The managerial accounting literature suggests that adjustment costs lead to asymmetric cost behavior. Previous studies show that labor adjustment costs are the significant factor that drives asymmetric cost behavior. However, empirical proxies for labor adjustments costs have several limitations. This study suggests that CEO-to-worker pay disparity and the labor share as a new proxy for labor adjustment costs and substantiates that labor adjustment costs play a significant role in determining asymmetric cost behavior. Our proxies for adjustment costs represent the effectiveness of labor cost management and labor productivity. Prior studies suggest that large CEO-to-worker pay disparity indicates effective labor cost management. We find that lower CEO-to-worker pay disparity and higher labor income share are associated with greater cost stickiness. In additional tests, we find that the effect of adjustment costs is more significant for firms disclosing ESG grades and firms with higher ESG grades.