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When analyzing the impact on the economy of minimum wage increases, which have been implemented since Morena entered the federal government, this can only be done by correlating them with increases in consumer price inflation. As I have mentioned in previous notes, the National Consumer Price Index (INPC) is NOT a good indicator of price increases for the population.
This is because the basket used for this measurement only includes "popular" consumer items, as it is designed to be representative of the consumption of a household with a fairly low "average" income. It is also because the federal government actively seeks to control price increases for some of these items in order to mitigate inflation.
The mechanism by which higher wages are passed on to consumer prices must come from the effect of higher production costs associated with labor payments, in the percentage that they represent within the total cost.
If we review the increases decreed to the minimum wage, which was $88.36 pesos per day at the end of 2018, by 2026 it will be $305.04 pesos per day, a 3.6-fold increase, meaning that the minimum wage has increased by 260% in seven years, with no apparent impact on consumer prices.
The explanation for this, in addition to the fact that the INPC only records increases in very basic products.
This is because almost no one earned minimum wage in 2018, and reviewing the contribution wage data of workers registered with the IMSS (Mexican Social Security Institute), it was found that only 0.3% of all insured workers contributed at minimum wage, and this was because they worked reduced hours, not because they actually earned minimum wage, since we all knew that no one could live on that wage.
Like previous governments, which experienced the currency crises of the 1980s and 1995, used the minimum wage as an anti-inflationary "anchor," its value lost significant purchasing power, to the extent that it became unenforceable, since no one was hired for that wage because it was not enough to eat.
It was known that it needed to be increased significantly in order to truly be a minimum wage again, but the minimum wage is used to determine many other things, such as fines, payment of fees, etc.
It required that these charges first be "delinked," which was achieved with the establishment of the Measurement and Update Unit (UMA), which began in 2016 to delink the minimum wage from these charges so that it could be increased without automatically increasing these charges.
Technically, therefore, the minimum wage could have been increased without any problems since 2017.
Technically, therefore, the minimum wage could have been increased without any problems since 2017.
But for some reason, the Peña Nieto administration did not do so, and López Obrador took advantage of this, initiating sharp increases to the minimum wage starting in 2019.
As already mentioned, in 2018 no one really earned the minimum wage, so the first increases did not have a significant impact on labor costs. However, as the increases continued year after year, even exceeding 20%, they ended up impacting employers, and the creation of new formal jobs began to decline, while informal employment began to grow.
In fact, during 2024 and 2025, something unprecedented in the history of the IMSS occurred: the number of employers fell for two consecutive years, something that had not happened even during the 2008 economic crisis or the pandemic, an event that should have a positive correlation with increases in the minimum wage.
In addition, the momentum in the creation of new formal jobs affiliated with the IMSS has lost significant momentum since López Obrador's six-year term, worsening in the last two years, in 2024 and 2025.
Where the creation of new formal jobs affiliated with the IMSS has been only 214,000 and 270,000 new jobs, averaging less than 350 new jobs per year during Morena's seven years in government, when the growth of the workforce demands no less than 750,000 new jobs annually.
This shows that boasting about the low open unemployment rate recorded by INEGI is a false achievement, since most of the new jobs are being generated in the informal economy, largely due to the high costs of formal employment, driven by increases in the minimum wage.
Certainly, the decline in investment and the near-zero growth of the economy also contribute to the low creation of new jobs, but the transfer of workers to the informal economy and the reduction in the number of employers can only be explained by the high cost of formal employment and increases in the minimum wage.
Without a doubt, the minimum wage was lagging behind in terms of purchasing power.
But not by 260%, perhaps by 100%, so raising the increases to those percentages undoubtedly has a negative impact on labor costs.
Finally, the percentage of labor's share of GDP, which was 26.7% in 2018, will reach 30.4% by 2025. Therefore, increases to the minimum wage have, in some way, pushed up all wages, confirming the rising cost of labor, which is not associated with higher productivity.
Economic theory states that wages should be equal to the marginal value of labor, and setting them by decree has never been advisable, as it ultimately harms workers if wages are not linked to productivity.
This seems to be happening already in Mexico, taking economic populism to undesirable levels.
