Vacation Deprivation: How The USA Lost Its PTO

Outside the states, 'take a vacation' is advice, not sarcasm


In Europe, a vacation isn’t a weekend trip. It’s a month or two spent by the seaside, renting out cabins or beach houses for an entire summer. By law, every country within the EU must have at least four weeks of paid vacation. In America, it’s only 16 paid vacation days and there isn’t a law that requires employers to actually grant any vacation or holidays. Because of this, nearly 25% of US employees don’t receive any paid vacation or holiday time. Does this mean that we have a better economy because we’re working more throughout the year?

In the fall of 2011, Jin Liqun, chairman of China’s sovereign wealth fund, said that Europe’s economic troubles were due to its 'sloth-inducing, indolence-inducing labor laws.' Then in 2012, Mitt Romney stated that this European focus would 'poison the very spirit of America.' However, economists such as John Schmitt (senior economist at the Center for Economic and Policy research in Washington, D.C.) are refuting with the fact that the macroeconomic effect that comes from paid time off (either family leave, sick days or vacation) is 'pretty small.' Schmitt said that 'it’s very hard to say that those policies are connected to any kind of a reduction in economic performance.'

TIME magazine featured an article that compared two European countries: Greece and Germany. In Greece, workers spend an average of 2,017 hours a year working, which is more than other European countries. They took only two weeks of vacation per year. On the other hand, German works only work about 1,408 hours a year. When you compare the economies, it is no news that Greece’s has been in turmoil for some years - unemployment was over 20% in 2012. Germany though, boasts of only about 6.8 percent unemployment and is one of the eighth most productive countries according to the Organisation for Economic Cooperation and Development.

Some may throw back that Europeans actually earn less than Americans during a year though despite the fact that the pay per hour is similar. Though this is true, it is due to the fact that European workers end up paying for their time off since employers have already factored the costs that come from lost productivity due to vacations into a pay package. So overall, the higher amount of vacation days doesn’t affect the economy as much as we would assume.

Economy aside, do more vacation days actually equal better employee satisfaction? We’d say so. In 2009, the Harvard Business Review posted a study that showed business consultants who were required to take time off each week had elevated levels of productivity. The study also showed that rather than being always available for business items, when individuals planned uninterrupted time off, work actually benefited rather than plummeted. Communication between team members improved, and other processes throughout the business were also enriched as teams were able to work more effectively and efficiently. The experiment performed was in hopes of seeing work and life benefits from the required time off, which they did see. They also say an increase in learning and development and even a better product delivered to clients.

Along with more vacation and paid holidays also seems to come better benefits such as better types of life insurance, health insurance and even retirement plans, according to John Schmitt. This also tends to add to better overall work and life benefits.

  1. We should also note that Europeans aren’t the only ones with required time off in mind. Japan recently began research on this legislation in 2012 and in a TIME article in 2015, it was discussed that they too, will begin a required amount of paid time off: 10 days.

The question at the end of the day may not necessarily be is it worth it, but what is the end goal? Countries seeking to improve overall health and well-being of their employees and works might want to reconsider paid vacation and holiday requirements. Though some countries feel it might be counterproductive to the economy, such Switzerland who just voted down two extra weeks of vacation in 2012 because they feared losing jobs and holding back the country, it might be better to rely on our faith in economists who know better than we do what will harm or help the economy. If anything, it might be worth a shot to at least experiment and see what extra time off could do for your business overall.

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