HR Glossary

Labor Cost

Table of contents

Labor cost definition

Labor cost refers to the total sum of wages, benefits, taxes and insurance paid to employees by an employer.

what-is-labor-cost

Labor cost definition

Labor cost refers to the total sum of wages, benefits, taxes and insurance paid to employees by an employer.

Labor cost is divided into direct and indirect costs where direct costs include wages for the employees that produce a product while indirect costs are associated with support labor, such as employees who maintain factory equipment.

Labor costs can also be classified as fixed costs or variable expenses.

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