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LABOR. Various meanings include 1) human effort aimed at the production and/or distribution of goods and services; 2) one of the four factors of production; 3) an organized labor movement or union.

LABOR AREA. Geographical area from which workers may be recruited. (See LABOR MARKET AREA.)

LABOR CLASS (LABOR GRADE, SALARY GRADE, JOB GRADE, JOB CLASS). A series of rate steps (single rate/2-rate range) in the wage structure usually determined by job evaluations or by negotiations so that different jobs or positions of the same relative worth fall into the same grouping and are therefore, paid at the same rate.

LABOR COST. The cost of human resources that is a part of the cost of goods or services. Usually refers to those wages which go directly into the product, but may include the indirect support functions.


LABOR ECONOMICS. The study of wages, employment and the operation of the labor market in general.

LABOR FORCE. In census terms, all persons age 16 or over, employed or unemployed and actively seeking work. Total labor force includes members of the Armed Forces; Civilian labor force excludes them. Term is often used to designate total employment of a particular company or industry. Also known as work force.

LABOR FORCE PARTICIPATION RATE. The proportion of the population 16 years old and older that is employed or unemployed and actively seeking work.

LABOR GRADE. One of a series of rate steps (single rate or rate ranges) in the wage rate structure of an establishment. An outcome typically of some form of job evaluation in which various occupational classifications are rated on the basis of such requirements as skill, experience, training, education requirements and working conditions. Occupations are grouped into a limited number of steps so that occupations of approximately equal “value” or “worth” fall into the same level. (See JOB CLASSIFICATIONS, JOB EVALUATION.)


LABOR-MANAGEMENT COMMITTEE. A committee of labor and management representatives focusing on improving labor-management relations and joint problem solving.

LABOR MANAGEMENT RELATIONS ACT. Refers especially to the Taft-Hartley Act (1947) a federal law, amending the National Labor Relations Act (Wagner Act), 1935, which, among other changes, defined and made illegal a number of unfair labor practices by unions. It preserved the guarantee of the right of workers to organize and bargain collectively with their employers and retained the definition of unfair labor practices as applied to employers. The act does not apply to employees in a business or industry where a labor dispute would not affect interstate commerce. Other major exclusions are: employees subject to Railway Labor Act, agricultural workers, government employees, domestic servants, and supervisors. Amended by Labor-Management Reporting and Disclosure Act of 1959. (See NATIONAL LABOR RELATIONS ACT, NATIONAL LABOR RELATIONS BOARD, UNFAIR LABOR PRACTICE , SECTION 14 (B), LABOR MANAGEMENT RELATIONS ACT, 1947.)

LABOR-MANAGEMENT REPORTING AND DISCLOSURE ACT OF 1959, (LANDRUM-GRIFFIN ACT). This federal law was designed “to eliminate or prevent improper practices on the part of labor organizations, employers,” etc. Its seven titles include a bill of rights to protect members in their relations with unions; regulations of trusteeships; standards for elections; and fiduciary responsibility of union officers. The Labor Management Relations Act, 1947, was amended in certain respects by this act. Among other changes, hot-cargo clauses in contracts were forbidden, except for apparel and construction industries. Restrictions were placed on secondary boycotts and picketing.

LABOR MARKET AREA. A geographical territory from which workers may be recruited, surrounding a concentration of establishments. Usually a metropolitan area, consisting of a central city and its suburbs. Also a Labor Area.

LABOR MOBILITY. The extent to which workers can, are willing, or do move from job to job, employer to employer, or place to place to find employment.

LABOR MOVEMENT. General term usually applied to organized labor; its growth, structure, and activities.

LABOR PRODUCTIVITY. The rate of output of employees per unit of time measured against a standard or expected rate of output per man-hour.

LABOR RELATIONS. In an organization it is concerned with the relationship between the employees and the organization. In a unionized organization, the working relationship between the union representatives and the management representatives.

LABOR-SAVING RATIO. The mathematical relationship of the unit labor cost of one method to the unit labor cost of another, usually an improved method compared to an existing method.

LABOR SUPPLY (LABOR SUPPLY CURVE). The minimum wage necessary to attract a given number of employees or level of employment. Economists most often consider labor supply as a function or line of points defining this wage for a series of employment levels.

LABOR TURNOVER (TURNOVER). Movement of workers into and out of employment in a company or industry through hiring, layoffs, recall, quits, etc. Labor turnover rates are usually expressed as the number of accessions and separations during a given period per 100 employees.


LAYOFF (REDUCTION IN FORCE). Involuntary separation from employment for a temporary or indefinite period, without prejudice, that is, resulting from no fault of the workers. Although “layoff” usually implies eventual recall, or at least an intent to recall workers to their jobs, the term is occasionally used for separations plainly signifying permanent loss of jobs, as in plant shutdowns.


LAYOFF COSTS/BENEFITS. The benefits provided to an employee while on lay-off and the costs to the company for supplying such benefits. Also called trailing costs.

LAYOFF PAY. Benefits received because of temporary or permanent termination. (See SEVERANCE PAY.)

LEARNER. A person acquiring knowledge, generally for the purpose of performing a job satisfactorily. (See APPRENTICE.)

LEARNER RATES. The schedule of wages applicable to workers inexperienced in the job for which they are employed, during their period of training. The schedule of rates is usually established in such a manner as to permit the gradual achievement of the minimum job rate as the learner develops competence on the job. Under the Fair Labor Standards Act, an employer may be permitted to employ learners in a specific plant at a wage lower than the legal minimum, whenever employment of learners at such a lower rate is believed necessary to prevent curtailment of employment opportunities. Hearings are held by the administrator to determine under what limitations as to wages, time, number, proportion, and length of service, special certificates authorizing the employment of learning at subminimal rates may be issued to an employer for certain occupations in the plant facility.

LEARNER’S ALLOWANCE. A special allowance attached to an incentive standard to encourage new employees or employees on new operations or products to reach incentive level performance. It is often used with group incentives to avoid penalizing the senior members of the group while the new employee(s) are “coming up-to-speed.”

LEARNER’S CERTIFICATES. Certificates issued by the U.S. Department of Labor, under provisions of the Fair Labor Standards Act of 1938, enabling employers to pay rates below the statutory minimum to learners, messengers, apprentices, and handicapped workers so as not to curtail opportunities for their employment.

LEARNING CURVE, MANUFACTURING PROGRESS FUNCTION (MPF). A graph or mathematical formula plotting the course of production during a period in which an employee is learning a job; the vertical axis plots a measure of proficiency while the horizontal axis represents some measure of practice or experience (time). Also known as an experience curve, a quantitative model relating the factors of time, productivity improvement and cost, applied to predict future costs under conditions of production volume increases. Essentially, a linear relationship on log-log paper reflecting an equivalent percentage reduction as production quantities double.

LEAVE OF ABSENCE. Generally, an unpaid excused period away from work, without loss of job or seniority.

LEGALLY REQUIRED BENEFITS. Insurance programs to which employers must contribute for employees according to law. Includes social security, unemployment compensation, worker’s compensation, state temporary disability insurance, and special programs for railway workers.

LEGAL PLAN, PREPAID. An employer and/or a union agreement with a law firm or group of lawyers to supply legal services to workers at no or minimum employee cost. Some unions, such as the UAW, have a group of lawyers who supply legal services to their members at no or minimum cost. Such services are usually supplied for civil actions as opposed to criminal actions. Also called prepaid legal services. When supplied by an employer, it is considered a fringe cost.

LEVELING. A procedure for rating work performance in order to adjust observed average elemental times used to establish a labor standard and/or standard data. (See NORMALIZE.)


LEVEL OF ASPIRATION. A goal that an individual sets as something he/she expects or strives to achieve. Reaching the goal is interpreted by him/her as success, falling short as failure.

LIFE INSURANCE PLAN. Group term insurance coverage for employees, paid for in whole or in part by the employer, providing a lump-sum payment to a worker’s beneficiary in the event of death. (See HEALTH AND INSURANCE PLAN, DEATH BENEFIT.)

LINE OF PROGRESSION (LOP). A designated sequence of related job classifications through which an employee may progress for purposes of promotion or demotion in cases of layoff or work cutback. Frequently called a “promotion schedule.”

LIVING DOCUMENT. This term, as used by unions, expresses the belief that the terms of an agreement, particularly a long-term agreement, should be subject to review and renegotiation by the parties if conditions change or unforeseen events come about, despite the absence of a reopening clause.

LIVING WAGE. A term used normally in collective bargaining to mean the minimum compensation under current economic conditions which is perceived by workers as necessary to sustain a particular standard of living.

LOCAL UNION. Labor organization comprising the members of a union within a particular area or establishment, which has been chartered by, and is affiliated with a national or international union. Also known as local; chapter; lodge.

LOCKOUT. A temporary withholding of work or denial of employment to a group of workers by an employer during a labor dispute in order to compel a settlement at or close to the employer’s terms. A joint lockout is such an action undertaken at the same time by a group of employers. Technically, the distinction between a strike and a lockout depends on which party actually initiates the stoppage. One, however, can develop into the other. (See WORK STOPPAGE) (JOINT LOCKOUT.)

LONGEVITY PAY. Wage or salary adjustments based on length of service.

LONG TERM BONUS. Usually a form of deferred compensation that establishes an income stream in the form of a bonus over time.

LONG TERM CONTRACT. A multiple-year wage contract or collective bargaining agreement as contrasted to a one-year agreement.

LONG-TERM DISABILITY. Wages or salary paid by an employer or a third party to workers who are ill or injured and unable to work for long periods of time.

LOOSE RATE. A job rate which produces a higher payment than would be paid for similar work performed under correctly applied or maintained work methods and related standards. Runaway rate.


LOW TASK. Performance level normal for unmeasured or unstandardized tasks; also called unmeasured daywork pace.

LUMP SUM AWARD. One time payment of a bonus based upon an exceptional performance. A one time payment made to an employee for a variety of reasons such as an arbitration award or the granting of a patent or a method improvement.

LUMP SUM INCREASE. The practice of giving employees an annual or periodic increase as a lump sum rather than in regular paychecks. If an employee was granted a $1,000 per year increase, he/she would receive the full amount at one time (less applicable taxes) rather than $83.33 per month.

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