Understanding Capital and Costs in Human Resources
Only the tangible part of investments will be accounted for as an investment. The skill is not visible and is not tangible. But both of these are capital only. In order to make the capital run and produce something of value, we need to fuel it, spend a lot on repairs and maintenance, and periodic updating (in software or technology), and these are costs only.
Fueling Human Capital
Similarly, we need to fuel the human capital by paying wages and allowances, spending a lot to enhance the skills through training, and making the HR more and more engaged. Hence, the cost of wages, the cost of training, and the cost of making the HR more effective are also costs to generate end revenue.
Comparing Capital and Labor Costs
In another way, if the capital is paid interest as a reward for providing the service as a factor of production, the labor is paid wages. Both are costs only.