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$2.25/hr to Build a $40,000 Vehicle

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Posted 30 September 2017 - 06:31 AM

So here is how this $2.25-an-hour wage came about. Government records cited by the AP show that in January 2014, when the factory was being discussed, and nearly three years before it would be inaugurated, Volkswagen signed a union contract that specified that wages would range from $1.40 per hour to $4 per hour.


The key, in Mexico’s auto industry, may be the so-called “protection” contracts signed long before plants open. Very few of the current Audi workers ever voted for their union leader, and they won’t get any chance to vote for years.


These “protection” contracts that lock in low wages in advance are part of the condition for investing large amounts of money and building a new plant, and throwing money in various directions except to the future workers at the plant. 


The auto industry has managed to create a low-wage Nirvana for itself in Mexico. The AP describes the workforce this way:

[A] class of workers who are barely getting by, crammed into tiny 500-square-foot apartments in government-subsidized projects that they pay for over decades. Many can’t afford even a used car, taking home as little as $50 per week after deductions for mortgages and cafeteria meals.


These persistently low wages, and the shenanigans used to keep them low, have attracted global automakers, especially since wages have surged in another “cheap-labor” country, China, whose current labor costs in the auto sector far exceed those of 2015 in the chart above.







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