ˈleib.r̩ ˈkɑːsts / Labor Costs
Labor costs are essential operating costs that cover the total cost of labor in an organization.Aside from the wages paid to the workforce, they include payroll taxes and employee benefits such as medical assistance, retirement plan, and life insurance.Labor costs are classified into two: direct and indirect.Direct labor costs consist of salaries and benefits given to workers involved in business operations.For example, a manufacturing company's assembly line workers and a restaurant's kitchen staff constitute the respective business's direct labor costs.On the other hand, indirect labor costs cover the salaries and benefits of employees who are not involved in business operations. These workers support direct labor by working backstage.Take for example employees in the human resources (HR) and finance departments. Their compensation makes up a company's indirect labor costs.
