Mexico Reports Drop in Labor Poverty, Income Disparities

The Labor Poverty Trend Index (ITLP), which tracks the relationship between labor income and the cost of a basic food basket, showed a decline in labor poverty in Mexico from 37.3% in 3Q23 to 35.1% in 3Q24, reports the National Council for Evaluation of Social Development Policy (CONEVAL). This shift reflects improved economic and labor conditions, argues the council.

Labor market improvements in Mexico have contributed to income growth and poverty reduction, though disparities between urban and rural areas persist, found the report. Real per capita labor income rose 7.1% year-over-year, from MX$3,124.26 (US$156) to MX$3,346.45. Meanwhile, urban labor poverty fell by 2.6 percentage points to 30.7%, while rural poverty declined by 1.4 points to 48.5%. Despite these gains, rural areas remain disproportionately affected by labor poverty.

This overall growth masks significant variations across income groups and demographics. The lowest 20% of earners saw only a 1.4% increase, while the highest 20% experienced a 7.7% rise. Nationally, the average monthly labor income was MX$7,397.27. However, a significant gender disparity persists, with men earning MX$8,067.53 compared to MX$6,433.15 for women.

Labor poverty reduction took place despite a 5.9% increase in the cost of the basic food basket, exceeding the average annual inflation rate of 5.0%. Real wage gains helped offset these cost pressures, sustaining household purchasing power, says CONEVAL.

Meanwhile, state-level data reveals uneven progress. Zacatecas, Queretaro, and Hidalgo saw the largest poverty reductions, while Guerrero, San Luis Potosi, and Oaxaca reported increases. Formal workers earned an average of MX$10,583.78 monthly, more than double the MX$5,018.76 earned by informal workers. Year-over-year, formal incomes grew by 7.8%, compared to 4.7% for informal workers.