How a Pandemic Changed a Countries’ Labor Market
By Josh N. Garcia
October 15, 2021
6 min read
Eighteen months ago you could hire an outbound telemarketing agent in Mexico for $4 USD per hour. You could hire a Senior Software Engineer for $20 USD per hour. Suddenly, a global pandemic hit, and businesses needed a way to cut costs and realized they could hire anyone in the world and get real-time access through any variety of video platforms. Tech firms and manufacturing companies have been outsourcing for decades, however, mainstream firms have adopted the practice, which has changed the landscape for many countries including Mexico. Granted, salaries continue to be 50%-60% less than salary ranges in the USA or Canada, however, the market has changed, and changed fast. Below are a few factors most closely related to increasing wages in Mexico.
Independent Contractors
This is the single most important factor increasing wages in Mexico. For decades, Mexicans have relied on corporations to provide government subsidized health insurance, mandated housing credits and guaranteed year-end bonuses called aguinaldos. In recent years, as the gig-economy became more relevant, Mexican workers began to take notice and jumped into the gig-market, slowly increasing wages. When many businesses looked to the Phillippines or India to cut costs, others realized Mexico had an educated workforce, who were bilingual and within a 3-hour time window of anywhere in North America.
In early 2020, COVID-19 began to make its impact and suddenly everyone was working remotely. This led to businesses asking why they needed to hire locally when they could hire someone of equal talent for far less money. The gig-economy accelerated at record pace and so did wages in many parts of the world. Suddenly, bilingual professionals in Mexico didn’t need the security of corporations. They didn’t need government health care or credit for housing. They could afford their own private health insurance and could buy a home with a mortgage loan based on their income level.
Based on our first-hand experience, wages have increased at least 25%-30% for many bilingual professionals. American businesses are hiring independent contractors within Mexico at record rates, improving the life of many bilingual professionals and changing the economy across the country.
Native English Speakers
Not all workers are created equal, however. Wages have increased for English speaking residents of Mexico, but not much has changed for Spanish-only citizens. Without getting political, there are millions of native English speakers living in Mexico today. Many were taken to the United States before they could walk and never received the proper documentation to gain legal citizenship. So, they were forced to return to a country they knew little about. Many of these transplants speak better English than Spanish and find themselves lost in a very different World. The remaining population of English-speakers are expats who have chosen Mexico as home, learned English in school or lived in a bilingual environment growing up. Nonetheless, English-speakers in Mexico have boosted salaries for many living in Mexico, but a wage gap still exists between English and Spanish-only speakers
Game-changing Platforms
The amount of technology that has evolved to accelerate the gig-economy is another major factor in salary increases. American businesses have discovered tools to facilitate these hires and are accustomed to paying 50% more for a position locally. Platforms such as Upwork, Fiverr and Deel are just a few gig-related platforms that allow businesses of all sizes to hire anyone in the World. Our current partner Deel ( https://www.letsdeel.com/partners/ventes) allows businesses to hire anyone in the world with fully automated onboarding, a wide range of payroll options and complete legal compliance anywhere in the World. If you’re reading this and interested in 3 months at no cost, please feel free to click the link above to take advantage of our promotional offer. Peronally speaking, Deel has changed the way we do business and I encourage all of my clients to use this game changing platform.
A Rising Minimum Wage
While salaries are increasing in 2nd and 3rd World countries, they’re also increasing in in the United States. Without a federal mandate to increase the minimum wage across the country, states are voluntarily raising their minimum wages themselves. California, Washington State and Massachusetts all have minimum wages near $14 USD per hour. This doesn’t include payroll taxes or insurance required for employers on top of the hourly wage. This easily approaches $18 USD per hour in many states. While the federal minimum wage has held at $7.25 USD for over 10 years, most states average about $12 USD per hour. In sum, rising minimum wages in the USA have led businesses to seek other alternatives close to home but outside the borders. This is where professionals living in Mexico have reaped the rewards. Proximity to the USA and a growing English-speaking population have generated a huge draw for US businesses.
Each of these factors have led to rising wages in Mexico. These factors have helped prop up a Mexican economy and created a better life for many bilingual professional residents. As a business owner living in the United States or Canada there are still many great opportunities to recruit and hire in Mexico. In many cases, saving your business upwards of 50% in labor costs. If you have questions about how to recruit in Mexico or how to make a good hire, please don’t hesitate to contact us at (877) 785-5788 or email us at sales@ventesmexico.com
