Lost labor is paid time being consumed by work that should not take that much effort.
People are still working. The labor is real. But part of that time is being burned by friction instead of producing useful output.
Lost labor usually does not look dramatic. It shows up in repeated reporting, duplicate entry, unclear tracking, avoidable mistakes, manual cleanup, waiting on missing information, and messy handoffs.
Most of the time, the problem is not laziness or lack of effort. It is that the process is forcing good people to work the long way, the manual way, or the confusing way.
A few extra minutes on one task may not look serious. But when the same friction repeats every day, across multiple people, it becomes a real operational cost.