wolfstreet.com / by Don Quijones •
Could the “Tequila Crisis” happen again? The IMF is worried.
Although Mexico’s economy has grown at a steady rate during the lion’s share of this fledgling century, Mexican workers’ real salaries have barely shifted. In fact, over the last four decades, Mexicans’ purchasing power has not just stagnated, as has happened in many Western nations, in terms of minimum wage, it has shrunk by 78%. In 1976, a family on minimum wage could buy four times as much as today.
So bad have things become that when CNN’s Spanish edition did a study comparing the minimum statutory wage of over a dozen Latin American countries set against each country’s performance on the Big Mac index, with the US Dollar as the benchmark currency, Mexico came in 13th out of 13, behind a host of much smaller, weaker economies.
In Mexico the legal minimum wage is 74 pesos, or around $4 per day. That’s the equivalent of $0.50 per hour, compared to $1.40 in Brazil, $1.45 in Peru, $2.07 in Ecuador and Chile, $2.38 in Argentina (soon to increase by 33%) and $2.43 in Uruguay. According to the study, the five countries in Latin America with the highest minimum-wage purchasing power are, in ascending order, El Salvador, where a minimum-wage worker has to work 1.51 hours to buy a Big Mac; Chile (1.47 hours); Costa Rica (1.33 hours); Puerto Rico (1.03 horas) and y Argentina (1 hour).
In Mexico, by contrast, a minimum-wage worker has to clock in 5.6 hours to be able to get his or her lips around a Big Mac — over triple the number of hours a Salvadorian must work to receive the same “reward.” In other words, Latin America’s second biggest economy appears to have a significantly lower minimum-wage purchasing power than its tiny neighbor to the south.