Last week, I took my daughter to the pediatrician. When we started taking her there, the fee was 600 pesos: pricey for Mexico, but doable for someone like me and enough other people to keep him busy and in business.
Last week, it had gone up to 850 pesos. As I paid, I chatted with the secretary. “Yes, prices of everything are going up so much, aren’t they?” she said.
“They really are … in fact, I’d say everything has gone up — except for my salary!” I replied. She had a hearty laugh and nodded, and all I can say is that I hope that hasn’t been her particular situation.
“Salary” is a stretch. Like many people both here and in the United States, I don’t receive a salary — and the benefits that the word implies — from anywhere these days. My choices are to work for companies that prefer to save money by classifying its workers as independent contractors or to not work at all. (Okay, fine; or I could work for a salary locally where, in my city, most employers consider themselves extremely generous for offering 6,000 pesos a month for a demanding full-time job — notably almost 2,000 pesos more a month than the new minimum wage will be once it’s increased.)
Using independent contractors is a strategy that saves a lot of money for the company by first passing the risks of fluctuation in demand to the workers, rather than being absorbed by the company itself. (“I mean I’d love to give you some hours, but we just don’t have that many customers right now. What can we do, right?”) Secondly, this strategy saves them from having to pay taxes on the worker.
In Mexico, salaried workers are also entitled by law to social security benefits, vacation time and pay, holiday bonuses, contributions to a housing credit fund, and antiquity, meaning that later benefits will be calculated based on how long they’ve officially worked there.
Obviously hiring people por honorarios (by fees) is the more attractive money-saving choice. The usual assumption here is that people who work this way are highly skilled professionals who charge hefty sums of money in exchange for their services and therefore have the extra money and time to arrange for their own benefits.
The reality is that while they may very well be highly skilled, potential employers say, “This is what we pay for this service; take it or leave it, plus there’s no guarantee of consistent work, so keep that in mind.” Meanwhile, the workers live from unsecured paycheck to unsecured paycheck — usually from several employers at once — and then pay a higher percentage of taxes at the end of the year on those unsecured earnings than salaried workers do on theirs.
It’s a huge, gigantic loophole that’s quickly becoming the norm on both sides of the border, and companies are for the most part totally getting away with it. What worker is going to blow the whistle, after all, and then be left without a job, not to mention possibly blackballed in their industry?
On the one hand, it’s not always that terrible of a deal. In my own case, I get paid fairly well (for Mexico, anyway) and with my kid still mostly at home, I can get to my work when I get to it.
But I’m also extra lucky: earnings that would keep me under the poverty line in the U.S. afford me a fairly comfortable, if not precarious, middle-class lifestyle in Mexico. I’ve “gamed” the system (can you call it that if you’re not actually a real economic winner?) by insisting on the minimum of U.S. wages online while living in a place considerably cheaper than the United States.
On the other hand, the absence of any kind of security — will there be work after this project is over? Will I be able to survive if I have to suddenly take time off to get my appendix out or something? Will this person I wrote an article for stop ghosting me now that I’ve sent the rough draft? — has me in a constant state of anxiety. Throw in some unexpected (and much higher-than-usual) medical expenses from the past few weeks, and I’m positively spinning.
I know I’m not alone there — on either side of the border.
Prices for everything are going up. Even with my particular advantages, I’m starting to feel the squeeze. Inflation in Mexico is up a record 7% this month, and the money that used to stretch quite a bit is rather suddenly no longer going nearly as far.
It’s 800 pesos here, 1,000 pesos there, another 850 here, 2,000 over here that you weren’t expecting, then 500 pesos at the store when it’s usually 300 … Pretty soon, you’re all pesoed out.
Wages for salaried workers in Mexico will soon be going up, which I applaud. For the millions of informal workers and those who work on contract, the jury’s out — and I’m not all that optimistic.
When people are suddenly spending a lot more money on the same things, they want to hold on to their money and save anywhere they’re able to. And keeping wages paid steady (and reducing hours, if you’re able to) is an easy way to do that because jobs are scarce enough that most people that need them aren’t just going to walk away and not eat.
It’s a tricky combination. And while I’ll freely admit that I don’t understand economics at all (money is symbolic and we collectively choose what value to give it – so why do we put ourselves through this?), I understand the social effects of economic need on a visceral level.