Selecting The Right Time Off
Policy For Your Workforce

Their discovery: a huge discrepancy exists between how the U.S. and other countries value paid vacation time. Every other country mandated at least ten days of paid vacation time a year, with France holding the highest number at thirty days per year.

The gap between paid time off in the U.S. and the rest of the world becomes even more pronounced when legal holidays are included. While U.S. law doesn’t guarantee any paid holidays, most other countries provide between five and thirteen days per year.

For U.S. companies in the private sector that do provide employees with paid time off, the sum of the average paid vacation and paid holidays that workers receive equals sixteen days. While that number sounds better than zero, it doesn’t meet the minimum number of days required by law in nineteen of the twenty-one rich countries studied.

In fact, the CEPR notes the lengths that some countries go to in order to promote time off; five countries go so far as to mandate paying vacationing workers a small premium above their standard pay to overset the cost of taking a vacation.

The study concludes by noting that the lack of paid vacation and paid holidays in the U.S. “is particularly acute for lower-wage and part-time workers and for employees of small businesses.” Not only are they less likely to receive PTO, but when they do, the payments are significantly less than the higher-wage, full-time workers who labor for larger employers.

What’s Happening In The U.S.?
The U.S. has a different perspective on time off than the rest of the world. That’s not exactly news to anyone. After all, the American workforce has a reputation for being hard workers, driven by a strong work ethic and capitalistic spirit. Anyone can live the American Dream, as long as you work hard, have initiative, stay determined, and—as recent studies demonstrate— put in long hours and take less vacation time.

As a country, American workers are taking less time off than ever before. A study entitled All Work and No Pay discovered that approximately 4.9 of 21 earned PTO days are unused each year in the U.S.

To put these numbers in perspective, the study found that approximately 169 million days of vacation are forfeited, which is $52.4 billion in lost benefits. As noted by the authors: “That’s more than the total wage and salary income of several U.S. states—Nevada, Arkansas, Mississippi and New Mexico, to name a few.”

Why are workers giving up 23% of their hard-earned vacation time?
It hasn’t always been this way. In fact, from 1976 to 2000, American workers took an average of 20 days off. Fast forward to 2013, and suddenly Americans are taking almost a week less! The average number of vacation days has dropped from 20 to 16 days.

Why Aren’t American Workers Using All Of Their Vacation Days?
One theory is that the workplace culture is to blame with its emphasis on longer work hours and the lower value placed on free time.

A Time article notes several key factors that contribute to workers not using their vacation days, namely “fears of keeping your job, being passed over for promotions or lead projects, coming back to a staggering pile of work, or feeling like you’re the only one who can do your job.”

The result of this attitude is a remarkable amount of stress and anxiety for Americans. As reported in the Huffington Post, the American Psychiatric Association performed studies that illustrate a striking increase in the number of Americans who suffer from disabling anxiety. In a thirty-year time period, anxiety disorder has increased from between 2-4% percent in 1980 to 49.5% in 2009. Almost half the population is now afflicted.

What is causing this shift in behavior? Are employees somehow getting more satisfaction or other benefit out of longer work hours? Is the U.S. economy experiencing a global advantage as a result?

Time Off Is A Good Thing
Actually, studies show that no one benefits from Americans forfeiting their PTO: not employees, not employers, and definitely not the U.S. economy.

Research compiled by the Project: Time Off Coalition—a broad-based group of organizations committed to changing the way Americans think about vacation time—illustrates a strong correlation between time off and numerous health benefits for employees.

Advantages to taking time off include a decreased risk for three big health problems: heart disease, depression, and stress. Research shows that employees who take time off also go back to work healthier and are better colleagues after experiencing a break.

For employers, the upside of employees taking vacation is improved productivity, less burnout, and potential longevity with the organization. An internal study conducted by Ernst & Young discovered that year-end performance ratings improved 8% for each additional ten hours of vacation that employees took. That’s a huge improvement for the equivalent of about a day more vacation each year.

Even better: employees who took frequent vacations were less likely to leave the firm, and stronger workplace morale is seen amongst employees who utilize vacation time, which benefits everyone.

From a macro-perspective, vacation time is also critical to the economy. In a report by the U.S. Travel Association that examines the implications of time off, a key finding illustrates that the U.S. economy would benefit from more than $160 billion in total business sales and $21 billion in tax revenues—while supporting 1.2 million jobs in industries such as retail, manufacturing, and transportation—if Americans utilized their time off.

Perhaps the most startling number: if employees take just one additional day of earned leave each year, the result would be $73 billion in output for the U.S. economy.