The most persistent complaint in the U.S. produce industry is labor costs.
In California, the heart of the nation’s fruit and vegetable industry, the minimum wage is now $15 per hour (for companies with over 25 workers). On January 1, that figure will rise to $15.50 for companies of all sizes. https://www.dir.ca.gov/dlse/faq_minimumwage.htm.
Another source of complaint is Mexican wages, which have always been much lower than American wages.
The gap in pay between the two nations remains huge, but it has been shrinking as Mexico’s minimum wage has significantly increased over the last 4 years.
Mexican president Andrés Manuel López Obrador (popularly known by his initials, AMLO) has announced plans to increase the national minimum wage by 20 percent next year. AMLO announces plan to raise minimum wage in 2023 (mexiconewsdaily.com)
At present, the Mexican minimum wage is 172.87 pesos (U.S. $8.95) per day across most of the country and 260.34 pesos per day (U.S. $13.47) in the Free Trade Zone on the U.S. border.
The business sector wants the next increase to be 15 percent, while the unions want an increase of 25 percent.
A 20 percent increase on current rates would be the equivalent of $10.74 per day in most of the nation and $16.16 in the border areas.
When AMLO took office in 2018, he pledged to raise the minimum wage by 15.6 percent per year. At that time, the daily wage was 88.36 pesos per day, one of the lower daily wages in the Americas.
Since then, he has raised the minimum wage by 16.2 percent in 2019; 20 percent in 2020; 15 percent in 2021; and 22 percent in 2022.
Even the proposed 20 percent additional increase would leave wages much lower than the U.S. federal minimum wage of $7.25 an hour and would not significantly disrupt the Mexican advantage in labor costs.
But companies who are doing business in Mexico may still have to figure out how to add another yet another hefty wage hike to their balance sheets.
