Chat with Bridget ™ About Labor Costs – AI Helping Investors Understand Complex Concepts

Today marks the celebration of Labor Day in the U.S. For many, the holiday has come to represent things beyond its original meaning: the end of summer, the beginning of the school year, a last opportunity for vacation.

Of course, the origin of the holiday is to celebrate labor, unions, and workers. As a U.S. holiday, the choice of the first Monday in September was made to separate the holiday from its more “radical” version on May 1, celebrated in Europe and elsewhere.

For us at BridgeWise, however, it’s an opportunity to think more broadly about labor, its associated costs, and how investors can think about these impacts as they make investment decisions. The concept of labor costs and their impact on market movements may be a difficult challenge for multiple categories of investors.

For those not well versed in the terminology, or lacking the access or understanding to study labor reports or other metrics, it can feel like an impenetrable question. It’s exactly the kind of question that can be answered successfully by our AI chat for investment intelligence—Bridget™.

We turned to Bridget to get a better understanding of labor cost impacts and to demonstrate how investors can use this information to make further investment decisions.

Note: Responses from Bridget below have been edited for length. Also see our important disclaimer about these insights at the end of this post.

Chatting with Bridget About Labor Costs

Let’s start by getting a broad understanding of labor costs and their impact on the market.

Q: What market sectors are impacted by labor costs?

Bridget:

“Labor costs have a significant impact across multiple market sectors, particularly those where human labor is a major component of the cost structure. Key sectors affected by labor costs include:

• Industrials: This sector, including Capital Goods, Transportation, Machinery, and Electrical Equipment industries, is highly sensitive to labor costs due to the reliance on skilled and unskilled labor for manufacturing, logistics, and operations.

• Consumer Discretionary: Sectors such as retail, hospitality, and leisure are labor-intensive, making them vulnerable to changes in wages and labor regulations.

• Health Care: Hospitals, clinics, and long-term care facilities depend heavily on labor, with wages forming a substantial portion of operating expenses.

• Construction: Labor is a major cost driver in construction, impacting both residential and commercial building projects.

• Technology and Professional Services: While less labor-intensive than manufacturing, these sectors can still be affected by specialized labor costs, particularly in software development, engineering, and consulting.”

With that overview in place, let’s ask Bridget to help us understand if any recent events regarding the labor market are significant.

Q: Is there any news about labor costs impacting the market?

Bridget:

“Based on recent news reports and various information sources:

• Rising labor costs in 2025 are increasing business expenses and contributing to inflation, especially in labor-intensive sectors such as services, manufacturing, and agriculture.

• Unit labor costs in the nonfarm business sector rose 1.6% in Q2 2025, driven by a 4.0% increase in hourly compensation.

• Manufacturing experienced a 6.2% increase in hourly compensation, with unit labor costs up 0.7% year-over-year.

• Service sector prices are particularly sensitive to labor cost increases, as labor is the primary input; higher wages directly lead to higher service prices.

• Labor shortages, due to an aging workforce, lower participation rates, and immigration restrictions, are tightening supply and supporting further wage growth and cost pressures.

• Small businesses are feeling the impact most acutely, facing higher payrolls and squeezed margins.

• Many firms are responding by investing in automation or technology to offset rising labor costs, especially in competitive industries.”

Now that we know labor costs are rising, let’s ask Bridget if there are any ways to take advantage of that.

Q: Are there any market sectors that benefit from rising labor costs?

Bridget:

“Based on recent news reports and various information sources:

• Banks can benefit from rising labor costs, as higher wages improve borrower creditworthiness and expand net interest margins, supporting loan performance.

• Non-housing services sectors, such as healthcare, education, and professional services, often pass higher labor costs onto consumers through price increases, which helps sustain or grow sector revenues.

• Retail and hospitality sectors may offset higher labor costs by raising prices, but their margins remain pressured unless productivity gains match wage growth.

• Manufacturing faces higher unit labor costs, but sectors with strong productivity growth are better equipped to absorb wage increases.”

AI chat gives investors an easy-to-use and highly accessible pathway to investment knowledge. It can help them tackle difficult concepts, explore new avenues of investment, and serve as a launchpad for further explorations.

To learn how Bridget and AI chat can help your investors, sign up for a demo today.

Disclaimer: The information contained in this analysis is intended for general guidance purposes only. Under no circumstances is the information adjusted to a specific factor or variable related to the identity of the reader. The information is not a substitute for specific advice that takes into consideration the specific data and special needs of each reader, and in any case, it is recommended to consult with professionals and tax advisors in these contexts.