is a waste

Are you trying to increase your annual income by working long hours because your hourly wage won't go up? This is what I call the hourly wage mindset.

On the other hand, with an annual salary mindset, you contract with your employer to provide the correct results needed to earn the amount required for your lifestyle. Time is irrelevant. With this mindset, finishing work efficiently in a short amount of time becomes a habit in order to earn a fixed, set amount.

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The hourly wage mindset: (Being evaluated by time)

Standard: 1,000 yen per hour, working 8 hours a day, 20 days a month for a monthly income of 160,000 yen
1. Increase working hours to reach a monthly income of 320,000 yen
2. Further increase the number of days to reach a monthly income of 400,000 yen

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Thanks to your hard work, your hourly wage has become 2,000 yen.
As a standard monthly income, 320,000 yen
1 + 3. Increase working hours to reach a monthly income of 480,000 yen

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With even more hard work,
your hourly wage has become 5,000 yen, then 10,000 yen.
With 1 + 4, your monthly income becomes 1.2 million yen
With 5, if your hourly wage increases to 10,000 yen, your monthly income becomes 1.6 million yen

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So far, I have simulated hourly wages of 1,000, 2,000, 5,000, and 10,000 yen. How did that make you feel?

What I felt was that at an hourly wage of 1,000 yen, since working 8 hours a day for 20 days a month isn't enough, you try to increase your monthly income by working 16 hours a day for 25 days a month.

However, when the hourly wage reaches 10,000 yen, the absolute monthly income is already sufficient, so the idea of working long hours disappears.

Furthermore, you start to think about working even shorter hours.

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The annual salary mindset: (Being evaluated by results)

Let's simulate this using a contract with an annual salary of 10 million yen as an example. Generally speaking, 10 million yen is a sufficient amount of money to live on.

Pros
・Thinking rationally to achieve results in the shortest possible time
・Realizing that working long hours is a waste
・The idea of slacking off disappears

Cons
・Working long hours to achieve results is also a possibility
・There is no sense of stability / There is a risk of demotion
・The process can sometimes be neglected

What we can learn from this simulation is that working 8 hours a day, 20 days a month, at an hourly wage of 5,208 yen results in a monthly income of 830,000 yen and an annual income of 10 million yen. Once you are receiving a sufficient amount, you can begin to consider shortening your working hours.

If you aim to work rationally in even shorter amounts of time rather than working long hours to achieve results, humans are surprisingly capable of producing results in a very short time. Because of this, your hourly wage will continue to increase significantly.

If it is possible to contract with a company, and you produce 10 million yen worth of results in 2 hours a day, you could sign another contract for the remaining 6 hours, or through side jobs, an annual income of 20 to 30 million yen would be possible. When converted to an hourly wage, it jumps to 40,000 to 60,000 yen.

This is just a simulation, of course.

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Differences between foreign-affiliated companies and domestic companies

When you simulate it like this,
the formula for calculating an hourly wage is:

Amount ÷ Time = Hourly Wage.

The point is either to increase the amount or decrease the time. The annual salary system mindset (being evaluated by results) is how foreign-affiliated companies evaluate employees.

In this hourly wage calculation formula, the annual salary amount is fixed. Therefore, the idea of reducing working hours is strongly emphasized. This is the reason why foreign-affiliated companies have shorter working hours, plenty of paid leave, and high incomes.

Conversely, many Japanese companies think in terms of Working Hours × Hourly Wage = Monthly Income. Because the hourly wage is fixed first, they think about maintaining their salary by increasing working hours through overtime.

That is why Japanese companies have long working hours, little paid leave, and low incomes.

It looks like this when summarized in a table

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Summary

The topic jumped around and became a bit of a disorganized article, but there were two main points I wanted to write about today.

・First:
Investing in study in advance increases your hourly wage.

・Second:
Instead of the mindset of increasing income through long working hours,
produce results in a short time and further increase your hourly wage.

These are the two points I wanted to convey.

As a third point, I want to live a life where, once I have secured my income through an annual salary and created time through short working hours, I dedicate that time to meaningful things I want to do.

I didn't write about it this time, but
you're working for the sake of that third point, right?
It is important to work while thinking about your hourly rate.

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