Labor – definition and meaning
Labor is the effort that people contribute to the production of products and services. When it means workers, we consider them collectively. It also means work, especially physical work. For example, if I say “The repairs cost me $40 plus $20 for labor,” the term refers to paying workers.
The term may also refer to the process of childbirth, i.e., when uterine contractions begin until the baby is born. It is the process by which the placenta and the fetus leave the uterus.
As a verb, it means to make a great effort, i.e., to work hard. If I say “He labored from dawn to dusk,” it means he worked hard all day. The verb also means to do unskilled work. If I say “Harry supplemented his income by laboring,” I mean he did unskilled manual work.
When two people or teams are competing, the one that is laboring is struggling. For example: “Despite laboring for long periods, Barcelona’s skills and determination were just too much for Real Madrid.”
In Britain, Ireland, and most of the Commonwealth countries, people spell the word with a ‘u,’ as in ‘labour.’
According to Collins dictionary, the term means:
“1. Physical or mental exertion. 2. A specific task. 3. All wage-earning workers as a group. 4. All manual workers whose work is characterized largely by physical exertion.”
“5. Labor unions collectively. 6. The work accomplished by or the role in production of all workers, esp. workers for wages. 7. The process or period of childbirth.”
This article focuses on the meaning of the term in economics and business.
Labor – a factor of production
Factors of production are the building blocks or elements we use to produce products and services. We divide them into four categories: land, labor, capital, and entrepreneurship.
According to the Federal Reserve Bank of St. Louis, it is the second factor of production. It is the effort that we contribute to the production of goods and services.
Labor resources include the work that the waiter in the restaurant you went to did. It also includes the work that the engineer who designed a town’s buses did.
In fact, any person who has ever received payment for a job has contributed labor resources. They have specifically contributed those resources to the production of products and services.
The Federal Reserve Bank of St. Louis says:
“The income earned by labor resources is called wages and is the largest source of income for most people.”
Direct and indirect
The people who work in a company but do not make things that the company sells are ‘indirect labor.’ For example, accountants, janitors, and administration personnel are not actively involved in converting materials into finished products. They play a supporting role.
Assembly line workers, on the other hand, make things. They actively work in converting materials into finished products, i.e., products that the company sells. Therefore, assembly line workers are direct labor.
What is labor economics?
It is the study of the labor force, specifically as an element in the production process.
The labor force consists of people who work for gain, such as employers, employees, and self-employed individuals. It also includes unemployed people who are looking for a job.
Labor economics looks at the supplier of labor services as well as the demanders of those services. In other words, it looks at the workers and employers respectively. Specifically, it tries to understand the resulting pattern of employment, wages, and income.
The Labour Party
The Labour Party is a British center-left, political party. It is one of the two main political parties in the United Kingdom. Its rival is the Conservative Party.
The Labour Party describes itself as a broad church, which brings together trade-unionists, social democrats, and socialists.
Although Britons say it is a left-wing party, it does not favor a communist system. The Labour party believes in a mixed economy.
A mixed economy is a free-market capitalist economy with some government intervention. Labour supporters want more government intervention than the Conservatives do.
However, following the 2007/8 global financial crisis, the Conservatives intervened in a big way by bailing out banks.
Video – Labor Markets
Labor markets work on market forces just like in the rest of a capitalist economy. Market forces are the forces of supply and demand, which in a capitalist economy determine the price of goods. When demand goes up faster than supply, prices rise. However, when supply grows faster than demand, prices fall.
In many countries, there is one feature in the job market which has nothing to do with market forces. That one thing is the compulsory minimum wage.