Competitive Prices
Mexico’s living costs are compared to the United States very low; accordingly the salaries are very competitive in Mexico. Whereas an average engineer cost in the United States up to $30 dollar hourly, a Mexican engineer earns around $10. Though the salaries vary from state to state. A quarter of Mexicans population, which is around 30 million people, earn between 500 - 700 Dollars monthly.
Some Hard Facts
- minimum wage in Mexico is around $10 per day,
- the average salary of employees without bachelor degree is around 500 - 700 dollars per month.
- Working hours: 40-48 hours
- 12 days holidays after the first year
Low-cost workforce
There are significant competitive advantages associated with Mexico's low labor costs and efficient operations. While many countries experience rising employee and transportation costs, Mexico has emerged as one of the most cost-effective nations. Indeed, in the North American region, labor costs in Mexico can be up to 10 times lower than those in the United States or Canada.
On average, companies operating in Mexico, particularly within the manufacturing industry, can expect to save up to 50% on labor costs. It is worth noting that many companies in Mexico pay their employees significantly more than the minimum wage. Around 60 million people earn slightly over $1000 per month, demonstrating that Mexico provides a relatively affordable labor market for businesses.
Cheaper than United States
To illustrate the scale of this difference, let's consider some figures. In the beginning of 2023, the Mexican government raised the daily minimum wage from $8.80 to $10.50. However, when compared to the United States, where the minimum wage is around $60, Mexico still offers a considerable cost advantage. Moreover, in comparison to other Latin American countries such as Argentina or Brazil, Mexico proves to be a more cost-effective option.
A worker in the United States without any bachelor’s degree earn up to 4x more than graduates in the equivalent fields in Mexico. Low skilled factory workers earn around 80% less than the $12 per hour wage which can typically found in the United States or other similar high-wage countries. The salaries in general vary drastically across different sectors manufacturing such as healthcare, IT, pharmacy etc., like any other country. Skilled machinists cost around 50% less and engineers just out of college have a 40% lower employer cost. In addition, the living costs are 70% less than their American counterpart and 44% less than a European country like Spain.
Forbes study about Mexicans salaries vs United States
- Engineers and technicians specialized in design, robotics, and mechatronics earn around $1,500 per month upon graduating, with salaries increasing to $4,500 after two decades in the industry.
- Software designers typically start at approximately $1,200 per month and can earn $4,000 plus bonuses after 15 years of industry experience.
- According to a study by the Brookings Institute, STEM workers in tier-two U.S. cities without a bachelor's degree can earn up to four times more than graduates in equivalent fields in Mexico.
- In specific locations, STEM workers without a bachelor's degree earn an average of $62,092 in Bridgeport, Connecticut; $48,353 in Wichita, Kansas; and $44,851 in Tulsa, Oklahoma.
- Across the United States, the average starting salary for entry-level STEM jobs that do not require a bachelor's degree is $47,856, while for positions requiring a bachelor's degree or higher, the starting salary rises to $66,123.
- The starting salaries for STEM graduates in Mexico are nearly five times lower than the most competitive starting salaries for bachelor's degree holders in the United States, based on data from Burning Glass Technologies.
Salary differences among the states
Salaries in Mexico exhibit regional variations, influenced by factors such as state and strategic location. Along the northern border regions, such as Tijuana or the Chihuahua region, wages are typically estimated to be around $16 per day, as they directly compete with neighboring United States. Below, you will find an approximate overview of average salaries in Mexico.
Average wages of Mexico within the states
| Aguascalientes | -10% |
| Monterrey | +10% |
| Mexico City | +5% |
| Queretaro | -10% |
| Guadalajara | -15% |
| Merida | -10% |
Nearshoring effect and Inflation increase salaries
With the impact of inflation and the prevailing nearshoring trend, salary levels in Mexico are expected to rise. In April 2023, Ford Motor Co. and the Chihuahua state union reached an agreement to increase wages by 8.2%, surpassing the inflation rate. This salary increase can be seen as a strategic move, considering the growing influx of companies entering Mexico due to the nearshoring trend. Consequently, the competition for top talent has intensified.
Is it cheaper to manufacture in China?
Over the past few decades, the "World Salaries Report" published by the International Labour Organization has highlighted substantial growth in real salaries in China. Between 2008 and 2019, salaries in China doubled, surpassing the global growth rate. This phenomenon can be attributed to the manufacturing industry's focus on the Asian market and the subsequent demand for top talent, which drove up salaries. In 2018, the average salary in Mexico stood at US $4.45 per hour, while China recorded an average of US $5.51 per hour. As a result, Mexico remains competitive in terms of manufacturing costs and it is therefore not cheaper anymore manfucaturing in China as maybe one decade ago. Indeed, China is not anymore the low cost production place as beside the increased taxes, you also must calculate the transportation oversea from China to the United States which take several weeks.