Labor Costs

Labor costs are those expenses incurred by a new venture in the acquisition, development, engagement, and disengagement of the human capital necessary for its current and future operations. It is useful to think of labor costs as falling into three major categories—direct, indirect, and overhead. Direct labor costs usually refer to payroll-related expenses, such as direct wages and salaries, whether base pay or incentives; the employer's portions of payroll taxes and contributions required by national law, state law, and union agreements; and the costs of benefits paid directly to the employees or on their behalf during the period. Indirect labor costs are expenses that will be incurred in future periods to provide compensation or benefits, where the employee has a vested claim against the firm. ...

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