Competitive Labor Costs in Mexico

Mexico has cemented its spot as a top site for companies looking to expand their operations beyond the United States. Its proximity to the US makes it accessible, and it also opens businesses up to a lucrative local market. 

One of the biggest draws for manufacturing in Mexico, however, remains its competitive labor market. For up to more than half the cost of wages in the US, you get the same quality of work at high levels of efficiency and productivity. To see how much you can expect to pay for labor in Mexico, check Tetakawi’s payroll cost calculator for a starting estimate.

Payroll Cost Calculator


Average Cost of Wages in Mexico

The average base salary for an entry-level manufacturing laborer in Mexico is a little below $5 per hour, which is well below the $7.25 minimum wage rate in the US. This trend in labor costs is consistent across the board, with skilled workers, such as machinists and operators, and management positions (like production managers) coming in at costs that are much cheaper for similar positions and work in the US. 

Other Labor Costs to Consider

Employees across Mexico expect other benefits on top of their base pay. Mandatory benefits (i.e. those required by law) include twelve or more days paid time off, profit-sharing percentages, pension contributions, and an end-of-year Aguinaldo bonus. Companies may also offer other extras, such as healthcare and transportation incentives, though these still fall at a fraction of what you’d normally expect to pay for the same in the US.

When considering labor costs, you must also think about the expense of the hiring process. This could be significant, especially if you factor in costs for onboarding and training. But you can save a lot if you employ the services of a shelter like Tetakawi that can deal with recruitment in the region that you’re targeting.

What Makes Mexico’s Labor Costs So Competitive?

Mexico has long offered competitive labor costs, especially when compared to the US. A large factor behind this is the low cost of living in the country, which allows workers to live comfortably on a lower salary. The living wage in Mexico averages between $677 to $917 per month—a stark contrast to the $3,900 living wage in the United States.

Nonetheless, the quality and complexity of the products manufactured in the country are at par. Mexico has a 48-hour work week (before requiring overtime pay), which makes for generally higher productivity levels than in the US. Plus, labor costs grow at a consistent 5% inflation every year, which keeps the rates relatively low.

Calculate Labor Costs With Tetakawi’s Labor Cost Calculator

Mexico has an abundance of trained and skilled workers that you can hire for every step of your manufacturing process. Tetakawi’s labor cost calculator can give you an estimate of how much you can expect to shell out for this overhead expense, so you can be ready when you expand your operations outside of the United States.

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