What is included in legitimate labor costs?

Legitimate labor costs encompass a wide range of expenses associated with employing workers. The correct answer includes hourly wages, which represent the direct payment for labor performed, and fringe benefit packages, which can cover health insurance, retirement contributions, and paid time off, adding significant value to the total cost of employment. Payroll taxes, which are mandatory contributions to social security and Medicare, also contribute to labor costs, as employers must account for these in their budgeting.

In addition to wages and benefits, safety costs—related to equipment and training necessary to maintain a safe work environment—are crucial for compliance and protecting employees. Small tools and consumables are also part of legitimate labor costs because they are necessary resources for employees to perform their jobs effectively. Together, these components represent a comprehensive view of what constitutes labor costs, highlighting the importance of considering various direct and indirect expenses associated with employing staff.