What You Need to Know About Labor Expenses in Mexico

By  //  May 29, 2023

Many companies in the United States are turning to Mexico to take advantage of its exceptional manufacturing opportunities, transforming the country into a buzzing hotspot. 

One of the top benefits of moving operations to the country is its cost-effective labor expenses. Skilled laborers and technical workers in all levels and expertise cost a fraction of what you’d pay for similar positions and work in the US, yet they produce high-quality work just as efficiently—maybe even with higher value.

If you’re interested in expanding your company to Mexico and are wondering how much it would cost you in terms of wages, check out Tetakawi’s payroll expenses calculator to get an estimate.

Understanding Wages in Mexico

In Mexico, wages are commonly shown as a daily rate (versus a per-hour rate). Still, it’s not unusual for people to talk salaries in terms of monthly payments, with some professionals unable to break down their takeaway at the daily rate. With a bit of math, you can easily calculate per-hour costs, which could be easier to compare to US prices. 

Wages in Mexico are paid for 365 per year, in which employees are required to work forty-eight hours per week. Work time is determined by start and finish times within the day and is usually categorized as either day shift (forty-eight hours per week), mixed shift (forty-five hours per week), and night shift (forty-two hours per week).

What Is the Average Salary in Mexico?

An entry-level manufacturing laborer in Mexico makes approximately $4.70 per hour, about a third of the $7.25 minimum wage rate in the US. It’s a stark contrast to its counterpart across the border; direct manufacturing labor costs an average of $17.42 an hour. The lower salaries apply across the board. From skilled workers to managers, labor expenses come out much cheaper in Mexico versus the US.

Calculating Labor Expenses in Mexico

When calculating labor expenses in Mexico, it’s not enough to focus on base pay as there are other costs to consider. You must also factor in statutory requirements for paid labor, specifically mandatory payments like paid leaves, pension contributions, and the end-of-year bonus (Aguinaldo pay). 

You also need to think about overtime pay where relevant, as well as additional benefits you may want to offer to stay competitive in the hiring market, such as healthcare compensation, transportation allowance, and performance bonuses.

Use Tetakawi’s Payroll Expenses Calculator

Scaling operations to Mexico is a smart choice, but it’s not always so simple to expand an entire system to another country. Shelter service providers like Tetakawi make the transition much more convenient. 

We can help you navigate the whole undertaking, from choosing the right location to complying with local labor and financial laws. One service that you may find particularly helpful is our payroll expenses calculator, which can help you estimate how much you can expect to pay for wages, payroll, bonuses, and more, depending on the specific labor needs of your company.