What Makes Mexico's Labor Rates Competitive

What Makes Mexico's Labor Rates Competitive

Mexico has long offered competitive labor costs, especially compared to the U.S., but what’s remarkable is that labor rates in Mexico have stayed relatively low while the quality and complexity of the products manufactured there has increased. Plus, because Mexico has a 48-hour work week (before requiring overtime pay), productivity is generally higher than in the U.S.

Average Wage in Mexico

Average Wage in Mexico

The average base salary for an entry level manufacturing worker in Mexico is approximately $3.50 (USD) per hour, well below the average federal U.S. minimum wage of $7.25 (USD) per hour. Additionally, for skilled workers like machinists and welders, Mexico is approximately $6 - 7 (USD) per hour, compared to an average of $16 – 18 (USD) per hour for similar positions in the U.S. Because Mexico’s average cost of living is lower than the U.S., it’s a win-win all around.

Labor Rates in Mexico Mean Lower Operating Expenses

Labor Rates in Mexico Mean Lower Operating Expenses

The cost savings keep adding up when you figure in the lower expenses for rent and utilities. Undeveloped sites are available throughout Mexico, but because manufacturing has been such a major part of the economy for so long, there’s more than enough industrial facilities to go around. Most of these are Class A facilities that are in gated industrial parks or secured, stand-alone buildings.

Leasing rates range from $0.35/square foot to $0.49/square foot, depending on the class of the building (Class A, B, and C are available) and its location.

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