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Japan auto companies triple Mexican pay rather than move to US

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Re: Japan auto companies triple Mexican pay rather than move to US

#71

Post by adventured »

0max wrote: post #34
Aloha wrote: post #30

Earlier quoted context omitted.

It's good for the US to have economically prosperous neighbors too.

hilarious to the point of tears since we've been enabling the opposite for decades

Canada is one of the most affluent, stable, peaceful nations. For 2019 Canada's GDP per capita just barely missed surpassing Germany. They happen to be a prominent neighbor to the US, their primary cities are positioned next to the US border, and they are likely to get a lot wealthier in the coming decades. If the US gets credit for the bad, it also gets credit for the good (which is the part that critics universally evade at all costs).

In GDP per capita Mexico ranks in front of 120 other nations, including: China, Turkey, Brazil, Argentina, Thailand, and just behind Russia. US imports are 1/3 of their economy; we're running a $100 billion trade deficit with Mexico, which is to their benefit. As an American I'm happy that we're doing that, it's to our benefit that Mexico's economy advances. It has the 15th largest economy in the world and continues to gradually climb. That's despite the intense domestic chaos they've been dealing with there the past ~13 years. As a developing nation their long-term economic potential is immense.

Re: Japan auto companies triple Mexican pay rather than move to US

#72

Post by knolax »

Barrin92 wrote: post #16
SpicyLemonZest wrote: post #3

The article is making it sound like some kind of backfire, and I'm not really sure why. It's gotta be good in the long run for US auto workers if their competitors' wages triple.

Because the US now gets no new jobs but the price for the cars will go up as the labour cost increases, proving the very trivial point that tariffs function as a tax on domestic consumers. If the goal of the policy was to redistribute money from Japanese carmakers and American consumers to Mexican factory workers they've done a great job, very altruistic. Also it's quite hilarious how quickly the reputation of the US…

> The US is now being treated like an unreliable country

All countries are unreliable. I'm sure FAANG feels the same about the EU.

Re: Japan auto companies triple Mexican pay rather than move to US

#73

Post by AnthonyMouse »

onion2k wrote: post #28
jonahhorowitz wrote: post #18

> The center also said U.S. car sales will drop by up to 1.3 million units annually due to the Trump administration's trade policy This is incredibly good news, if true. We need to reduce the number of cars in the US if we are going to have any chance of confronting climate change.

Only if there's a corresponding drop in the number of cars in use. It could be that people keep their old, inefficient, polluting cars for on the road for longer rather than replacing it. That would be bad for the environment.

There is some disagreement about whether this is actually the case. It takes a lot of resources to build a new car. Meanwhile the average passenger cars has been above 30MPG for 15 years now and the newer ones aren't dramatically better than that. So you only come out ahead with a new car if you put a lot of miles on it. But then that's still conflating "new" and "efficient" -- a 2004 Prius still gets better mileage than the new car average.

This doesn't apply to electric cars, which do use dramatically less petroleum (i.e. none), but they're mostly already made in the US, so making petrol cars cost more may actually be an environmental advantage because more people will buy electric.

Re: Japan auto companies triple Mexican pay rather than move to US

#74

Post by AnthonyMouse »

thephyber wrote: post #66
AnthonyMouse wrote: post #57

Earlier quoted context omitted.

That's assuming corporations are too dumb to figure out how to get their other costs counted as part of the $16/hour. For example, one of the major costs in the US is employer-subsidized health insurance, and employers subsidize it because it's tax advantaged. If they instead paid the employees more only to have the employees use the money to buy health insurance, the employees would pay more taxes. But they could st…

> And if that got people asking why they pay tax on their health insurance when they buy it themselves, or why health insurance costs so much in the US, all the better. Or it might just lower the compensation package that autoworkers get and make other industries more attractive by comparison. Employees that want to know can already figure out what their employer pays for. Health insurance tax subsidies have massivel…

> Employees that want to know can already figure out what their employer pays for.

That's not how humans work. The fact that information is available on the internet doesn't mean that people are actively going to go out and look it up. But if you send them a huge bill for something every month, they're going to look at it and ask WTF.

Re: Japan auto companies triple Mexican pay rather than move to US

#75

Post by henvic »

phasnox wrote: post #59
erikw wrote: post #6

Wow, this should at least provide for some very interesting natural sociological experiments. For context, I make less than this as a software developer in Chile, and still have no problems saving and living a comfortable lifestyle. This is going to significantly impact the lives of folks working in these factories, and it will be interesting to see how it will affect the individuals, their communities, and the quali…

You are getting payed less than $16/hour?? As a software developer? Man you are getting ripped off. My advice is to seek for opportunities overseas, or even in your country. For context I live in Ecuador.

To give you some context about how migration can impact salary: I made this spreadsheet during 2018 when I was trying to make a case for a raise that never happened. https://drive.google.com/file/d/18D1aAM0bTx4vLSDonpImtIfYR4T...

In 2019 I resigned from my previous employer (an American company growing fast and short of 1000 employees nowadays). I moved to the Netherlands to work on a startup (that pays average for the Netherlands).

If you check my website (https://henvic.dev/) you can see it's not like I was inexperienced.

I was told the major reason why my request for a raise was denied was that my salary was great for where I lived in Brazil (northeast, which is poorer than São Paulo and Rio de Janeiro).

I considered the work I was doing worth way more. I started looking for new opportunities and asked to quit. This is not uncommon at all. Most of my colleagues in the tech field that are average or better have eventually moved abroad for money or started working remotely for a company overseas. Working for a company in a poor country where it has a local presence is almost always a sentence to getting paid less than you're capable of elsewhere or doing remote work.

Re: Japan auto companies triple Mexican pay rather than move to US

#76

Post by thephyber »

cmxch wrote: post #58
ksk wrote: post #29

Earlier quoted context omitted.

Well, nobody is "owed" a job. Markets transform and respond to pressures. When you operate in a saturated market like the US the only line item on the balance sheet that is easy to tackle is labor costs, not revenue or profit. Your customers aren't going to buy products from you because you gave a raise to your janitor instead of replacing them with a roomba (relax, its a joke :P). The China/Walmart economy is here t…

So what do you do for those that end up on the wrong side of the equation, especially those who have been there for a long time?

I don't understand why some HNer is expected to have an answer for this because no part of US society does.

We've underfunded career counseling in public schools for generations. We don't have any healthy career retraining system like other OECD countries do. Unemployment systems in the USA are nearly useless when it comes to retraining employees -- they really just act as job boards. Most states don't seem capable of attracting different industries, so when a batch of jobs leave a region, those employees struggle to find a near replacement. We have massive mental health and addiction problems so companies spend a lot of effort to avoid hiring anyone who might raise these costs for the company.

US society doesn't actually care about employees who don't take care of themselves. It's time we stop pretending like we do and call a spade a spade.

Re: Japan auto companies triple Mexican pay rather than move to US

#77

Post by renewiltord »

gscott wrote: post #20
linuxftw wrote: post #10

Obviously, nobody is going to move a state of the art facility that cost billions just because their labor costs went from 'nothing' to 'almost nothing.' What it will do is prevent more things from leaving the US to go to Mexico. Me being a cynic, I'm fully expecting the employees will have to return some of that cash via forced employee dormitories and such, but we'll see.

Plus paying a person in Mexico $16 an hour is still 50% cheaper then paying an American $16 an hour.

Is that payroll tax and stuff like that? Or something else?

Re: Japan auto companies triple Mexican pay rather than move to US

#78

Post by colechristensen »

valuearb wrote: post #32
colechristensen wrote: post #24

Earlier quoted context omitted.

Raising your neighbor's income means they will import more from you, it's not backfiring, it's working as intended.

But it’s not. It’s funding more robots for the Mexican plants, which means fewer jobs for Mexican auto workers. So some workers will do better, others worse. And American consumers pay higher prices, so they are worse off.

Are the robots cheaper or more expensive than human workers?

There is some broken thinking that high wages will increase consumer cost but replacing humans with cheaper robots won't, cherry-picking armchair cause-and-effect thinking to fit a "this is bad" narrative.

Reducing trade frictions forces economic equality, especially when that reduction is tied towards some equality metric, like wages.

Products being cheap because of economic disparity in trading partners isn't something to celebrate or bemoan the loss of. What is good for our neighbors is good for us. So many people are arguing from both sides at the same time.

Re: Japan auto companies triple Mexican pay rather than move to US

#79

Post by thephyber »

cestith wrote: post #12
samfisher83 wrote: post #4

Earlier quoted context omitted.

Even triple the pay they are making $16 dollars/hour which is less than whatever an american auto worker is going to make.

That's a lot more than other factory workers in Mexico and still more than some non-auto factory workers in the US. If the best factory workers in Mexico all go to the auto factories in droves, the factory base wage eventually goes up there. The competitive advantage for clothing, toys, and furniture factories there eventually diminishes.

> The competitive advantage for clothing, toys, and furniture factories there eventually diminishes.

Perhaps, but Mexico has a ton of advantages that lots of other countries don't. They have cheap labor and can source parts quickly and cheaply from the USA.

Mexico has low-friction trade agreements with something like 40 other countries. In an age where America's government is demanding to renegotiate trade deals and do them all outside the WTO and rejecting all 3+ lateral deals, Mexico's trade policy stability is still an advantage over the current US policies, even if they lose some wage benefits.

Re: Japan auto companies triple Mexican pay rather than move to US

#80

Post by austincheney »

AnthonyMouse wrote: post #54
erikw wrote: post #6

Wow, this should at least provide for some very interesting natural sociological experiments. For context, I make less than this as a software developer in Chile, and still have no problems saving and living a comfortable lifestyle. This is going to significantly impact the lives of folks working in these factories, and it will be interesting to see how it will affect the individuals, their communities, and the quali…

That's assuming it lasts. When you already have a factory in Mexico and now you have to pay them $16/hour, it makes little sense to immediately move it back to the US just in order to save $0 by paying US workers $16/hour instead. But the next thing that happens is that it becomes more cost effective to automate, so you start considering that. Then you don't employ as many people, and they become skilled workers who…

> But the next thing that happens is that it becomes more cost effective to automate, so you start considering that.

Economically that is always the desired direction, but not because people cost too much. Changes to automation are incredibly expensive to build. The benefits to increased automation are increased output volume and improved quality control.

Any cost reductions that arise are almost always completely unintended. To the contrary increased automation actually raises costs directly proportional to changes in market pressure from the increased output volume and any supply chain changes that increase access to the product. You have to consider things like marketing, regulation, distribution, and so forth that do not benefit from the same automation efforts.

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