Lowering labor costs as a percentage of sales might be an arbitrary decision. It assumes there is no difference between your company and your competitors. However, this is rarely the case because businesses are built on a productive asset that varies from business to business. What you want to look at is what is this asset and what is your return on it in comparison to the competition.
Let's look at two car manufacturers: Rolls Royce and Ford. I don't know the financials of either but I bet you labor is higher cost component for Rolls Royce than for Ford. Consequently, if Rolls were to benchmark themselves against Ford their product would undoubtedly suffer. You might be doing the same thing. Now if we look at this example from the productive asset point of view and determine that Rolls's asset is the brand and Ford's is a manufacturing plant then we can see that the return on the brand is probably close to the return on the plant. Okay, so I am being a bit hypothetical but it is only to make a point.
All businesses exist because they own and/or control an asset that can be used in a product or service that provides customers with a competitive advantage. That is, the asset somehow makes the customer's life easier or less uncertain in some way. the busy part of the business involves putting in place processes that make that asset usable to the customer, and managing the risks inherent in the business. The business survives when all this done and an excess of value of produced, otherwise known as profit, allowing the company to pay for the cost of capital, return money to investors and reinvest in its future.
You have to look at the specifics of your business before making a decision which assumes you are like everyone else.