Double-digit minimum salary increases have become a New Year tradition in Mexico in recent times. Since 2018, the minimum daily salary has almost quadrupled in nominal terms, from the miserly 88 pesos (just under $5) granted by the former Enrique Peña Nieto government to today’s 315 pesos ($17.50).
Accounting for official inflation, the latest minimum wage increase will bring the accumulated rise in salaries to 154% in eight years. Yet when the former leftist President Andrés Manuel López Obrador began this process, many opposition politicians, business leaders[the wage increase will cut into our profits!] and economists warned that it would fuel inflation as well as risk higher unemployment.
Neither of these things have come to pass. Today, official unemployment in Mexico is 2.7%, close to its lowest level on record.
In other words, Mexico’s eight year experiment with minimum wage increases has had a significant net positive effect on the incomes of millions of Mexican workers, helping to lift an estimated 13.4 million people out of poverty, without lowering their unemployment prospects.
Mexico’s Consumer Price Index is now at 3.8%, which is one percentage point lower than the level it was at in late 2018, when the minimum daily wage was roughly 70% lower than it is today.
How can the above be?
In 2025, global companies—from tech startups to small manufacturers—are increasingly turning their eyes to Mexico. At the heart of this shift: a unique combination of strategic location, robust nearshoring demand, and record-breaking foreign direct investment.
According to recent data from the Bank of Mexico and the Ministry of Economy, foreign direct investment (FDI) from the United States in Mexico’s manufacturing sector grew by 18% in 2024, reaching a record of over 12 billion dollars.
Mexico has positioned itself as a primary strategic destination for American companies seeking to optimize their supply chains and strengthen their manufacturing capacity.
Beyond operational costs, Mexico stands out for its highly skilled and competitive labor force. The country has invested significantly in technical and professional education, developing a new generation of engineers, technicians, and specialized operators in high-demand areas.
This is particularly evident in key sectors such as automotive, aerospace, electronics, and medical devices, where expertise and precision are essential.
And yes indeed higher China tariffs came with the new US administration.
Much of the growth owes to the phenomenon of “nearshoring” — Chinese companies moving production to Mexico to have tariff-free access to the US market under the USMCA trade deal.
“Even with a 25% tariff on Mexican goods, many companies believe it’s still a better option than manufacturing in China,”
China has chosen Monterrey as the base for China industrialization in Mexico.
