Stickman Readers' Submissions July 10th, 2008

The Lifetime Earning Potential of Bargirls

I’ve been a long time reader of blogs covering personal finances and am generally interested in this topic. Applying this to life in Asia can be fascinating while explaining a lot of the day to day happenings.

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One interesting concept that applies to both farang and Thai is the lifetime earning potential. This is the total amount of money that can be earned in a career lifetime. I recently read an article of a study done in the US in 1999 showing
that the lifetime earnings of a US worker with a high school education but no college education is $1.2 million USD. For someone with a college degree the number jumps up to $2.0 million. For a Masters degree the number climbs further to $2.5
million and for a Ph.D it is $2.9 million. The highest in the list are those with professional degrees (lawyers and doctors) where the average lifetime earnings are $4.4 million. Now the career lifetime in this case is from 25 years to 65 years
so a high school graduate making $1.2 million is actually earning an average of $30,000 per year or 900,000 baht at the current exchange rate. This level of earnings is assumed to be in present value terms, in other words $1.2 million of today’s
spending power. There will be inflation of both goods and salary during this time but this is roughly reconciled to the spending power of today’s dollar.

So in the US someone with a good education (Master’s degree) is looking at earning about $2.5 million in a lifetime. Of course this is gross and after taxes the number will be closer to $1.75 million. Interestingly enough if $1.75
million were put into an annuity (deposit producing fixed payments throughout the lifetime of the beneficiary) at 4% this would amount to $70,000 per year- not too different than the yearly salary required to save the money in the first place.

So now let us take this lesson to employment in Thailand. The average worker in the country is earning about 10,000 baht per month or 120,000 baht per year. Looking at a lifetime earnings perspective this calculates to 4.8 million baht (or
roughly $150,000 USD- less than 10 times the lifetime earnings of the high school educated US worker.) In other words the BMW 7 series that you see stuck in Bangkok traffic is worth more than 2 average worker’s lifetime salary! Considering
that the owner of the person driving this BMW likely has many more assets it is easy to imagine the large scale of wealth inequality in Thailand.

A farmer is going to make even less – on average a farmer leasing land and growing food in Isaan may be looking at 6,000 baht per month or a lifetime earning potential of less than 3 million baht. Nevertheless people leave the farm to pursue
opportunities in the city where 20,000 baht per month is a competitive salary.

Now let’s consider the plight of the bargirl. Although I doubt that few if any aspiring bargirls have given this some thought I will try to look at the lifetime earnings potential of the bargirl. Interestingly if a lady is attractive
and young with no previous children she can make a great monthly income by local standards – say 100,000 baht average per month given that she is getting lady drinks, barfines and a few foreign patrons wiring money into the account to supposedly
keep her out of the bar (of course she is still in the bar during this time). However the career lifetime of a bargirl is not too different than the career lifetime of a sports athlete. I would say a good career range is perhaps 19 to 34 or 15
years and this is being generous. So during the bargirl career a lass is looking at earning a maximum of about 18 million baht (100,000 baht times 12 months times 15 years) – this is really a best case scenario but you can see in a much shorter
time the bargirl is making 6 times the lifetime income of the rural farmer living on the poverty line.

The problem is that the girls don’t see this and inevitably fall victim to the many other people (family and friends) who prey on their newfound wealth. Also there is the temptation to buy the latest overpriced gadgets and designer
clothes and cosmetics to keep up with the trappings the moneyed lifestyle brings. Unless a very young lady is very clever and calculating she will usually waste the money coming in until she realizes she is approaching her late 20’s and
soon she is getting too old to cash in on her looks and time is running out.

This is the time when the near mythical stories of the dumb lazy lady from Yasothorn or nearby province struck gold by marrying a Swiss surgeon who fell in love with her while holidaying in Phuket become the seed of fantasies of our aging
bargirl. The earlier mentioned lass from Yasothorn has been given gold, a new house and condominium and 2 new cars plus monthly income for the extended family back home in the village. She has extracted more than 50 million baht from her aging
husband and there are regular payments coming that will continue up to the point when he expires and then she will be rewarded with even more from the inheritance or life insurance policy. This type of fantasy explains the persistence and desperation
to ‘catch’ a farang as a source of financial security. Actually it makes solid and practical economic sense. The alternative to catching one of these farang is to go back to working as a tour guide or massage parlor receptionist
making 12,000 baht per month again and this is going to feel like a hardship after the years of easy money coming in.

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Even for a foreigner working here in Thailand making a good local salary the same mindset applies. For example the English teacher working in the reputable international school making 100,000 baht per month will have to ask themselves how
much money are they going to be able to save by retirement. If you are in your mid 30’s and looking at 25 years to retirement at the 100,000 baht per month salary the remaining lifetime earning potential is about 27 million baht. How much
of that can be put into savings? I would think that if someone was an assiduous saver then 7 million baht but I suspect it would be less. Now let’s suppose you are 60 with 7 million baht in the bank – this isn’t going to be
enough to retire comfortably. At a 5% withdrawal rate 7 million baht would yield 350,000 baht per year or just under 30,000 baht per month. While this is just enough to get by any run of bad luck (medical accident, fraud or stealing of your money,
payment to renew your visa, etc) would be enough to put you over budget and in a severe case, wipe you out entirely. It’s a precarious position to take while being a resident in a foreign land.

To go back to the perspective from a Thai it’s easier for me to see how when someone shows off their wealth (with a flashy car, penthouse condominium, designer watch, etc) it can really make big face with the locals especially when
you put the value of those things in comparison to the lifetime earnings of the average worker but that there is a natural opportunity of potentially fleecing the farang out of some of the flash. This helps define some of the attitude to the walking
ATM machines (oops, I mean foreigners) trolling around Nana in the early hours of the morning. To the latter, I offer the following advice: view the people around you with the same economic analysis with which they view you. Yes, respect and love
them and enjoy your time in the Kingdom. But don’t lose sight of the underlying financial reality of the situation. And if you do end up marrying one of the locals as I have – please make sure they know you are worth more to them alive
and happy than otherwise.

Stickman's thoughts:

That last sentence is oh so true!!!

There is a huge disparity in wealth in Thailand although it is no different in other developing countries.

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