Is paying higher wages bad for Mexican workers?

San Miguel is increasingly pricey but expat generosity is hardly the chief culprit

Last Sunday Stew and I stopped at Querétaro’s “Mercado de Flores,” a hangar-size paradise of all things gardening located next to the city cemetery, that sells plants, pots and other supplies at noticeable lower prices than nurseries in San Miguel. If you like gardening as much as we do, it’s tough not to walk away with a trunkful of goodies.

On Monday I showed my gardener Félix a combination pot and iron stand, plus a large indoor plant and a bag of soil, that we had bought for about $400 pesos. The same would have cost at least as much as $500 in San Miguel, I noted, and we would have had to visit two or three nurseries before assembling the pieces we wanted.

Félix shook his head disapprovingly and groused that the large number of foreigners moving into San Miguel are unwittingly driving up the cost of everything, either because we are being overcharged, or just don’t know how much things should cost. That’s true: You can’t haggle over the price of avocadoes when there are no prices posted anywhere at the produce market and you don’t speak Spanish anyway.

Coincidentally, a January 7 opinion column by Sara DeVries in the webzine Mexico Daily News concurred with Félix, namely, that an influx of foreign residents with pocketfuls of dollars tended to inflate living costs and make life more difficult for local folk.

“[D]on’t vastly overpay for goods and services. You may think you’re extra generous, but the effect of too many people doing that is to price out everyone else … turning many goods and services that locals could access before into hard-to-have luxuries,” DeVries wrote.

My new pot and plant. Cat not included.

The Civil List, the local internet bulletin board picked up the thread and several commenters chided fellow expat for paying workers more than the normal norms.

Civil Lister Jess Rabinowitz wrote, “Inflating wages beyond what the true cost of living may seem generous to someone, but it is hurting others as they struggle to deal with the increased cost of living…”

Living costs in San Miguel undoubtedly have risen since my husband and I moved here 17 years ago, yet to blame the trend wholly, or even partially, on profligate gringos throwing money around is grossly reductionist.

A few global facts. “The inflation rate in Mexico has soared from 3.4 percent in 2020 to 8.03 percent in 2022, the highest figure of the last 22 years” according to one source. Most affected by the inflation surge were “most basic goods and services, like food, electricity or water, due to decreasing purchasing power” of the peso (although the peso’s value has gone up slightly over the past few days.)

The price of groceries has gone up sharply but that’s a national trend rather than a particular San Miguel problem attributable to expats clamoring for gluten-free crackers at Mega or French raclette cheese at Luna de Queso.

Besides, it’s good to remember that Americans on Social Security, which is the primary source of income for many expats, just raised benefits by eight percent, precisely to compensate for inflation in the U.S.

In particular, the price of gasoline in San Miguel now is about twice as high as in Texas, and that’s set nationally by Pemex, the monstrously mismanaged, government-owned oil monopoly. High gasoline prices are notoriously regressive because they impact the working poor disproportionately.

Such gouging has nothing to do with expats fueling up, or buying, fancy new cars, which by the way, have identical sticker prices whether you buy your Chevy Colorado in San Miguel or Irapuato, thanks to another Mexican monopolistic arrangement.

A far more immediate cause for San Miguel’s rising costs beyond other localities has to be the tsunami of Mexican nationals flooding the city, visiting on weekends, arranging destination weddings or buying property, from cookie-cutter homes in subdivisions with hundreds of units, to multi-million-dollar mansions in gated vineyards that have become ubiquitous on all sides of San Miguel. Some cynics attribute these mega-investments to narco-tainted money, but hey, if there’s a new goose in town laying golden eggs no one is going to question whence it came.

Stew, some friends and I have had lunch at a couple of these vineyards—a sign at the entrance at one warns that armed bodyguards are not allowed on the property—and found extensive facilities that included chapels for weddings, club houses, vast manicured lawns, artificial lakes, wine-bottling operations, a couple of pricey restaurants and huge homes on hectare-sized lots. And not a gringo in sight.

This sudden flood of cash from wherever undoubtedly has an impact on the price of homes, land and facilities such as restaurants to accommodate the newcomers. Stew and I have noticed that restaurant prices in San Miguel may be surpassing those in Querétaro or even Mexico City. Restaurateurs we have spoken to cite increasing rents for the pricier menus.

On the other hand, the flurry of construction of thousands of homes has to benefit the working San Miguelenses who for years have barely eked out a living in the building trades and suddenly have steady jobs with perhaps higher wages. And the same for chambermaids and waiters at new hotels and other low-skill jobs. That’s all good, no?

In addition, the inpouring of tax revenue to local government, even with deductions for “shrinkage,” has yielded a myriad public works projects. The entrance from Querétaro, for instance, for years a forgettable stretch of highway, now is festooned with dozens of trees, garden flowers and even traffic lights. Welcome to the new San Miguel.

Yet while all these new monies can’t help but stimulate demand and a rise in prices, which as usual most affects the slice of the population with limited incomes.

But breast-beating and urging expats to keep from bumping up the meager wages or María the housekeeper or Jorge the gardener doesn’t make sense. Foreign residents no longer have the outsize impact on the local economy they once had, and to chisel on what we pay those most affected by inflation is disingenuous if not mean-spirited.

For our part, Stew and I are generous with what we pay the workers but hardly drive around throwing pesos out the window, à la Evita Perón. We try to compensate for the rise in the cost of living, and yes, regularly remind ourselves that “there for the grace of God” we go, vis-à-vis the poorer, much poorer, folks all around us.

13 thoughts on “Is paying higher wages bad for Mexican workers?

  1. This is a never ending debate. Some folk believe that they should pay a little more because they can afford it and it makes a difference. I reckon they should do so. Others believe that they should pay the same prices as everyone else in Mexico. And I reckon they should do so.

    Twasn’t a debate I ever worried about. I worked in Mexico, was paid in pesos and I was never about to start paying a Gringo Tax. Every now and then a street vendor would look at my pale pasty face and try and charge me double for a cigarro suelto. So I’d just buy from the next guy, 3 feet along…


    1. Gary: You need to write a book about your travels around the world. You were working in Mexico? Doing what? Who looked after the British railroad system while you were away? As for your cigarro purchases, imagine how much money you would have saved if you had quit earlier.


      1. I’m not sure I’ve done quite enough to be ‘book-worthy’ yet. As I understand it, the world has had more than enough books about Brits who’ve moved your side of the pond anyway!

        I lived in Mexico for six years, Al. Teaching English.


    1. As you probably know, Mexico Highway 57 is under construction the whole length of Queretaro and traffic is pretty screwed up. So plan how you are going to get to this place before you reach Queretaro (I think you can use Bernardo Quintana, past Costco, with the fewest problems), and definitely go on a Sunday, when there is hardly any traffic. Weekdays are the worst, and Friday is the pits.


  2. norm

    on profligate gringos throwing money around is grossly reductionist.
    a very good line, that one.

    One only has to read a little economic news from around the world to see that Mexico has done very well in the current world economic fandango. Japan has fared better but Mexico is in there at the top of the tables. Its money has held up well against the US dollar, I saw the Peso at under 19 to the USD yesterday. That is better than a year ago, by about 5%-that in a time of world inflation, a true placard that is hard not to notice.
    Your comments about wealthy nationals flooding the area from areas that have a higher cost of living would seem more likely to be a cause of the rising local wages and prices, with the gringos just aggravating the price structure. Tell your gardener that it is the price of progress, if we can call people living and eating better progress because more and better work does just that.


  3. Creigh Gordon

    Eh, any extra money you spend is extra money to be passed around. And lacking full employment of economic resources (an unlikely situation), someone will see an opportunity to increase supply to meet demand, which should work against price increases.


    1. Thank you for your comment. The problem that is not so neatly resolved is income inequality which in Mexico is dire. We live near Queretaro whose economic boom doesn’t seem to affect the vast underclass in the campo.


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