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Vacation cont'd

"It’s true that American[s] have fewer paid vacations and paid holidays," writes Reihan Salam. "But the top 80 to 90 percent of U.S. households have more disposable income than their counterparts in the vast majority of OECD [Organization for Economic Cooperation and Development] economies. Paid vacation is best understood as a form of non-cash compensation. It’s not obvious that we should collectively choose more paid vacation over more pay, and the lack of mandatory paid-vacation gives employers and employees more flexibility to choose an arrangement that works for them."

There are a couple of things wrong with this paragraph. For one thing, the top 80 percent or 90 percent of households -- the ones that Salam identifies as making us richer -- are the same households that actually do get paid vacation. As this CEPR report makes clear, you're more likely to get paid vacation days if you're a high-wage worker, if you work for a large firm and if you're full time rather than part time. And the richer you are, the more days of paid vacation you're likely to get.

Which goes to the reality of the situation, which is not that workers and employers "flexibly choose an arrangement that works for them." Employer-employee relations are rarely so idyllic. Broadly speaking, employees with the power to demand more paid vacation do so, and employees without the power to demand more paid vacation get less -- or in some cases, no -- paid vacation. A law guaranteeing paid vacation would primarily tilt the playing field toward low-income workers, rather than against them, as is the case now.

You see a similarly dynamic in family leave: There wasn't much of it until Bill Clinton passed the Family and Medical Leave Act. And the FMLA was one of his most popular accomplishments. So the situation that preceded it was not, from the perspective of employees, the arrangement that made them happiest. In practice, employers had the flexibility to not offer much time off, and so they didn't offer much time off. Workers were glad to see a law guaranteeing them family and medical leave because they weren't finding themselves able to effectively negotiate it on their own. And vacation seems similar: There's at least some polling -- though it was commissioned by a pro-vacation organization -- showing that a paid vacation law would be popular.

By Ezra Klein  |  September 2, 2010; 12:15 PM ET
 
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Comments

Vacation time flexibility?? - dude's not a Gov contractor, is he....

Posted by: JkR- | September 2, 2010 12:41 PM | Report abuse

"There wasn't much of it until Bill Clinton passed the Family and Medical Leave Act."

A comment: considering the time this blog's author has (rightfully) spent on demonstrating the importance of Congress to the actual crafting of legislation in the United States, statements like this should be revised. Bill Clinton did not pass legislation; while he did *sign* it, the Congress had to pass it. Either the word should be changed from pass to sign or Congress should be brought into the sentence (or some higher order entity, like "the Democrats" or "a bi-partisan coalition" or whatever should be assigned credit).

Posted by: y2josh_us | September 2, 2010 12:48 PM | Report abuse

You also need less disposable income when the government provides such amenities as free health care and education through university, as it does in many European countries.

Posted by: Mimikatz | September 2, 2010 12:52 PM | Report abuse

--"You see a similarly dynamic in family leave: There wasn't much of it until Bill Clinton passed the Family and Medical Leave Act. And the FMLA was one of his most popular accomplishments."--

That statement is particularly interesting, Klein, if you juxtapose it with the graph you included in your immediately previous post showing the income decline in "working age households" following the Clinton presidency.

http://voices.washingtonpost.com/ezra-klein/2010/09/our_lost_decade_in_one_graph.html

Posted by: msoja | September 2, 2010 1:01 PM | Report abuse

So, does Klein have any thoughts on how mandatory paid vacation legislation will impact median income for working age households?

Posted by: msoja | September 2, 2010 1:04 PM | Report abuse

*****There are a couple of things wrong with this paragraph. For one thing, the top 80 percent or 90 percent of households -- the ones that Salam identifies as making us richer -- are the same households that actually do get paid vacation.*****

Ezra: Shouldn't we be using the term "percentile" rather than "percent?" Not to get all pedantic, but if we say "top 90%" we're only eliminating the bottom ten percent. And there are LOTS of Americans who are a tad richer than the bottom 10% but who nonetheless don't get paid vacation. If on the other hand we say "80th or 90% percentile" then sure, we're talking about a group of folks who generally get paid pretty well and who generally get paid vacation.

Posted by: Jasper999 | September 2, 2010 1:11 PM | Report abuse

Why does Salam choose to compare the incomes of the "the top 80 to 90 percent"? To exclude the bottom income quintile, who do poorly compared to the bottom income quintiles in other rich countries.

In other words, it could have been phrased "even though the bottom 80 to 90 percent of US households have only about the same income as other rich countries".

Posted by: tom83 | September 2, 2010 1:28 PM | Report abuse

yes, and mandatory paid vacation for the bottom 10% would also make it much more expensive to hire these workers. you'd increase unemployment among the sector of society that can afford it the least. tradeoffs everywhere you go...

Posted by: jfcarro | September 2, 2010 1:33 PM | Report abuse

Yeah, but a positive trade-off for the economy is that people spend money while on vacation (frequently at small businesses--restaurants, bars, etc). As with socialized health care: that's money that people don't have to use to spend on health care.

Look at it this way. China has no safety net at all. Chinese save a very large fraction of their pay to hedge against future catastrophe. But this is also why they have to export, because of low internal demand due to a lack of financial security.

Trade-offs...

Posted by: nickthap | September 2, 2010 1:48 PM | Report abuse

@nickthap-i agree that there should be a social safety net to hedge against catastrophe. mandatory paid vacation is hardly such a safety net. we should be very careful to pay for our safety net as efficiently as possible (ie, lower payroll, income and investment taxes, more progressive consumption taxes, less regulation) so that we don't increase unemployment, and thus the need for the safety net.

Posted by: jfcarro | September 2, 2010 2:07 PM | Report abuse

The truth is that Europeans in general are just as productive, with in some cases a 30-hour work week, than their American counterparts.

In France, everyone gets 5 weeks paid vacation, from the lowliest street cleaner to the loftiest CEO. Yet their productivity is not affected negatively. And people have more time to spend with friends and family, and (anecdotally) are happier and healthier, mentally and physically. They use that time to enjoy life.

We could to it here, if the corporate stranglehold in this country wasn't so busy painting everything European as necessarily evil. We just don't recognize how badly our workers are treated here compared to these countries, and why there is no reason not to mirror their efforts on this issue.

Posted by: terraformer5 | September 2, 2010 2:15 PM | Report abuse

Interesting on the topic here:

http://www.bbc.co.uk/news/world-11139960

Of note:

"But since the heyday of Thatcher and Reagan, they have been increasingly afraid to ask for it directly and way too afraid to come together and demand it as a group. "

Posted by: JkR- | September 2, 2010 2:20 PM | Report abuse

I would say the problems with this claim start with "disposable income."

I'm sure the statement is true on its face if for no other reason than taxes in the U.S. are low.

That said, an equitable comparison would require the U.S. workers to deduct various cost such as health care, pensions, education, child care, transportation costs, etc. U.S. workers pay for these out of "disposable" income while many OECD workers have ALREADY paid for these via taxation and don't have to come out of disposable income.

After that adjustment is made, it is unclear whether U.S. workers are better off.

(And that's before making further adjustments for intangible, more public goods.)

Posted by: Jamesaust | September 2, 2010 2:20 PM | Report abuse

I would say the problems with this claim start with "disposable income."

I'm sure the statement is true on its face if for no other reason than taxes in the U.S. are low.

That said, an equitable comparison would require the U.S. workers to deduct various cost such as health care, pensions, education, child care, transportation costs, etc. U.S. workers pay for these out of "disposable" income while many OECD workers have ALREADY paid for these via taxation and don't have to come out of disposable income.

After that adjustment is made, it is unclear whether U.S. workers are better off.

(And that's before making further adjustments for intangible, more public goods.)

Posted by: Jamesaust | September 2, 2010 2:21 PM | Report abuse

To make a point Ezra makes a little more clearly, and to answer msoja somewhat, the people who already get vacation days are not likely to be affected by a government mandate for some minimum number of paid vacation days. If the government mandates 5-10 vacation days per year then people who already get 15 vacation days won't be affected at all.

We'd need a lot more data (at least in this discussion) on how instituting mandatory vacation time is likely to affect employer's hiring choices and worker pay before we pulled the trigger on anything, but the point of this post is that there isn't some kind of invisible hand helping everyone out here with some employees choosing more money and others choosing more vacation. Workers with more power (and usually money) get more vacation. Workers with less power (and less money) get little or no vacation.

Posted by: MosBen | September 2, 2010 2:27 PM | Report abuse

There's no such thing as a free vacation day.

Posted by: ostap666 | September 2, 2010 3:22 PM | Report abuse

--"We'd need a lot more data (at least in this discussion) on how instituting mandatory vacation time is likely to affect employer's hiring choices and worker pay before we pulled the trigger on anything"--

Amass all the data you like, but it's still none of government's business. At least in a free country, it's not.

Posted by: msoja | September 2, 2010 3:34 PM | Report abuse

Absolutely, Ezra. In addition to better quality of life for many, mandatory vacations would increase the US employment rate. The employment rate would be affected to an amount relative to the length of the mandatory vacation.

Posted by: LoriWisconsin | September 2, 2010 3:40 PM | Report abuse

The vacation (and FMLA) situation reflects the American way: "Screw you, I got mine". Thre is little or no interest in the commonwealth, the idea that we all can benefit.

Posted by: jamie_2002 | September 2, 2010 3:42 PM | Report abuse

A comment and a clarification:
Comment: A European friend of mine said that here in the US employers complain of 'absenteeism', when often the problem is 'presenteeism'. He felt that too many workers in the US simply put in their hours, but work far less efficiently than in France where vacation time is far longer and weekly hours put in are less.

Clarification of my discussion above of on an increase in employment, relative to the amount of time for mandatory vacation:
During the time the worker was on vacation, the work still needs to be done. Therefore, the employer needs to pay someone to do it. Options are hire more people, or else to pay existing workers to work more hours. The latter sometimes involves overtime or isn't possible, so therefore in many cases new workers will be hired.

Posted by: LoriWisconsin | September 2, 2010 3:53 PM | Report abuse

"The truth is that Europeans in general are just as productive, with in some cases a 30-hour work week, than their American counterparts.

In France, everyone gets 5 weeks paid vacation, from the lowliest street cleaner to the loftiest CEO. Yet their productivity is not affected negatively. And people have more time to spend with friends and family, and (anecdotally) are happier and healthier, mentally and physically. They use that time to enjoy life."

It does not matter.
No one will pay attention because it will harsh their "OMG! Europe sucks" narrative.
Plus whoever said that the workers should enjoy life...we are here to make sure the top 2% enjoy life.

Posted by: vintagejulie | September 2, 2010 4:05 PM | Report abuse

I cannot believe that anyone would claim that 90% of households are or should be considered 'high wage' households.

Posted by: krazen1211 | September 2, 2010 4:59 PM | Report abuse

"Comment: A European friend of mine said that here in the US employers complain of 'absenteeism', when often the problem is 'presenteeism'. He felt that too many workers in the US simply put in their hours, but work far less efficiently than in France where vacation time is far longer and weekly hours put in are less.

Clarification of my discussion above of on an increase in employment, relative to the amount of time for mandatory vacation:
During the time the worker was on vacation, the work still needs to be done. Therefore, the employer needs to pay someone to do it. Options are hire more people, or else to pay existing workers to work more hours. The latter sometimes involves overtime or isn't possible, so therefore in many cases new workers will be hired."


And yet, US GDP per hour worked is higher than Europe's.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_hour_worked

Posted by: krazen1211 | September 2, 2010 5:01 PM | Report abuse

Why not use median hourly wage?

Posted by: jwogdn | September 2, 2010 5:17 PM | Report abuse

I don't get it. The top 80 to 90% includes nearly everybody, right?

Posted by: tomtildrum | September 2, 2010 5:20 PM | Report abuse

--"In addition to better quality of life for many, mandatory vacations would increase the US employment rate."--

What do you suppose the knock on effects would be at having to pay additional people (with all their bennies) to do the same or less work?

Posted by: msoja | September 2, 2010 6:13 PM | Report abuse

"Absolutely, Ezra. In addition to better quality of life for many, mandatory vacations would increase the US employment rate. The employment rate would be affected to an amount relative to the length of the mandatory vacation."

Somehow I'd guess employers would react in other ways first, including:

a) Make other employees cover those hours
b) Make other employees work harder
c) Expect employees to work harder/longer upon return from vacation
d) Invest in labor saving technology

Hiring new employees can be very expensive (taxes, training, odds they might not work out, search costs). I'd imagine it's not first on the list for many businesses.

Spain manages to run a 20% unemployment rate despite providing 34 days of vacation and public holiday. The U.S. is at 9.5% with zero. Japan is around 5% with 10 days. Denmark is around 4% with 34 days.

Mandatory vacation simply creates another business cost, which the business then needs to work around (or pass onto) someone else.

Posted by: justin84 | September 2, 2010 6:28 PM | Report abuse

*I don't get it. The top 80 to 90% includes nearly everybody, right?*

No. The top 80 to 90% of workers *with paid vacation days* in the US have more disposable income than *all* workers (who all have paid vacation days) in the OECD.

So, yes, it is not surprising to me that a restaurant manager in Virginia (who has paid vacation days) might have more disposable income than a grocery bagger in Poland (who has paid vacation days). It's heavily tilted in the US's favor if you automatically ignore all of the clerks at WalMart and waitstaff at Waffle House (who don't have that paid time off).

Posted by: constans | September 2, 2010 8:23 PM | Report abuse

Creating a mandatory vacation law would be a great idea.
Why?
-It gives an incentive for workers to work hard. If they feel that the company is taking care of them, then they will do whatever they can Ie: working hard, to keep the company up and running.
- France has a mandatory 5 week vacation law in place for all workers. The production of these workers are up while working less hours.
- Giving more paid vacation will open up job opportunities as employers will need to fill up positions when their employees are taking their vacations.

Posted by: cristobalmadrigal | September 2, 2010 8:47 PM | Report abuse

krazen1211 and justin84:Thanks for adding important data points to the discussion.
msoja: The people who currently don't get vacations? They are generally people who don't currently get benefits either. Those employers don't save on benefits like pension, 401K, etc. by making current workers work more hours. Likewise, most of the no-vacation workers are paid hourly rather than with a salary.

Posted by: LoriWisconsin | September 2, 2010 10:17 PM | Report abuse

Ezra, you're overlooking the fact that a lot of high-earners are self-employed and have no paid vacations.

And, as publicly traded corporations sit on a record $2 trillion in cash, it is unlikely we will see much job growth in the management ranks of big firms. Instead, they are getting their bottom line growth not by growing the top line but by slashing jobs in the middle.

Posted by: rminiter | September 2, 2010 10:29 PM | Report abuse

As a child, my mother would give me very little time to do my chores. She said, "The amount of time it takes to do a task is the amount of time one is given. Given them more time, and they'll just do their work slower."

From the amount of internet comments I see posted between 9 and 5, I'd wager that if our workweek was 30 hours, instead of 40, for a lot of cubicle workers, just as much would be done, just with fewer internet breaks.

As for vacation time. Only two weeks off a year sucks. Its why I quit my old job and went back into academia. Spring break, winter break, summer break, its awesome! The loss in salary from that switch doesn't even compare to the happiness my travels have brought me or the extra time per year I get to spend seeing family that live too far away to see during non-vacation periods. Of course, some of those are working vacations, but writing a research paper in a cabin in the woods or while visiting family is much easier on the soul than staying in the office.

Posted by: nylund | September 3, 2010 1:07 AM | Report abuse

This isn't a productivity or economic growth issue, it's a social justice issue.

All of the arguments against mandating vacation time (it will harm productivity, it will impose costs to employers, etc) could be made against the 8-hour workday. I'm sure workers are less productive because they don't work 6 days a week, too, but I don't hear anyone arguing for the return of those halcyon days.

At my job here in Denmark, we're given 5 weeks holiday and every year, we can choose to either take a sixth week of holiday or get a pay bump.

If employee choice is a value we want to uphold, the government could mandate that all workers get, say, three weeks of holiday per year and must be given the option of another two weeks or the equivalent in extra pay. This allows workers who would rather have the disposable income to take it.

Every legal protection of workers' rights has reduced productivity and imposed burdens on employers, from the minimum wage to health and safety provisions to workplace inspections. The fact that mandatory vacations would do this isn't a disqualification.

Posted by: RotteninDenmark | September 3, 2010 1:59 AM | Report abuse

"All of the arguments against mandating vacation time (it will harm productivity, it will impose costs to employers, etc) could be made against the 8-hour workday. I'm sure workers are less productive because they don't work 6 days a week, too, but I don't hear anyone arguing for the return of those halcyon days."

Really?

Almost every high income (200k+) person I know works far more than 40 hours a week. And more importantly, while theyre at work, they only work. There's no websurfing or anything else in downtime.

"If employee choice is a value we want to uphold, the government could mandate that all workers get, say, three weeks of holiday per year and must be given the option of another two weeks or the equivalent in extra pay. This allows workers who would rather have the disposable income to take it."

We already do this. Take your unpaid vacation if you choose.

Posted by: krazen1211 | September 3, 2010 2:44 AM | Report abuse

Another aspect of this discussion, I would like to add, is that companies if anything are lowering access to vacation time. Many co's are now limiting the amount of vacation and/or sick leave that can be carried over from year to year. My wife's company has recently done so while declaring that they had 6 months to use it or it could be cashed in at fifty percent of value. Again this follows the current trend of "cooking the books' and allowing upper mgmt to "earn" a larger bonus for the year. Meanwhile ignoring employee morale and undermining any loyalty.

Posted by: Falmouth1 | September 3, 2010 6:22 AM | Report abuse

I agree with what is being said in this post. It doesn't seem fair that the more wealthy workers who have enough money to be able to afford an unpaid vacation still receive a paid one from their employers. It just isn't logical or ethical I believe that people with the ability to afford such things are given additional benefits at the expense of smaller and less important employees down the food chain. Maybe a bill submitted to congress that mandated some sort of paid vacation for lesser employees would help to level the playing field as said. this bill could work its way up the corporate chain requiring a percentage of pay during vacation that decreased as it moved up the pay scale. This seems like a fair way to make sure everyone gets their fair share.

Posted by: rmami | September 3, 2010 6:45 AM | Report abuse

http://www.npr.org/templates/story/story.php?storyId=129137542

Unlimited vacation policy has already been in effect for several companies here in USA. Netflix have had it for a decade and it works. I would support this and I would think research in this would be valuable.

Posted by: AD1971 | September 3, 2010 9:48 AM | Report abuse

Germany, with a high minimum wage, mandatory paid vacations, universal health care, high-quality public education, decent unemployment benefits, a significant unionized workforce, other worker protections and benefits and much lower CEO pay than the US, is a major manufacturing and exporting country. Reihan Salam and the supporters of his fallacious, fact-devoid arguments here, really need to get out more and see the world. Start with getting to know the quality of life in France and Denmark, where my friends aren't terrified of bankruptcy due to a chronic illness or disabling accident, and despite a relative lower salary, enjoy many more benefits as employees and citizens.

Posted by: nancycadet | September 3, 2010 11:05 AM | Report abuse

--"France and Denmark, where my friends aren't terrified"--

And they live in homes the size of shoe boxes, drive cars (if they can afford them) the size of skateboards, hang their clothes on lines because they can't afford either the dryers or the electricity to run them, eat out of pint size refrigerators for the same reason, etc., and look down their noses at Americans. You should go live there and be happy meddling in each others' lives.

Posted by: msoja | September 3, 2010 11:39 AM | Report abuse

It's funny and sad that many of the right-wing commenters lack the facts or the actual experience to support their assertions. For instance, about replacing absent workers during vacations, there are numerous examples of businesses that shut down for that period, and everyone on the staff takes a holiday. Here is a link to a food blog that describes, from a first-hand perspective, what the traditional vacation time of August is like in Paris:
http://www.davidlebovitz.com/2010/08/farro-salad-with-tomatoes-mushrooms-and-basil/

Posted by: nancycadet | September 3, 2010 12:28 PM | Report abuse

"It's funny and sad that many of the right-wing commenters lack the facts or the actual experience to support their assertions. For instance, about replacing absent workers during vacations, there are numerous examples of businesses that shut down for that period, and everyone on the staff takes a holiday."

Which puts paid to the 'more vacation, more workers hired' theory, doesn't it?

How is having businesses shutdown for extended periods because of a government mandate a good thing? From a customer's point of view that's no good at all.

If you like very long vacations, great, start a company and have 5 or 6 week vacations as a general policy. If its a good idea you'll have competitors imitating it in no time. Or move to one of the various utopias already in existence in Europe.

Posted by: justin84 | September 3, 2010 2:05 PM | Report abuse

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