A rising tide lifts all boats
In Mexico, the mimimum wage is not calculated by the hour, but by the day. It is supposedly calculated on a “market basket” of the goods and services needed to support a family of four, assuming the worker is employed full time and there are no added expenses. Of course, those calculations are easily manipulated, and people living on the “salario minimo” have never been able to make ends meet. Just as an example, my “pied-a-terre” in Mexico City (which is a maid’s room in someone else’s house) is about 180% of the salario minimo, and my ordinary expenses, not counting “frills” like a cup of coffee, or the telephone bill, are just about the salario mimimo. I suppose with two workers living here (which would be uncomfortable) getting by at the salario mimio it would be possible, but not particularly helpful to the economy as a whole, since we’d not be spending anything outside of immediate household expenses. And, never mind that without paying for a telephone line, and having a computer, I wouldn’t be working in the first place. Everyone recognizes that the wage is much, much too low… that 67 pesos a day (the Mexico City wage, the highest of the regional wages) is at least ten pesos too low, and probably needs to go higher. But even for those like myself, who are earning more (not enough, but that’s another story), and who recognize the need, there is a drawback.
The usual noise made about how a higher mimium wage will cause inflation, is usually silenced by the argument that it also means everyone will spend more. But spending on what? When inflation ran wild here in the 1980s and 90s, the mimium wage calculation didn’t keep up, but it was at least a meaningful number, whereas the number of pesos was not. So, rather than try to change the price of basic government services for things like licences and fines, which would mean endless revisions of the regulations, the prices were set by the miminum wage. A parking ticket, which at 50 pesos would be meaningless when there were 100o pesos to the dollar didn’t mean very much (and it wasn’t even worth offering the officer an “incentive” to resolve the issue) and there was no incentive NOT to illegally park. So… things like fines and license fees were set as multiples of the mimimum wage. And, discovering how much this simplified bookkeeping, so are a lot of salaries … including those of elected officials… and subsidies to political parties. Who seem to see the mimum wage as a number to multiply by a factor of 100 or a 1000 when they aren’t paying a 100 or a 1000 times as much for food, clothing, shelter than the rest of us.
Juliana Fregoso, Si aumenta el salario mínimo, dice la IP, subirán multas, derechos, inflación, y los partidos recibirán más dinero (Sin Embargo, 6 August 2014)