U.S. Paid Vacation Standards Totally Suck

The US is the only wealthy nation not to legally mandate paid vacation. (Source: CEPR)

There are a lot of great things about being an American, but our pitifully stingy paid vacation day policy is not one of them.* Of the 21 richest countries in the world, the U.S. stands out as being the only one not to legally mandate a minimum number of days a year of paid leave.

Absent a government imposed standard, one in four Americans get no paid vacation and no paid holidays at all. On average, private sector American workers receive only ten days of paid vacation and six days of paid holidays a year, less then the minimum legal standard in every other wealthy nation save Japan. But of course, our vacation gap is just as glaring as our income gap, with low-wage workers receiving an average of only four days of paid vacation a year compared to an average of 14 days for high-wage workers.

And what do American employers reap from their stinginess? Lower productivity:

Research synthesised by the International Labour Office in 2011 found that in many, if not most, industries in the US, shorter hours were associated with higher rates of output per hour. According to an analysis of 18, mostly European, OECD member countries, which explored the degree to which longer annual hours since 1950 had been associated with per-hour productivity, the responsiveness of productivity for a given increase in working time was always negative. When annual working time climbed above a threshold of 1,925 hours, the research found there was a nearly 1 per cent decline in productivity for every 1 per cent increase in working time.

So the lack of adequate paid vacation time not only makes American workers less happy, it makes us less productive. And it also inevitably inflates unemployment and depresses wages. Think about it: if U.S. employers were required to give all their workers 20 days a year of paid vacation (the European Union’s vacation floor), they’d have to hire more workers to fill gap, tightening the labor market in the process.

It’s way past time for the federal government to set minimum vacation standards.

* And in case you’re wondering, we have no set number of vacation days here at Civic Ventures. Nobody punches a clock, and nobody keeps track of hours. As long as we get our work done we can take off as many days as we want.

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