$2.25/hr to Build a $40,000 Vehicle

Mexico’s wage repression scheme creates Nirvana for global automakers

A system of wage repression in auto manufacturing that has long undermined the Mexican labor market, has dragged on the local economy, and has spread downward wage pressures to US autoworkers has been revealed by an AP story in the Detroit News.

And this is for factories that manufacture expensive products, even luxury products, in demand in the US and elsewhere. This isn’t about manufacturing T-shirts. But that system of wage repression has been working wonders for global automakers setting up shop in Mexico.

Most of the workers at the new Audi factory in the state of Puebla, inaugurated in 2016 and assembling the Audi Q4 SUV, which carries a sticker price in the US of over $40,000 for base versions, make $2.25 an hour, according to the Union.

Volkswagen, which owns Audi, started building Beetles in Puebla in 1967 and has since created a vast manufacturing empire in Mexico, with vehicles built for consumers in Mexico, the US, Canada, and Latin American markets.

Volkswagen, Ford, GM, or any of the global automakers, which can manufacture just about anywhere in the world, always search for cheap labor to maximize the bottom line.

So here is how this $2.25-an-hour wage came about. Government records cited by the AP show that in January 2014, when the factory was being discussed, and nearly three years before it would be inaugurated, Volkswagen signed a union contract that specified that wages would range from $1.40 per hour to $4 per hour.

The key, in Mexico’s auto industry, may be the so-called “protection” contracts signed long before plants open. Very few of the current Audi workers ever voted for their union leader, and they won’t get any chance to vote for years.

These “protection” contracts that lock in low wages in advance are part of the condition for investing large amounts of money and building a new plant, and throwing money in various directions except to the future workers at the plant.

The auto industry in Mexico has been booming since NAFTA connected factories efficiently to what was then the largest auto market in the world. Automakers from the US, Germany, Japan, and Korea invested heavily in Mexico to take advantage of the cheap labor obtained in part via these “protection” contracts.




The promise of NAFTA was that it would increase wages in Mexico and would bring them eventually closer to US wage levels and would relieve downward pressure on US wages. NAFTA went into effect on January 1, 1994. And this is where Mexican wages are on the global auto manufacturing scale (based on 2015 data, gathered by the WSJ in Sep 2016):

Labor unrest has been cropping up in Mexico for years, but manufactures have resisted significant wage increases, and even if wages rise by 10%, they do so off a very low base and rise only 22 cents or 30 cents or 35 cents an hour.

The auto industry has managed to create a low-wage Nirvana for itself in Mexico. The AP describes the workforce this way:

[A] class of workers who are barely getting by, crammed into tiny 500-square-foot apartments in government-subsidized projects that they pay for over decades. Many can’t afford even a used car, taking home as little as $50 per week after deductions for mortgages and cafeteria meals.

These persistently low wages, and the shenanigans used to keep them low, have attracted global automakers, especially since wages have surged in another “cheap-labor” country, China, whose current labor costs in the auto sector far exceed those of 2015 in the chart above.

Automakers see it this way, as Thomas Karig, VP of corporate affairs for Volkswagen in Mexico, told the WSJ a year ago: “There are enough people willing and eager to work.”

One of the country’s largest car manufacturers, Volkswagen will begin production this year of its luxury Audi brand in San José Chiapa, a rural town an hour’s drive from the company’s main plant in the city of Puebla. Audi said 230,000 people have applied for the project’s 4,200 jobs, although whether they have the appropriate skills is hard to gauge.

This type of wage repression by automakers in connivance with local political and union entities is ultimately a drag on the Mexican economy. Higher wages would perform miracles for Mexico’s overall economy. Higher wages would allow consumers to spend more and stimulate the economy more than anything else would. And they would allow Mexicans to buy more goods imported from the US (exports from the US to Mexico amounted to $230 billion in 2016, against $294 billion in imports from Mexico, according to the US Bureau of Economic Analysis).

Most importantly, sharply rising Mexican wages would lower the downward pressure on US wages. Now there’s a topic for NAFTA negotiators to sink their teeth into — for the benefit of all three countries, even if global automakers would have to give up some of their profits.

The hottest segment in US auto sales – the segment on which all hopes have rested – is cooling. Read… GM Cuts Entire Shift at SUV Factory, Laments “Moderating” Sales, Layoffs not Temporary




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  87 comments for “$2.25/hr to Build a $40,000 Vehicle

  1. Frederick
    Sep 29, 2017 at 11:57 am

    Two twent five an hour and the vehicle sells for 40K ? That’s disgusting It’s as bad as the construction workers in the Middle East

    • Joan of Arc
      Sep 29, 2017 at 1:58 pm

      The next move for the human race will be “Soylent Green”. That’s when they begin scooping up the old and infirm into large trucks to haul to factories to make edible wafers called Soylent Green wafers. It solves the food crises and saves paying out $ trillions in Social security and medicare benefits paid to non productive people. Stay off the streets where the homeless and poor old folks roam or you too could get scooped up!

      • alex in san jose AKA digital Detroit
        Sep 30, 2017 at 12:30 am

        “The scoops are coming! The scoops are coming!” – voice over megaphone in the movie Soylent Green.

    • roddy6667
      Sep 30, 2017 at 1:54 am

      You have to ask yourself why they work there. The answer is—because it’s better than what they had before and better than anything else in their area now. It’s a step up for them. Like the garment sweatshops in Cambodia and Bangladesh, people are lined up to work there because it improves the quality of their lives. Those who would shut them down would condemn them to a worse existence.

      • Binky
        Sep 30, 2017 at 10:37 pm

        Their economy was ruined by NAFTA. They didn’t used to be wage slaves-they were producers undercut by low corn prices and cheap Chinese imports. US ag crushed local produces and forced them out of self-sufficiency much like in the US in the 19th century. Now they will be run through the vicious mill of factory work and company towns until they muster enough anger to take over the factories and demand better. The same dances repeat over and over and over.

    • thelocalpragmatist
      Sep 30, 2017 at 10:14 am

      Fredrick,
      Is it no wonder that Communism continues to appeal to the exploited unwashed?

  2. mvojy
    Sep 29, 2017 at 12:06 pm

    Population growth fuels demand for products and provides an endless stream of cheap labor. When one nation develops too strong of a middle class the big businesses simply move to another undeveloped nation that gives them incentives. Maybe one day the world will run out of poor populations and corrupt governments to exploit. China has a growing middle class which is driving up their labor costs. I’m sure you’ll find a way to deal with them just like Congress has been doing to us for decades.

    • thelocalpragmatist
      Sep 30, 2017 at 10:27 am

      “Maybe one day the world will run out of poor populations….”

      Mvojy,
      Living well is a zero-sum game.

      Communism has a problem with production
      Capitalism has a problem with distribution.

      God must love the poor, since he made so many of them….

      China’s middle class has developed at the beggaring of the
      US middle class, to a degree.

      The World will run out of poor populations when there is
      pork in the trees….

  3. Sep 29, 2017 at 12:20 pm

    NAFTA Has never been good in my opinion, as a owner of a trucking company most people do not know that American or Canadian trucks can not drive one foot into Mexico, we have to drop a loaded trailer on the US side so a Mexican truck can come pull it across to be unloaded and returned back to the US side. Mexican trucks are allowed to come across and deliver wherever they choose in the United States. To be allowed to take our truck into Mexico we must have a Mexican business partner who owns 51% or more of our company.

    • Jerry
      Sep 29, 2017 at 9:22 pm

      That’s hoffifying, but I thought NAFTA allowed for reciprocity in movement of drivers? Or is this because NAFTA does not apply to drivers?

      • unit472
        Sep 30, 2017 at 8:08 am

        That’s kind of the Catch 22 in these ‘Free Trade Agreements’. Its mostly about trade in goods and less about free trade in services especially the biggest providers of service- government.

        Just imagine the horror in Washington or Brussels if government bureaucracies could use Mexican or Polish bureaucrats to administer their fiefdoms!

    • Mark B
      Sep 30, 2017 at 9:10 am

      My wife works for a freight logistics company. The Mexican truck issue is a bit overblown. Outside of border towns, ask yourself how many times you’ve seen a truck with Mexico plates? The wage issue Wolf points out is a much bigger problem. See the following article:

      https://www.joc.com/trucking-logistics/truckload-freight/politics-economics-collide-us-mexico-truck-crossings_20170213.html

  4. Drango
    Sep 29, 2017 at 12:45 pm

    It’s hard to believe that even a hundred percent increase in wages would affect the profit margin that much. Henry Ford made history when he paid his workers $5 a day, and that was in the 1920’s. Almost a hundred years later, and Mexican workers are barely making more than that. A national strike could change that fairly quickly, though.

    • Altandmain
      Sep 29, 2017 at 10:45 pm

      How much is $5 in Henry Ford’s day in today’s money? With inflation, a lot more.

      Ford wasn’t the great friend to employees that many said, but it seems to me like we need a massive worker’s uprising to demand fair wages and not just the rich steal all the gains for themselves. That’s been happening for the past few decades.

  5. Nicko2
    Sep 29, 2017 at 12:46 pm

    And in 2050 it’s projected Mexico will have a larger economy than Germany, Japan, and UK. Get on the bandwagon – population growth will fuel continued advancement. Globalization is unstoppable.

    • 2banana
      Sep 29, 2017 at 1:24 pm

      Mexico will be lucky to still exist in 2050 – let alone have any kind of economy.

      Massive corruption, the oil will be gone, cartels owning large areas, a destroyed tourist industry – just what are they going to base their economy on? Growing avocados using human waste as fertilizer?

    • kam
      Sep 29, 2017 at 1:34 pm

      Nicko2
      Paying $2.25 an hour is only possible where the product is sold into another, more wealthy country. (a worker that needs to work 9 years to pay for a car isn’t going to be buying one). And that depends entirely on being able to bleed out your asset base, since the incomes of ordinary people are eliminated by this globalist crime.

      Government debt/Central banking debt creation is the glue that holds this scheme together. And the plank that it all is founded on, is future income. Future income that is a mirage.

      By the way, while you are “projecting” why not project pollution-free, clean air in Mexico and China while you are at it.

      Unless, of course, you are offering a subtle form of sarcasm.

      • roddy6667
        Sep 30, 2017 at 1:57 am

        “a worker that needs to work 9 years to pay for a car isn’t going to be buying one”???????
        There has been 6 year financing for cars for a long time in America. It’s not too far ahead of Mexico.

        • Sep 30, 2017 at 8:25 am

          Effectively these people cannot borrow in Mexico in pesos to buy a car because interest rates on auto loans are very high … well into the double digits.

          The Bank of Mexico’s policy rate is 7%.

    • junior_kai
      Sep 29, 2017 at 3:56 pm

      Advancement? Surely you jest. Billions of poor, uneducated fighting for scraps all the while creating billions more just like them arent going to advance anything except pollution and resource depletion. Latin America, Asia and Africa are case studies on this.

  6. harry
    Sep 29, 2017 at 1:55 pm

    Audi said 230,000 people have applied for the project’s 4,200 jobs,
    ———————————–
    this tells me that the $2.25/hr is a boom to these people & the 225.8k that applied & didn’t get a job will be making a lot less. Wages are supply & demand like everything else. My suspicion is this is bring a lot Mexican workers a leg up the economic ladder.

    • kam
      Sep 29, 2017 at 3:15 pm

      “this is bring a lot Mexican workers a leg up the economic ladder.”

      And kick the ladder from underneath the American worker.

      Let Mexican-made cars be sold in Mexico only and see how fast those plants disappear.

      America, either the world’s greatest sucker or the world’s dirtiest leaders, take your pick.

      • Bin
        Sep 29, 2017 at 9:08 pm

        The funny thing is I own a VW made in Puebla that has zero defects, on the other hand I own a Dodge made in Warren, MI and it came with different color door handles and overspray on a tail light.

        • Sep 29, 2017 at 10:05 pm

          “….overspray on a tail light.”

          That means that it was repaired after it came off the assembly line. Hmmm. Did the dealer forget to tell you something?

      • John in Indy
        Oct 13, 2017 at 10:25 am

        Both. As for NAFTA, in 1997 i took an econ class at Univ of Louisville with prof Alexi Izyumov, formerly prof of Western Economies at the Moscow Technical Institute, just for the experience. I asked him about NAFTA, abd he explainrd that the promise of NAFTA would not be realized until sufficient foreign, low wage wotkers had been imported into the US to drive US wages down to world levels.
        I told him then that US workers would violently reject such a loss of their ability to support their families.

        • John in Indy
          Oct 13, 2017 at 10:26 am

          Dorry for the typos. Fat fingers on my phone.

    • Mark
      Sep 29, 2017 at 7:35 pm

      Exactly. They probably set the $2.25/hour wage too high.

      Also, if Mexican workers are willing and able to do the same job for $2.25/hour, then American workers making $23.83/hour are being massively overpaid for what their labor is worth.

      As an American in 2017, you’ve got to have an education and skills that allow you to provide services that can’t be performed just as well by an uneducated third world peasant.

      • interesting
        Sep 29, 2017 at 10:45 pm

        too bad that is 80% of most jobs….so now what?

        This is the thing, we either pay people a wage where they can survive OR YOU PAY MUCH higher taxes so the government can pay them to do nothing. AND the latter IS what IS happening……I already know more people who don’t work than do and why should they, government hand outs pay way fucking better.

        it can only be one or the other.

        • Mark
          Sep 30, 2017 at 12:49 am

          Interesting:

          Personally, I think a universal basic income (UBI) is the direction we are headed in the end. Automation and outsourcing have – and will continue to – drive the value of low-skilled, menial labor to the zero bound. Laws forcing rich world countries to grossly overpay for low-skilled labor when a machine will do it better and a third world peasant will do it cheaper makes no sense whatsoever. You may as well pay someone to jump rope all day…

          It’s not necessarily a bad thing as the problem is a political one, not a financial or technological one. Those outsized gains captured entirely by the ownership class over the last 40 years could be redistributed to the former working class. Problem is the working class continues to believe they’re pre-millionaires who haven’t hit it big yet instead of the disadvantaged underclass they actually are.

        • d
          Oct 1, 2017 at 2:36 am

          “could be redistributed to the former working class”

          Right there is you problem.

          Whilst you have this “redistribute from them” (which always involves some form of force) attitude.

          UBI is dead in the water.

          The way Corporates are taxed does not help either as realistically with the current structure Corporates, pay no tax, they simply pass it on.

          The tax on corporate needs to be change to a tax based on % of profit, before deductions, the higher the profit % the higher the tax, before deductions.

          A lot of those Corporate handouts to management would disappear, if they came out after taxation, but before dividends.

      • Martin
        Sep 30, 2017 at 8:18 am

        The workers are not over paid or underpaid, its the value of the currencies that make $23.83 per hour equal $2.25 per hour.
        Guess USA money overvalued by maybe 500%, Mexican money undervalued by another 500%.
        That $23.83 per hour USA worker has to pay on a 35 year backlog of govt. debts, upside down retirement plans, bloated schools, you name it..

    • Frederick
      Sep 30, 2017 at 12:05 am

      Yeah great A broken leg maybe It’s borderline slavery so NO

    • MD
      Oct 1, 2017 at 4:12 am

      LOL well yes but only at the expense of ‘beggar thy neighbour’.

      Seeking out ever more desperate people that you can pay less.

      Hardly social progress, is it really?

      Only really progress if you’re the strange kind of person that measures progress in the form of stockmarket indexes.

  7. Carl
    Sep 29, 2017 at 1:58 pm

    And lets face it, If Mexico had a real living wage, there would be less Mexicans turning to the crime of drug cartels for work? I believe so

  8. JB
    Sep 29, 2017 at 3:44 pm

    The lower wages paid to employees is not the only incentive for a foreign company relocating to mexico. The Mexican government affords other benefits to foreign manufacturers.
    Reduced import and export tariffs are one.

    https://insights.offshoregroup.com/maquiladoras-in-mexico-what-are-the-benefits

    • John Taylor
      Sep 30, 2017 at 2:33 am

      They also don’t seem to care much for protecting the environment, which saves a lot of $ for the factories

  9. raxadian
    Sep 29, 2017 at 3:50 pm

    I had no idea things were so bad in Mexico. There must really be no better work oportunities for these people.

    • william
      Sep 29, 2017 at 5:05 pm

      The cost of living in Mexico is also low.

      • walter map
        Sep 29, 2017 at 7:43 pm

        The quality of life is even lower.

        • Harambe
          Oct 1, 2017 at 6:40 am

          And the value of life lower still.

  10. Old Engineer
    Sep 29, 2017 at 4:15 pm

    In a 2008 article comparing the efficiencies of auto manufacturers the average number of labor hours per vehicle for final assembly was given as around 35 hours per vehicle, including stamping, assembly, engine and transmission. And I’ll bet that number is lower now with the increased use of automation. Clearly that number is not driving the cost/profit on new vehicles regardless of the hourly wage. However it is estimated that to make all the parts for the car takes around 3000 man hours. Although that seems high, and will be coming down with increasing automation and integration, it seems that making the parts in a low labor cost environment would be effective.

    I suspect that the real cost savings are found in the fact that manufacturers are not paying for retirement, health care, sick days, vacation, and other “bennies”. And even if you do pay for health care it is significantly cheaper just about everywhere else on earth than in the U.S.

    • alex in san jose AKA digital Detroit
      Sep 30, 2017 at 12:36 am

      Nationalized health care – a system like Britain’s NHS – would make the US a much more viable place for manufacturing to come back to.

      We’re spending tons more than we have to because we don’t believe in preventative care. We spent tons more than we have to because people can’t get health care so minor problems become chronic and then acute and then they go do the ER.

  11. mean chicken
    Sep 29, 2017 at 4:47 pm

    Hard to pass up a deal like that, if I were a globalist.

  12. Lee
    Sep 29, 2017 at 5:20 pm

    Interesting article, but what is the current minimum wage in Mexico and how does that compare to what the automakers are paying?

    I think that number should have been presented in order to determine how ‘bad’ that number per hour is.

    Another interesting number from the chart in the article is the wage per hour for a worker in Japan: US$14.88 per hour.

    I don’t know if the auto companies in Japan still do it, but when I lived there they would import workers from South America (many with Japanese background) train them, and put them to work in the factories. They would pay them really poor wages and work them like crazy.

    (In the 20’s and 30’s there were around 125,000 or so Japanese that moved to Brazil. Also a large Japanese community in Peru before they were illegally deported to camps in the USA during WWII.)

    That wage rate seems quite low, but then many people start at the auto companies in Japan on the factory floor at cheap wages and then get moved after their stint there.

    • Sep 29, 2017 at 5:26 pm

      The minimum wage is $80.04 pesos per DAY ($4.38 per day). So this would be about $0.55 per hour).

      But that minimum wage is ludicrous. Urban workers don’t work for it. It’s like Germany not having a minimum wage at all until recently … it says absolutely nothing about the rest of the wage structure.

      • walter map
        Sep 29, 2017 at 7:50 pm

        Now tell us what the maximum wage is. You know, the one that’s enforced to ensure Mexico is competitive with Asian rivals. For obvious reasons its not something they like to talk about.

        Remarkably, maximum wage scales have even been proposed for the US.

      • Lee
        Sep 29, 2017 at 11:23 pm

        Well I guess those workers are just getting ripped off and maybe they should just quit their jobs and find better ones at higher pay.

        Maybe they could all ‘kneel’ and refuse to work as well.

        On the other hand maybe they need the work in order to live and something is better than nothing.

        The story is just another example of the continuing corruption in Mexico – the real national industry. It exists everywhere and almost everybody gets the shaft there except the ones on the top.

        When I was going to grad school there I used to ride by bike to school. One day a cop tried to shake me down for la mordida – gotta get the money somehow………..

        Here in Oz the minimum wage is A$18.29 an hour. Sounds pretty good doesn’t it? A 7.5 hour day will bring in A$685 a week or in a year A$35,565.

        Can a person survive on a minimum wage of what works out to some A$35,600 a year in Sydney or Melbourne?

        To rent an average apartment of the same size in Sydney as given in the article (500 square feet) will set you back $A2000 a month……………. That is before any utilities or food. Electricity supply charge will cost you around A$400 a year without even using one kWh of electricity. NG will be about half of that. Say a really cheap $A50 a month.

        If you don’t have any children your income tax on that income will be about $2900 and you’ll have to pay another 2% in Medicare tax if the new rates come into effect this year.

        So after paying for rent, basic utilities, income and Medicare tax you have a little left – oh i forgot – you have to eat and somehow get to work as well……….

        Not much left out of that minimum wage.

        So who is better off the car worker in Mexico or the minimum wage worker in Sydney?

        • alex in san jose AKA digital Detroit
          Sep 30, 2017 at 12:40 am

          Sydney sounds pretty good! You split an apartment, they probably have good public transportation there, and as for medicare, I’m paying 16% of my gross and I won’t actually get it until I’m 65 unless some winds of sanity start blowing in Washington. As for $2900 tax, well, I pay about $2000 tax a year on an income of a bit over $12,000 USD.

        • Frederick
          Oct 2, 2017 at 3:09 am

          Alex I’m totally at a loss how you can live in California or anywhere for that matter on 10 k net income a year That’s nuts

  13. JK (the other John)
    Sep 29, 2017 at 5:27 pm

    Of that $230 billion in exports from US to Mexico, how much was in auto parts to be used in building those $40k vehicles and re-exporting those parts back to the US as a complete vehicle?

    • Sep 29, 2017 at 7:29 pm

      The auto component traffic is vibrant in both directions. Many components that are made in Mexico by global component makers are shipped to US and Canadian factories. Sometimes, these are also component factories that put them into larger assemblies and ship them back to be assembled into cars. It’s a very complex cross-border supply chain, with some parts getting shipped back and forth several times.

      Magna, Canada’s largest component maker, for example, has been busy opening new component factories in Mexico over the past few years, as have others.

  14. robt
    Sep 29, 2017 at 5:35 pm

    If ‘living’ wages, however that were to be quantified, were to be paid to Mexican auto workers, the jobs would just shift to China, or India, and even more workers would be lining up for employment with the cartels, or maybe starving or freelancing by thievery – or perhaps illegally crossing the border to find under-the-table work in the USA, something that NAFTA was implemeted to moderate while lowering prices for consumers. The alternative is a closed economy which benefits nobody, especially in a declining economic environment.
    Before we ostracize Mexico, or China, or India, or corporations that shop labor costs to remain competitive, remember that the US government had an official policy, developed by Hamilton as Treasury Secretary in the late 18th century, inducing the targeted immigration of British experts and managers needed to produce British textiles and products at lower prices due to lower US labor costs, using stolen technology and specifications of British patented proprietary machinery.

  15. IdahoPotato
    Sep 29, 2017 at 5:35 pm

    Indian two-wheeler giant Bajaj Auto killed two birds with one stone. They got a lot of glowing publicity for having an assembly line with 50% women. And they get to pay their workers less overall as a result (no one’s discussing this part).

    http://indianexpress.com/article/cities/pune/co-bots-remove-barriers-for-women-in-assembly-line-bajaj-auto-limited-2988269/

  16. Rates
    Sep 29, 2017 at 5:47 pm

    Wage equality == all wages going to zero.

    Remember guys, during slavery there were no complaints about wage inequality. At zero, everyone’s equal.

  17. RD Blakeslee
    Sep 29, 2017 at 6:04 pm

    “(Mexican auto workers) are barely getting by, crammed into tiny 500-square-foot apartments in government-subsidized projects that they pay for over decades. Many can’t afford even a used car, taking home as little as $50 per week after deductions for mortgages and cafeteria meals.”

    Quite like the “company town” structure of the coal mining industry in Appalachia, 75 years ago.

  18. R Davis
    Sep 29, 2017 at 6:14 pm

    No wonder President Donald Trump – in his corporate capacity of course – wants to build the walls to keep the Mexican Labor working poor in Mexico – it is too keep the poor working classes of Mexico in employment.
    Nothing personal here.
    Kaching
    Kaching

    • R Davis
      Sep 29, 2017 at 6:17 pm

      An extravagantly expensive wall – paid for the the US Tax Payers – to benefit Global Corporate Interests.

  19. Gershon
    Sep 29, 2017 at 6:21 pm

    “Shareholder value!” The globalist neoliberal battle cry. Never mind they are turning flyover country into an dying, looted husk.

  20. Jim Graham
    Sep 29, 2017 at 6:35 pm

    Criminals running the country….

  21. Mary
    Sep 29, 2017 at 6:47 pm

    That’s how investments work. Grow up morons. Those labours are still better off making 2.25 an hour than sitting on their couch, which is why they came to the job.

    Almost none of the posters here actually bothered to give a job or any money to those labours. Yet they are raging against the only employer who actually offered them a job. O the intellectual hypocrisy.

    • Wilbur58
      Sep 29, 2017 at 7:26 pm

      Good, Mary.

      Now just say the same thing about slavery in the south. “Those labours (sic) are still better off with food and a place to live than having nothing.”

      Guess who else never “gave a job” to anyone? The people currently helming these corporate automakers. They didn’t create VW.

      Next, guess who creates most jobs? Small businesses… not major manufacturers like these. Now, guess who destroys most jobs… you got it.

      I really hope you were born rich to having anything close to this mentality.

    • David G LA
      Sep 29, 2017 at 7:32 pm

      So concern for a living wage makes us “morons?” Lack of Rule of law. Treaties broken by all sides? Depressed US wages?

      Also, what does “labours” mean? Did you mean to write “laborers?”

    • Sep 29, 2017 at 7:37 pm

      That’s not “how investments work,” it’s how corruption works.

      Did you read the part in the article that describes how these wages are being kept low – by conniving local politicians and union bosses and global automakers? This is corruption in the labor market, at the expense of the workers, who are consumers, and thereby at the expense of the overall Mexican economy, and by extension at the expense of the US workforce and economy. I thought that was pretty clear in the article.

  22. mtnwoman
    Sep 29, 2017 at 7:34 pm

    No one is factoring climate change into these economic equations? Mexico will be hit hard in the next ten years with the effects.

    • roddy6667
      Sep 29, 2017 at 9:40 pm

      That average hourly pay, being read by uneducated Americans, looks bad. The reader needs to know what kind of life it buys for the worker, not what it buys in America. For example, the Chinese auto worker can afford a middle class life, measured by Western standards. He has a good job, good working conditions, health insurance, a pension, owns a home, has lots of consumer goods, goes on vacations with his family, and still saves a third of his pay for the future. What kind of hourly pay would that need to be in the US? $50 an hour?
      What do most Mexican auto workers make? This article is inaccurate, as Chinese auto workers now make about $5.75 from their latest negotiated agreement.

      • Sep 29, 2017 at 10:11 pm

        The article says what kind of life autoworkers can afford, quoting the AP article:

        “[A] class of workers who are barely getting by, crammed into tiny 500-square-foot apartments in government-subsidized projects that they pay for over decades. Many can’t afford even a used car, taking home as little as $50 per week after deductions for mortgages and cafeteria meals.”

        • Frederick
          Oct 2, 2017 at 3:11 am

          Afford a used car? How about affording the fuel and repairs It’s not possible

    • Mike F.
      Sep 29, 2017 at 9:55 pm

      @mntwoman:

      Are you fricking serious? If so please explain— while the September Antarctic ice pack is the thickest in last 10 years. I believe this winter will be the coldest winter in the last 5-8 years…

      • Sep 29, 2017 at 10:03 pm

        Nothing moves in a straight line. And it’s not so simple. From the National Snow and Ice Data Center:

        “On September 13, Arctic sea ice appears to have reached its seasonal minimum extent of 4.64 million square kilometers (1.79 million square miles), the eighth lowest in the 38-year satellite record. The overall rate of ice loss this summer was slowed by a persistent pattern of low sea level pressure focused over the central Arctic Ocean.

        “Please note that this is a preliminary announcement. Changing winds or late-season melt could still reduce the Arctic ice extent, as happened in 2005 and 2010. NSIDC scientists will release a full analysis of the Arctic melt season, and discuss the Antarctic winter sea ice growth, in early October.

        http://nsidc.org/arcticseaicenews/

        • d
          Sep 30, 2017 at 3:58 am

          He dosent understand or perhaps dosent want to understand global warming = extremes of all kinds of weather.

          Not just a warmer planet.

          You fixation in the north with the Arctic is is pathetic. Its sea ice. Its already in the water.

          Antarctica is you problem.

          Even if global warming is halted today. Without another ice age. Sea level will rise by at least 6 meters over the next century, as the western antarctic ice is moving into the sea and melting. It can not be stopped, without, another “ice age”, as the submerged ice-anchors. That held the sea-ice barriers around Antarctica in place for tens of thousands of years, have all melted off.

          The two storms that just smashed over the American south .

          In the future they will be the norm.

          Justice. The southern US Oil region is where they will hit regularly, enjoy. If you live in what will become the regular cat 5 hurricane landfall zones, now would be a good time to move, as it will only get worse.

          The chinese will get heightened Typhoons and in the winter, Arctic cold blast as the weather barrier formerly holding the cold air in the arctic is broken.

          Oh that global-warming simply meant warmer all over.

        • Mike F.
          Sep 30, 2017 at 5:06 am

          “Global Un-Warming? Antarctic Sea-Ice Reaches Record High Levels”

          http://www.zerohedge.com/news/2014-09-15/global-un-warming-antarctic-sea-ice-reaches-record-high-levels

        • d
          Sep 30, 2017 at 5:32 am

          It really pays to learn about Antarctica and its ice systems.

          THAT NEW VERY THIN SEA-ICE was land ice in Glaciers. So is making sea levels RISE.

          It is moving into the sea and spreading out as there is no big wall of old sea ice (Like thousands of year sold ) to keep it on land any more. Like there used to be, as it has melted away, due to GLOBAL WARMING.

          So no it is not global unwarming.

          Take a big block of ice, smash it up into small pieces, then pile it up in a bowl/basin and watch what happens as it Melts. Then you will understand where the new big THIN sea-ice field has come from, and what is happening.

          It is not a good sign, it is a very very bad one.

          That ice should be jamming up against old ice, becoming hundreds and thousands of feet thick, and remaining jammed against the shoreline for hundreds, if not thousands of years.

          Not spreading out in a big thin sheet of sea-ice that will quickly melt contributing to rising sea levels. Sea-ice is really the wrong term. As that ice did not form in the sea, it is not salt ice, not to long ago, it was land glacier fresh water ice, and still should be.

        • Sep 30, 2017 at 9:07 am

          San Francisco just set an all-time heat record over Labor Day, with temperatures reaching 106F. San Francisco is cold in the summer, normally. The thing is, individual data points like this mean nothing out of context.

          So here is some context: The ZH article was based on an ABC article. The ABC article said this, which ZH didn’t include:

          “CEO of the Antarctic Climate and Ecosystems CRC, Tony Worby, said the warming atmosphere is leading to greater sea ice coverage by changing wind patterns.

          “The extent of sea ice is driven by the winds around Antarctica, and we believe that they’re increasing in strength and part of that is around the depletion of ozone,” he said.

          http://www.abc.net.au/news/2014-09-14/record-coverage-of-antarctic-sea-ice/5742668

  23. Panamabob
    Sep 29, 2017 at 9:07 pm

    It all started in 1981 with the firing of Air Traffic Controllers. I was a Tool Maker at GM and heard coworkers saying that was good, ATC were over paid Primadonnas. All strong unions protected all workers yet my peers didn’t get it. The next year we got losses for the UAW workers, seven paid days, and additional concessions. These things trickled down!! and down and now today where all wages are short of living in 2017 for the workers of products that all want and need.
    It’s been amazing to witness Americans being duped by politicians and media for over 35 years, poor souls those believers.

    • wkevinw
      Sep 29, 2017 at 10:45 pm

      The Air Traffic Controllers are not a good model/scapegoat. They were/are well-paid, and are government workers. As such, the union wasn’t/isn’t really a union (it might be different now). A public/government employee union is a VERY different organization from a union in private industry.

      Their union boss made a power play, employing consultants who gave him bad info. He didn’t last long after this fiasco. The FAA gave the controllers lots of warnings and tried to help them keep their jobs, but they were determined to prove their point.

      FDR very much realized the conflicts of interest in this issue, and said there should not be public/government employee unions.

      My dad worked in the FAA. I have first hand info on what happened.

    • Altandmain
      Sep 29, 2017 at 10:51 pm

      Yep – the working class needs to stand together on this one.

      I’m consistently amazed by the fact that workers seem to think that unions are bad for them.

      Seeing as how a picture is worth many words …
      http://i.huffpost.com/gen/1360159/images/o-UNIONS-MIDDLE-CLASS-facebook.jpg

      It is the power of propaganda. Same with the pointless wars abroad. They are there to enrich the defense industry, not keep people safe.

      • alex in san jose AKA digital Detroit
        Sep 30, 2017 at 12:45 am

        Altandmain – I think things are changing. The SEIU has been making great advances in the last few years, and I was talking today with a guy who works for Airgas (new name for Linde Air Supply) and he said conditions are so awful there, that they really are looking at unionizing.

  24. Nicko2
    Sep 30, 2017 at 2:18 am

    I’m sure the deal is even sweeter for the manufacturers when one accounts for the Peso devaluation over the past few years vs. USD. ouch!

  25. DK
    Sep 30, 2017 at 8:55 am

    It’s not just auto makers that recognize the value. Take a look at all the pharmacies and dental offices just across the border!

  26. Brian
    Sep 30, 2017 at 9:25 am

    Love the Audi ad at the bottom of the page.

  27. Sound of the Suburbs
    Sep 30, 2017 at 3:33 pm

    The cost of living = housing costs + healthcare costs + student loan costs + food + other costs of living

    Disposable income = wages – (taxes + the cost of living)

    The minimum wage is set when disposable income = zero

    Do the maths to see the problem for the US.

  28. michael Engel
    Sep 30, 2017 at 7:30 pm

    If it takes 25 to 40 hours to build up a small car and labor cost is $ 5 / hr, on average, the cost of assembly is = $200 per car.
    The cost of producing a car, including all the pyramid above, is much
    cheaper than people tend to believe. A small car, produced in Mexico, Thailand or S. korea, can have a total cost of $4,000 to $8,000.
    It will be sold, after a discount, in the US market, for $15k to $20k.
    The mark up is huge.
    The total profit on a small imported car, is similar to the gross profit
    on a pick up truck.
    If the US economy will enter a recession, those Mexican workers will
    be lucky to have a job.
    The US mfg are much more prepared to play defense in the next recession.
    I wonder if North Korea is doing assembly jobs for car mfg from China
    and / or S. Korea to cut cost, to provide employment to the poor North,
    and to “pacify” them for a good reason.
    To sum it up : interest rates will rise, while the economy and commodities will cont to deflate.

  29. michael Engel
    Sep 30, 2017 at 7:34 pm

    My comment…

  30. John Doyle
    Oct 1, 2017 at 7:41 am

    All this deterioration in work and conditions is a result of the fact that our economy is declining due to resource depletion, etc. We actually peaked at about the time of the moon shot, 1970. Since then we have masked the decline with credit creation. This credit surge didn’t come from nowhere. It’s part of the end game for our techno-industrial “dynasty”. So just expect more of the same masked by more frantic credit binges and lower real wages for jobs on the line for elimination by automation.
    Fmr PM of Australia, Paul Keating, said when asked about the auto workers loss of jobs there said simply to ask what are they doing now. He assumed their new jobs were better than being an auto worker.

  31. SweetDoug
    Oct 2, 2017 at 9:44 pm

    Don’t forget that those sneaky corporations while ‘negotiating’ a free trade deal for Canada and the US and then Mexico, were setting up Mexico, with ‘free trade’ deals with the rest of the world.

    Nobody told us about that.

    Sneaky @#$%ing corporations.

    OJO
    V-V

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