Mexico’s new minimum wage: Thanks for trying

Some of Mexico’s lowest-paid earners are experiencing their second pay rise in as many years.

Mexican President Andres Manuel Lopez Obrador lifted the minimum wage this year by 20 percent for workers in most parts of the country, following a 16 percent hike in 2019. Those earning the minimum wage in Mexico now make 123.22 pesos, or about $6.53 a day.

Lopez Obrador’s administration, which rose to power in 2018 under a pledge to tackle corruption and inequality, says 3.4 million wage earners will benefit from the pay increase. It has heralded the move as a historic measure to offset decades of dismal wages in Mexico. “We haven’t seen something like this in four decades,” Lopez Obrador told journalists when he announced the pay rise.

But the impact of Lopez Obrador’s decision appears limited. Factors such as Mexico’s outsized informal economy, a historically depressed minimum wage, and persistently low wages in formal jobs mean the pay hike leaves much of Mexico’s working poor untouched. And the change has little potential to lift minimum wage earners out of poverty.

“In terms of reducing poverty, I don’t think it will be all that important,” says Valeria Moy, an economist at a think-tank in Mexico City called Mexico, Como Vamos? (How Are We Doing, Mexico?).

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