Wage Disparities In NAFTA Nations

With the signing of the North American Free Trade Agreement (NAFTA), Canada, the United States and Mexico entered into an international experiment in economics amid a cloud of controversy that still lingers. Central to the controversy are the disparities in wages that exist among workers in the signing countries. Wage surveys completed by Western Mine Engineering show the degree of disparity that exists among the mining industries of those three countries. Labor costs constitute 30% to 50% of operating costs. So these wage differences are a matter of interest to the mining industry. It is unclear how much of a factor they are in determining where companies search for and develop new mines. That depends on where minable deposits are expected to be found. However, a deposit that may not be minable in the United States or Canada may be minable in Mexico because of lower labor costs. Some adjustments are anticipated for the Mexican mining industry if and when its wages begin to approach comparability with US and Canadian wages. Table 1 combines the results of four recent surveys. It lists benchmark wages for mining job titles common to all the countries. About 220 mines are covered by the combined surveys. Canadian miners' wages, converted to US dollars, are typically 75% to 95% of US wages, while Mexican miners' wages are less than 10% of those in the United States. Table 1 also shows that wage disparities are not confined to international borders. In fact, the difference in average wages between the US coal industry and the US metal and industrial mineral industries is greater than between the Canadian and the US mining industries overall. Table 2 shows that managerial, technical and administrative salaries show similar, but less pronounced differences among the three countries. Salaried personnel at Canadian mines earn 80% to 90% as much as their US counterparts, while those in Mexico earn 20% to 30% as much. Here again, average US coal salaries exceed average salaries for the US metal and industrial mineral industries.