What is generally considered the biggest source of increased labor costs?

The largest contributor to increased labor costs is typically employee overtime. When businesses require employees to work beyond their standard hours, they often pay a premium for this overtime, which can significantly drive up labor costs. Overtime rates can result in expenses being two to three times higher than regular pay, especially if employees are working on weekends or holidays.

Inaccurate schedules can lead to inefficiencies, such as employees being overstaffed or understaffed, which can temporarily increase costs but typically does not compare to the long-term impact of consistent overtime pay. High turnover rates incur costs related to recruiting, hiring, and training new employees, while training costs also contribute to labor expenses but are often considered part of initial onboarding processes rather than ongoing labor costs.

Therefore, overtime emerges as the primary factor leading to significant increases in labor costs due to the escalated wages required during those extra hours.