The lower class consisted of the Mestizos and Mulattos. Mestizos were of peninsulares and Native blood. They were the working class. Mulattos were African Slaves mixed normally with Mestizos and rarely with creoles or peninsulares. They were slightly higher than slaves. The lowest were the captured Aztecs, natives, and slaves from Africa. They were used for labor with no rights. Under the Encomienda system, “labor” was to be treated fairly with shelter, food, and supplies. The goal was to prevent rebellion, but it also decreased revenue compared to alternative forms such as slavery. It was based on the concept of Muslims in Spain where they supplied labor with natives without enslaving them by definition.
Basically, the Encomienda was a system for the colonials in Mexico to define the status of the Indian Population, so it was just glorified social pyramid where the Indians were used as a labor supply. In this process a village or area would be distributed to a person of relatively high rank and the leader of that village would become a puppet of the Spaniards. This method was less profitable than a system such as slavery, but it helped deter rebellion to an extent and helped spread Christianity. It was detrimental in many other ways as well. For example, they could not be sold to others because the Spaniards did not own them, therefore creating less revenue, they did not have inheritance rights after the second generation, and the natives could not move