Here's why:
* It names a thing: "Labor" refers to the act of working, especially physical work.
* It can be the subject of a sentence: "Labor is essential for our economy."
* It can be modified by adjectives: "Hard labor" or "skilled labor."
While "labor" can sometimes be used as a verb (e.g., "to labor in the fields"), in the sentence you provided, it's functioning as a noun.