page_title: Effects of NAFTA on Mexico
section_title: Employment and Wages
hierarchical_section_title: Effects of NAFTA on Mexico / Employment and Wages
caption_attribution_description: English: Map showing the percentage of people living in poverty under the Mexican poverty line as of 2012.
context_page_description: The North American Free Trade Agreement of 1994's effects on Mexico have long been overshadowed by the debate on the Agreement's effects on the economy of the United States. As a kind partner in the agreement, the effects that NAFTA has had on the Mexican economy is essential to understanding NAFTA on a whole. A key factor in this discussion is the way the Agreement was presented to Mexico; namely, that it would increase development of the Mexican economy by providing more middle class jobs that would enable more Mexicans to lift themselves out of the lower classes. Thus, wages, employment, attitudes, and migration all present essential areas of analyses to understand effects NAFTA has had on the Mexican economy. The overall economic effects of NAFTA on the Mexican economy have been mild in light of the promises made about the deal when it was being negotiated. Economic growth has been steady at around two percent, but that growth is far from the growth the deal was supposed to bring. NAFTA has had a mild effect on employment, and wages have largely remained static over the years that NAFTA has been in place.
context_section_description: Overall, the effects of NAFTA on employment in Mexico have been mild. While changes in employment have occurred in Mexico since the passage of the Act, a variety of factors may have played a role in changes in employment. Upon passage, NAFTA did bring benefits to Mexico, such as more private investment, but it failed initially to create the jobs that were promised. NAFTA was passed during a time of recession in Mexico, which contributed to the minimal effect of the Act. Additionally, liberalization of trade as a result of the Act contributed to the loss of "nearly two million" agricultural jobs as a result of competition from the highly subsidized U.S. agricultural industry. Overall, unemployment in Mexico rose following the passage of NAFTA, largely due to the increased competition from United States agriculture. During the time following the passage of NAFTA, internal manufacturing employment fell by 44,000 while employment at foreign-owned manufacturing firms grew by approximately half a million jobs. Overall employment growth remained sluggish following the passage of NAFTA.  Additionally, the opening up of the Mexican market decreased internal industrial production, as more international firms imported cheaper components into Mexico to use at assembly plants; despite increased manufacturing, firms used fewer Mexican components. Labor productivity growth has remained low, due largely in part to the dominance of foreign driven manufacturing and the stable but low wages that comes with manufacturing jobs.
  The labor side agreement within NAFTA also affected the ability of workers to organize into unions, which in turn affected the quality of work available for workers. This agreement, along with the rest of NAFTA, made it harder for the Mexican government to neglect following its own labor laws. Furthermore, the passage of NAFTA made it advantageous for established factories and manufacturing plants to move from southern and central Mexico to northern Mexico closer to the border where collective bargaining was harder due to migration and ease of recruitment for low-wage jobs. Overall, unionization amongst the working population has decreased from 22.4 percent in the early 1990s to 13 percent in 2012.
  Wages for workers at jobs made possible by NAFTA have largely remained lower than at equivalent jobs in the United States. By permanently tying Mexican economic growth to an export-heavy model, new jobs created under NAFTA have largely been in the low-wage manufacturing sector, with real manufacturing wages falling to 12 percent below the 1994 level by 2002. Economists in Mexico have argued that the growth and higher salaries that the Act should have created have failed to materialize for the workers of Mexico. Wages in Mexico have stagnated as well in the years following the passage of NAFTA, and inequality in the country still remains high, a trend that mirrors the economic trends in the United States. Overall, new income is distributed upwards, so new wealth is not distributed to the vast majority of Mexican workers. Due to this phenomenon, those who would benefit the most by expressing themselves politically face increased barriers to entry into the political system due to social isolation and lack of influence through wealth.
caption: This image shows the percentage of people living in poverty as of 2012 on a state-by-state basis. Consistent with internal economic migration patterns, poverty is more concentrated in regions farther away from the U.S. border.
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