Mexico announced on Wednesday that it will be implementing a 12% increase in its daily minimum wage for the upcoming year. This decision comes as an effort to address the country's still significantly low minimum wage levels.
However, despite the increase, the value of the Mexican peso has experienced an 18% decline over the past year. As a result, the raise in the minimum wage actually translates to a slight decrease in constant dollar terms.
The three-party minimum wage commission, consisting of government, labor, and business representatives, disclosed the wage hike, which is set to come into effect on January 1, 2025.
The new daily minimum wage will amount to approximately 279 pesos, equivalent to around $13.75. In comparison, the 2024 minimum wage of 249 pesos per day was valued at $14.25 when it was initially announced in December 2023. However, the peso has since depreciated against the U.S. dollar, dropping from 17.20 to approximately 20.30.
With domestic inflation in Mexico currently hovering around 4.75%, the announced increase could potentially result in a real-term growth of about 7%, unless inflation escalates further.
Despite the raise, the minimum wage in Mexico remains notably lower than that of the United States. At $1.71 per hour, it pales in comparison to the U.S. federal minimum wage of $7.25 per hour. Many U.S. states have set their minimum wage rates between $10 and $16 per hour.
Notably, due to higher living costs in the northern border regions of Mexico adjacent to the United States, the official minimum wage is set at a higher rate. For 2025, it will be established at around 420 pesos, equivalent to $20.70 per day.
