Definition
What a business pays in wages to produce one unit of output.
The story
If a bakery's workers get a 5% raise but bake 5% more bread per hour, the labor cost of each loaf stays flat. If the raise comes without the extra bread, every loaf costs more to make, and the price may follow.
Why markets watch it
Rising labor costs per unit can push companies to raise prices.
Connects to
Average hourly earningsEmployment Cost IndexInflationProductivity
Last seen in
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms