In order to truly understand the situation, you have to consider the differences in the Japanese job market as well as the salary structure in Japan compared to western countries. Like many things in Japan, the payment situation is complex and varies on a case-by-case basis. However, you can break things down into general categories with what I'm sure are may exceptions on an individual basis.
Here are three very general categories of employment for Japanese people:
Category 1: Hourly wage-based work
This is work which is generally done by people who have not completed higher education (that is, they have only completed high school). This type of work is the sort of thing many people do in transition with the exception of skilled labor (like construction work). This type of work may pay as low as minimum wage and generally does not represent any opportunity for advancement. In Tokyo, the minimum wage tends to be about 900 yen an hour. Since this is essentially "unskilled" work and foreigners who work as teachers in Japan must have a university degree to qualify for visa sponsorship, this type of wage and work cannot be compared to that which teachers do.
Mimimum wage work generally requires no education beyond high school. Just as you expect people in MacDonald's in the U.S. to make less than a high school teacher, you can expect the same of Japanese minimum wage workers and foreign teachers in Japan.
Category 2: Contract work
These types of workers span a wide variety of jobs requiring many different skills. The commonality is that these employees work a set number of hours for a set wage which is usually between 150,000-220,000 yen a month for a 40-hour week. The big difference between these workers and the final category of workers is that they do not work unpaid overtime. If they work overtime, they are paid for the extra hours.
This type of employee tends to be female and have a junior college level education or a liberal arts degree from a school which isn't from the top 5-10 universities. Such people are often married and working mainly to augment lifestyle or income but also sometimes they are young women (or, more rarely, men) in transition who hope to secure a better situation after gaining skills or experience.
These types of Japanese employees are roughly analogous to foreign workers in terms of how their wages and working conditions are handled though not the same in terms of workload, expectations or required skill level. However, these employees are the type that frequently experience seasonal "down time" and are working very hard at times and killing time at others. Foreign employees usually work the same year round at the nearly full capacity of their schedules.
This is the type of office lady/secretary that foreign workers often work with in schools. They do the scheduling, answer the phones and handle students. This type of worker is the type of person you are most likely to have problems with or experience resentment from as they are generally not valued by the company and often succumb to pressure to work unpaid overtime despite the fact that it is against the law for companies to compel them to do so.
Category 3: Company workers
This is the type of worker that is the stuff of stereotypes. They work long hours and often feel a lot of pressure to do well for their companies. It's also where the greatest confusion comes in as these types of workers undergo a transformation in working conditions and salary as they continue to work at Japanese companies.
Typically, a university graduate is employed by a company with few or no skills relevant to his or her future job. In fact, most of them do not know precisely what job they will do when recruited at the beginning of their senior year. During their initial years, they work hard, learn the ropes, and are relatively low paid. As they stay longer at the company, they get paid more as they are seen as more productive. In some companies, salary increases when one marries or has children. When such employees reach their 30's, they start to make a pretty good wage in the vicinity of what English teachers make. As they reach their 40's, they will make 300,000-450,000 yen a month in most cases. By their 50's most are making over 400,000 a month depending on the company. Senior manager types may make as much as (or more than) 500,000 yen a month by the time of retirement. You can generally guess a salaried employee's monthly take by their title. A bucho tends to be in the 400,000-500,000 yen range.
In general, salaried employees get a raw deal initially and later do far better (though that has been changing recently, it hasn't changed as much as everyone believes).
Why Foreigners Should Be Paid More:
Among salaried workers, there are a wide variety of benefits that you don't get as a contract employee. Most foreigners working in Japan (particularly teachers) are contract workers. Among the perks foreigners do not get are:
- Free company housing/large housing supplements. I'm not talking about cheaper rent and a lower wage like the language schools give. I'm talking about people who get a place free or for 10,000-30,000 yen a month. Some companies provide complete housing free of charge and others may offer up to 100,000 yen a month as a housing bonus.
- Paid national holidays. The Japanese have 12 national holidays and most of the weekend days have been moved over to Mondays. That is a minimum of 10 days a year the Japanese get which foreign staff usually do not. In the golden age, teachers used to get paid national holidays. It's rarer and rarer for that to be the case.
- National health insurance supplemental pay. If you're paying your own health insurance, you may be forking over 20,000-30,000 yen a month from a usual teacher's salary. Japanese staff often get 50% of that covered by the company.
- The biggest difference of all is that foreigners are rarely involved in the twice yearly bonus system. Contract employees are paid more on a monthly basis but do not get the "balloon" payment in summer and winter that company workers do. Most companies give salaried workers between one and three months (typically, two months) pay twice a year. The Japanese who resent foreign salaries conveniently disregard factoring in the 4 extra months of wages they get which we do not.
- Foreign workers are rare. They may not be as rare as they used to be but the law of supply and demand requires we be paid more to make it worthwhile being here.
- Foreign workers work harder even if Japanese workers work longer. I know a lot of people will quibble with this but teaching in Japan is harder than nearly any other country because the students are so passive. You have to pour a lot of energy into your work and often get little or nothing back. It's stressful and exhausting. If you don't pay a better wage, no one will do it.
- Foreign employees work without a security net. If you like, you can consider extra compensation a way of adjusting for the fact that we have no family, friends, or support network in many cases to fall back on in cases of financial hardship.
- Most foreign workers who become teachers come over with debt from university. You can't afford to work for 200,000 yen a month if you've got bills to pay. Most Japanese students walk away from university debt-free. If you require employees with a university diploma, the wage you offer has to be enough to make the job worthwhile for them considering their typical circumstances. New employees who make less than the average teacher live in company dorms or at home with their parents and have no college debt. We don't have that luxury.
- If you work here, you don't pay in to any sort of retirment fund (like social security) as a teacher. You also have no unemployment insurance or possibility of severance if you are fired. You have to make enough to sock it away for yourself.
The bottom line though is always going to be supply and demand. If we get paid more for working fewer hours, it's because that's what the market will bear.