Labor
In classical economics and all micro-economics labor is a measure of the work done by human beings and is one of three factors of production, the others being land and capital. There are macro-economic system theories which have created a concept called human capital (referring to the skills that workers possess, not necessarily their actual work), although there are also counterposing macro-economic system theories that think human capital is a contradiction in terms.
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Compensation and measurement
Wage is a basic compensation for labor, and the compensation for labor per period of time is referred to as the wage rate. The two terms are sometimes used interchangeably.
Other frequently used terms include:
- wage = payment per unit of time (typically an hour)
- earnings = payment accrued over a period (typically a week, a month, or a year)
- total compensation = earnings + other benefits for labour
- income = total compensation + unearned income
- economic rent = total compensation - opportunity cost
Economists measure labor in terms of hours worked, total wages, or efficiency.
Marxian economics
In Marxian economics, the aim of labor economics is to provide insight and guidance for the optimal allocation of co-operative human labor. However, this optimality is not simply viewed as a "technical variable" as in micro-economics, because workers are not simply a "factor of production", but human beings who organise themselves and each other. Forms of labour co-operation can be oppressive, irrational and exploitative, or they can be beneficial, rational, or effective. That is to say, labor economics has a political dimension insofar as different workers and employers have different interests. There is a workers' point of view and an employer's point of view.
Marxian economists argue that the reason why labor economics receives little attention is because it has become viewed as a management issue. But this may hide that a particular form of organising labor has little to do with economic efficiency, and more with getting an high income from an activity. Marxian economists believe that ultimately the most desirable form of labor organisation in the workplace is where workers manage themselves collectively, and elect managers where necessary; too much management is inefficient, it just means that people get high incomes for doing very little, capitalising on specialised knowledge or qualifications.