United States Commerce Secretary Wilbur Ross suggested that the Mexican government raise the minimum wage for workers.
Speaking in an interview with CNBC last week, the Trump administration official explained that one of the inherent problems of the North American Free Trade Agreement (NAFTA) is the minimum wage in Mexico and the fact that it hasn’t risen at a pace that it should.
Ostensibly, according to Ross, companies, both foreign and domestic, can take advantage of cheaper labor in Tijuana. This means that labor costs would be far more affordable south of the border than in the U.S.
Here is what he told the news network:
“The theory of NAFTA had been [there would be a] gradual convergence of living standards between Mexico and the United States. That really hasn’t happened on the Mexican side. The minimum wage…has barely gone up in peso terms.”
Does Ross actually believe that the minimum wage is the creator of better living standards? Is the minimum wage the one and only factor to determine a population’s standard of living? Yikes. Let’s just hope that he was too tired on Friday and couldn’t make a better argument.
Nevertheless, Ross iterated the same idea at his confirmation meeting in the Senate:
“The minimum wage in Mexico has barely changed in pesos for quite a few years. And the peso has depreciated quite a lot against the dollar. So on a purchasing power basis, the average Mexican worker is far worse off than he or she was five or 10 years ago. That was not the original intent of NAFTA.”
Is Ross correct about Mexico’s minimum wage? Well, first, the Mexican minimum wage has gone up 11 times since 2009 as it has spiked by roughly 50 percent. Meanwhile, the U.S. minimum wage has not gone up since 2009.
Second, the minimum wage leads to compulsory unemployment. Third, this is just further proof that the Trump administration’s disagreements with NAFTA is not that it isn’t free trade enough but that Trump himself isn’t the one negotiating the terms and conditions of the trade pact.
Simply put: NAFTA isn’t coming to an end and the Trump administration needs a better economic team.