We Can’t Bridge the U.S.-Mexico Wage Gap Without Supporting Organizing in Mexico

The Mexican government is failing to prosecute violent retaliation and threats against workers who organize, says a new report, putting Mexico out of compliance with its trade agreement with the U.S. and Canada.

The report lists nine separate organizing campaigns in which threats were made against workers: in each instance, the authors found “little evidence of investigation or prosecution by the authorities.”

The report was authored by the Independent Mexico Labor Expert Board (IMLEB), set up by the U.S. Congress under the United States-Mexico-Canada Agreement and tasked with reviewing the implementation of Mexico’s labor reforms.

The USMCA, signed into law in 2020, was modeled on and replaced the North American Free Trade Agreement, which had gutted wages and pitted workers against each other while employers made out like bandits. In the first decade after NAFTA went into effect in 1994, 850,000 U.S. jobs were lost to outsourcing. Mexico, meanwhile, has become one of the world’s top vehicle-producing countries, but its auto workers are among the lowest-paid.

But in an important improvement over NAFTA, the USMCA mandated labor law reforms in Mexico that independent union activists had fought for for decades, sparking hope that the new agreement would help workers in the country raise standards.

The reforms established labor courts, supplanting arbitration boards that had been notorious for colluding with employers and sham unions.

Votes were mandated on all existing collective bargaining agreements, in an effort to help workers rid themselves of pro-employer “protection contracts” that lock in low wages and lock out genuine unions. Mexico’s Secretary of Labor estimated that these accounted for 80 to 85 percent of all union contracts prior to the reform.

It also introduced a first-of-its-kind rapid-response mechanism, which allows unions and workers to bring complaints against employers who violate Mexican workers’ right to organize. If a facility is found to be violating workers’ rights, it faces sanctions and may ultimately lose access to the U.S. market.

The mechanism has become a critical tool to enforce labor rights. It has benefited an estimated 42,000 workers, delivered nearly $6 million in back pay and other benefits, and given independent unions recourse against intimidation by unscrupulous employers and company unions.

FIGHTING DESPITE TERROR

These were critical improvements, but they have not led to the explosion in independent union organizing that many union activists had hoped for. Protection unions remain in control of most contracts.

The contract legitimation process was fraught with issues: incumbent unions ran the votes with minimal, if any, government oversight, and instances of coercion, bribery, and the spreading of lies that workers would lose benefits if they voted no were reported across the country. In the four-year period ending in July 2023, during which all existing contracts had to be put up for legitimation votes, workers approved 30,536 contracts and only rejected 663. Given these issues, the United Auto Workers is now calling for all contracts to be put up for legitimation votes again.

The USMCA has also not cut down on the wage gap between U.S. workers and their Mexican peers. On average, a U.S. auto worker makes about $35.30 per hour. Though their work is largely the same, Mexican auto workers make about $5.70, after decades of government collusion in wage suppression.

To this day, even workers in democratic, independent unions find themselves constrained at the bargaining table, since judges can rule a strike illegal if they deem labor’s demands to be unreasonable. In practice, the IMLEB report found, the line for many is capped at “inflation plus 1 percent.” Retaliation against workers seeking to organize remains common. There have been reported instances of violence or threats against workers in nearly every rapid response mechanism case, the report finds, including at large multinational employers like General Motors and French multinational Saint-Gobain.

Workers must face down threats not only from their employers, but also often from pro-boss protection unions that exist only to stave off true union representation.

In 2022, on the eve of a union election at a General Motors plant in Silao, Guanajuato, three people in a pickup truck with the license plates removed showed up to threaten the leader of the independent union SINTTIA at her home. Workers were also offered bribes to vote for a pro-employer union.

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Despite these tactics, the Silao GM workers voted by a landslide to affiliate with SINTTIA, and have gone on to win record-setting contracts in the industry. But their case is an outlier. More often than not, intimidation chills an organizing campaign—whether the threat is job loss or physical violence.

Mexico is also failing to impose sanctions when workers’ labor rights are violated more widely, the report found. Though the text of the USMCA expressly requires that the Federal Center for Conciliation and Labor Registry have the authority to impose sanctions, the center itself has argued that it is unclear if it has the authority to do so under Mexican law.

Employers flagrantly breach their obligations with few consequences. Auto parts supplier VU Manufacturing was twice investigated for alleged labor violations at its Coahuila facility.

Rather than comply with the terms of a mediation plan agreed to by the U.S. and Mexican governments, the company simply shut down its facility. Union supporters have since been blacklisted.

“The problem is not the law,” said Willebaldo Gómez Zuppa, an advisor to SINTTIA. “The problem is its enforcement.”

A HIGH-STAKES REVIEW

The USMCA doesn't expire until 2036, but it is up for review in July 2026, when the U.S., Mexico, and Canada will consider extending it longer. If they don’t, it will be subject to annual reviews by the three countries for the remaining 10 years.

Trump, who negotiated the USMCA during his first term and once called it “the best agreement we’ve ever made,” has floated the idea of supplanting the agreement with bilateral deals. Tariffs imposed by his administration, under the guise of a national security exemption, have angered Mexican and Canadian leaders and put manufacturers on edge.

Unions are seeking to influence the upcoming negotiations to strengthen workers’ rights across the continent.

A group of Mexican independent unions, including the unions at Audi and Volkswagen, and the UAW each issued their own recommendations in October. Both groups advocate for a continental wage floor in the auto industry—also a recommendation made in the IMLEB report. The Mexican unions advocate for a starting floor of $16 (U.S.) per hour, phased in over five years. Currently, the USMCA requires that 40 to 45 percent of the content of a vehicle be made by workers earning this amount to qualify for preferential tariff treatment.

While the UAW does not specify a specific minimum wage, its letter notes that addressing wage suppression in Mexico would disincentivize offshoring and create “billions of dollars in new working-class purchasing power,” which could help jump-start demand for vehicles in Mexico.

The unions and IMLEB also recommend improvements to the rapid-response mechanism, which has been the most effective means for Mexican workers to enforce their rights. These include expanding it to cover blacklisting and bargaining in bad faith, and to cover agricultural workers and workers in the gig economy.

The UAW and the Mexican unions argue that the mechanism should extend to workers in the U.S. and Canada, too. An expansion would mean that a company found to be violating U.S. workers’ right to organize—for instance, Mercedes in Alabama—could lose access to the Canadian and Mexican markets.

A TRI-NATIONAL COUNCIL

In order to jointly formulate language and recommendations, the UAW is calling for the convening of a tri-national labor council of unions in strategic sectors. This will require speedy action from unions in all three countries, and a willingness to come together despite disagreements over issues like tariffs, which the UAW has backed..

Mexican workers still have a long road ahead to enforce their rights and build genuine unions. “Legal reforms alone are inadequate to produce a democratic transformation,” the IMLEB report reads. “It will take a concerted effort by democratic unions and progressive political leaders in all of the USMCA countries… to accomplish these changes.” Workers across North America have a lot at stake.