We show that labor leverage, proxied by labor share, explains roughly half of the value premium but not future cash flow growth. The other half of the value premium is determined by the component of the book-to-market ratio that is orthogonal to labor share, and this component explains most of future cash flow growth. To explain these findings, we propose a parsimonious labor-based production model for firms. Our results suggest that the defining aspect of a growth firm is not a low book-to-market ratio, but rather a small component of book-to-market ratio that is not explained by labor share.