Description: Cost of labor to produce a single unit of product

Released: Five weeks following the end of the quarter

Calculation: Total compensation costs are tabulated by the Bureau of Labor Statistics

Key Point: Labor costs consume roughly 70% of production costs, far and away the most expensive input into the production process. Economists keep a close eye on this statistic because a sudden rise in Unit Labor Costs could trigger upward pressure on prices. When Unit Labor Costs rise, a firm has two options. A firm can pass on higher costs to consumers in the form of higher prices or allow the higher costs to cut into their bottom line. Productivity is closely tied to Unit Labor Costs. As productivity increases, labor cost per unit declines and this translates into bigger corporate profits.

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