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.”

Spelling of “Labor” and “Labour”

In Britain, Ireland, Canada, Australia, N. Zealand, India, and most of the Commonwealth countries, people spell the word with a ‘u,’ as in ‘labour.’ In the United States, it is spelled without a ‘u,’ as in ‘labor.’

When political parties include the words ‘Labor’ or ‘Workers’ in their name, the words refer to people who do manual work.

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 definition
In business and economics, the term ‘labor’ always relates to workers, making an effort, or employees’ incomes.

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.

Many other countries, including Australia, Ireland, Jamaica, and New Zealand, also have a Labour Party (with the British spelling).

Labor Markets

Labor markets work on “market forces” just like in the rest of a capitalist economy. Advancements in automation and artificial intelligence are increasingly influencing labor markets, as they alter the demand for various skill sets and redefine roles across industries.

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.

Compound phrases with “Labor”

The word “labor” is central to many compound phrases, particularly in the fields of economics, business, and human resources. These phrases help describe various concepts related to work and employment. Here are six compound phrases that include the word “labor”:

  • Labor Force Participation

The percentage of the population that is either employed or actively seeking employment.
Example: “The government’s new policy aimed to increase labor force participation among young adults.”

  • Labor Market Flexibility

The speed with which labor markets adapt to fluctuations and changes in the economy.
Example: “Labor market flexibility is often seen as key to a country’s economic resilience.”

  • Labor Cost Control

The methods employed by businesses to manage and limit the expenses associated with labor.
Example: “Effective labor cost control can significantly enhance a company’s profitability.”

  • Labor Intensive Process

A process or industry that requires a large amount of labor to produce goods or services.
Example: “Agriculture is traditionally a labor intensive process due to the significant manual work involved.”

  • Labor Union Density

The ratio of workers who are union members to the total number of workers.
Example: “The decline in labor union density has been a topic of much discussion among economists.”

  • Labor Law Compliance

The adherence to laws and regulations governing employment and worker rights.
Example: “The HR department ensures strict labor law compliance to avoid any legal repercussions.”

Derivatives of the root word “Labor”

The root word “labor” is integral to a variety of words that articulate concepts related to work, both in physical and broader economic contexts. Here are derivatives of “labor” spanning different parts of speech (verbs, nouns, adjectives, and adverbs), each with a brief definition and an example in use:

  • Laborer (noun)

A person engaged in physical work.
Example: “The laborer started his day early, ready for the construction work ahead.”

  • Laboriousness (noun)

The state of requiring considerable time and effort.
Example: “The laboriousness of the project was evident in its years-long timeline.”

  • Laboriousness (noun)

The quality of being characterized by or indicative of hard work.
Example: “The laboriousness of the task didn’t deter her; she was determined to complete it.”

  • Labor (verb)

To work hard; to make great effort.
Example: “He labored through the night to finish the report on time.”

  • Labor (verb)

To proceed with difficulty.
Example: “The old truck labored up the steep hill.”

  • Laborious (adjective)

Requiring much work, exertion, or perseverance.
Example: “The workers engaged in laborious tasks, undeterred by the heat.”

  • Labored (adjective)

Done or produced with effort and difficulty.
Example: “Her breathing was labored after the long climb.”

  • Laboriously (adverb)

In a way that shows hard work; industriously.
Example: “She worked laboriously to learn the new skills required for her job.”

2 Videos

These two educational video presentations, from our sister YouTube channel – Marketing Business Network, explain what ‘Labor’ and ‘Unskilled Labor’ mean using simple, straightforward, and easy-to-understand language and examples.

  • What is Labor?

  • What is Unskilled Labor?