Living Wage Versus The Minimum Wage In Peru
A Living wage versus the minimum wage is important to everyone, no matter what side of the political fence to stand or lean. This post is not “picking sides” but rather to show the value you, as a client have on our drivers and their families. Trust me, contracting a reliable, punctual and dependable taxi through us is making a difference in the quality of life for many Peruvians, and we’ll detail how and why below. If your goal is to find the place that will add the biggest punch for your dollar keep on reading.
However if you were to believe wageindicator.org you would think all is well in Peru and everyone who makes $256 a month is doing just fine.
So What Is Peru's Minimum Wage in 2020
The actual name for the Peruvian money is called the “Sol”, but often referred to as “un Solcito”. The name was officially changed in 2015. Currently, the Peruvian minimum wage is S/1025 (AKA PEN). Today’s (June 10, 2022) exchange rate would be roughly $272 per month.
While the “cost of living” here is said to be cheaper, Peru like many other countries in going an insanely high inflation period. Cost of living has gone up by at least 20% in the last 2 years alone. And Gasoline prices have doubled since Gringo Taxis was born.
A $272 a month paycheck isn’t near enough to live. In fact I did an interview with International Living about 5 years ago now, although the interview was published about years ago. During the interview, I mentioned finding a decent apartment would run around $240 a month in a more humble part of Lima.
Just the cost of an apartment eats almost 100% of the minimum wage in Lima. There is literally nothing left for anything else. No food, in some cases, no water or electric.
Where The Minimum Wage Goes Wrong
Owning an Airport Taxi business, I’m able to breakdown the actual cost of each trip. This allows me to set our rates so drivers are paid a living wage versus the minimum wage. Most of our drivers own their own vehicles. And with bigger companies taking up to 25% of the drivers income off the top. In the end those drivers can hardly pay their monthly car payment, never mind rent or food. And Airport taxi drivers get the worst of it.
At the Lima Airport the amount you pay is not what the driver will receive. A good day for an Airport Taxi would be 6 trips from the airport and 18 hours of work. If the driver’s paid 45 soles per trip (after he’s paid the business) he could make 270 soles ($75) per day or 8100 ($2240) soles per month. Man, don’t that look good when you now know minimum wage is 1025 soles? Really it’s not too bad if you don’t mind working 18 hours a day 30 days a month.
Remember I said he owns his own car? Well now we get to take out his expenses from that wonderful figure.
How It Works And Why You Should Care
Above I mentioned “a good day” would be 6 trips. However an average day is closer to 4, based on the number of drivers working for the companies at the airport. And most drivers will only work 6 days a week, which would be 25 days a month. We’re now in to the 4500 soles ($1240) per month range. Still looks good on paper right?
40 soles per day parking X 25 days = 1000 soles ($277)
1300 soles car payment ($360)
1500+ soles for Fuel ($398)
750 soles maintenance ($200)
300 soles per month Car wash and disinfection ($80)
25 soles per month Basic Taxi Insurance ($7)
41 soles per month Licensing ($12)
Comparing Family Size In Peru And Other Countries
In 2018 the average Peruvian household size was 3.6 people per household. And in the US the national average was 3.14 per household. While in Europe the 2019 national average was 2.3 per household. If you thought staying alive in your home country was tough on a minimum wage, try living in Peru with between 1/2 to 1.3 more people to care for.
Comparing Our Rate With Your Home Country Rate
Miraflores is 16-20KM or 10-12 miles from the Lima Airport. This is also the most popular area for tourist to go to.
A taxi from JFK airport in NYC to Manhattan is about $56 and the ride is similar in time and distance. I know firsthand, I drove NYC for 20 years and now 7 in Lima. And a trip to Citi Field (Queens NY) is $28 and 8.3 (13.25KM) miles with similar traffic conditions.
Between Heathrow and Central London travel time and rates are 30-60 minutes and £49-£92, again similar time and traffic conditions.
This strikes me as odd that people would think “I’m in Peru so I won’t pay the same rates as back home”. In essence you’re saying, I’ll contribute to the widespread poverty already present in Peru.
Even trips to Paracas Peru are looked at as overpriced when the driver literally drives for 3.5 to 4 hours one way. A trip from JFK to New Jersey would be around $90 (324 soles) and take about 2 hours.
The point here I’m making is that just because you’re in Peru, doesn’t mean our rates are “Gringo Prices” but rather enough to pay a living wage to a Peruvian.
Keep reading to find out why we pay our drivers so well.
Higher Pay Means Safer Drivers
With just the figures I’ve shown, the average Airport Taxi driver makes about minimum wage. And nearly all the money he gets goes back into his vehicle so he can work tomorrow. This is after a 12-18 hour workday! People ask me all the time “how safe is lima”? When a person puts their everything in to work and gets nothing out of it, my only answer can be “depends”. It depends on who you run in to.
This is why we pay our drivers the highest rates in the city. We pay our drivers not only to help them improve their lives, their families lives but also to help keep you safe. When our drivers have a few extra soles in their pockets at the end of the month, there’s no reason for them to even consider having to rip off a client, or not repair and maintain their cars.
With higher pay, our drivers are able to work less hours. They spend more time at home with family, and are all around happier people. This provides you, the best possible ride.
And while our rates may be a bit higher than some of these other flashy websites out there. Our money is reinvested in the local Peruvian economy, as well as in our drivers and their lives. The money is being invested in your safety, through drivers getting enough sleep and still making a living wage. Creating an all around safer, more reliable, more punctual and dependable workforce designed with you in mind. And we continue to hire new drivers. In fact recently we’ve hired on 30 new drivers in Cusco. We’re spreading the wealth amongst some of the poorest people in the country. And in this last year, we’ve implemented a profit sharing plan. And on a side note, I’m not “just the business owner”, I’m also a driver. These drivers could not make enough money to create a website in order to reach out to the world, so we did it for them. Bottom line is, we know you’re a “value shopper” and want to know you’re getting and doing something with your money. You are, you’re helping everyday Peruvians better their lives, while getting the best airport taxis in the country.