So, Who Thinks the Paid Vacation Act Is a Good Thing?
I'm an employer and I rue the days when Congress involves itself in the relationship between employers and employees. (Anyone remember pre-FMLA days when an employer could provide as much unpaid time off as he wanted without fear of discrimination charges later?)
Well, here we go again. In short, Rep. Alan Grayson (D-FL) plans to introduce the Paid Vacation Act that will require employers with 100 employees to provide one week of paid vacation after an employee is employed for one year. According to the Politico, the Paid Vacation Act:
"...would require companies with more than 100 employees to offer a week of paid vacation for both full-time and part-time employees after they’ve put in a year on the job. Three years after the effective date of the law, those same companies would be required to provide two weeks of paid vacation, and companies with 50 or more employees would have to provide one week."
In response, the Society for Human Resource Management (SHRM) issued a statement about one-size not fitting all employers. My predictions? One-size doesn't fit all employers and if this Paid Vacation Act becomes law, these are some potential consequences.
- Some employers will cap their growth at 50 or 100 employees so as to avoid compliance.
- Fewer employees will be hired. This is a huge raise in business expenses in a country where business already pays the fourth highest tax rate. According to a study cited by the Cato Institute:
"KPMG found that the United States has the fourth highest corporate income tax rate in the 30-nation Organization for Economic Co-operation and Development. The combined U.S. federal and average state rate of 40 percent is almost 9 percentage points higher than the average OECD top corporate rate of 31.4 percent. Only Belgium, Italy, and Japan have higher rates than that of the United States."
- Employers may be forced to change or reduce other benefits that may be more important to their employees.
- Employers will reduce the pool of money available for compensation increases and may freeze increases and take other steps necessary to reduce costs.
Anything else? What do you think about the potential Paid Vacation Act? Approximately 75% of American workers, including my company’s employees, have paid vacation time. While I am sympathetic to the 25% of employees that don't, do you think there might be a reason why their employers don't supply paid vacation time?
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Employers will restrict hiring but only at the margin. Those that find it worthwhile to have more employees, will. The problem of overwork in America is very large, and has many personal and social consequences. This may be “bad for business” but since the United States is one of only four nations in the world, the only “developed” nation at that, that doesn’t have mandatory paid vacation time, something needs to change.
It may be good that companies cap their growth at “50 or 100 employees”… Then it would allow other people to start up businesses (assuming entry is relatively easy) and provide disincentives for large companies which are generally damaging to society and to the environment.
It is high time that America’s workplaces become a positive place for people to be, that doesn’t take over our lives and control what we do, where we live, and how we live. We work 5 weeks longer than our European counterparts, assuming a “standard” 40 hour workweek. We worked on average 200 hours more in 2000 than we did in 1973 (according to the Economic Policy Institute).
Like credit card companies have been profiting at the expense of many Americans, so have many of our businesses, by not providing to their workers sufficiently. And don’t think that corporations actually foot 100% of the taxes they have to pay: simple economic theory states it’s shared between consumers and producers, and in the long run, consumers foot the total bill.
I want to know why the government thinks this is necessary? I have never worked for a company, nor heard of a company, that has not provided vacation of some sort and all of the plans I have participated in have been more generous than what congress is proposing. Is there really a need for a federally mandated vacation policy? With everything that is going on in the country can’t we focus on more important issues?
While I agree with you that government should stay out of business, especially small business, in most instances, I think this is a case where a federal minimum standard is a good idea. On the one hand, there are the expenses you noted that do cut into the bottom line. But on the other, many organizations that use some form of paid vacation or a central leave bank, when combined with strong employee engagement best practices, see lower absenteeism, presenteeism, and turnover and greater productivity — all of which outweigh the associated costs and help with recruiting.
The Top Small Workplaces our nonprofit, Winning Workplaces, has honored the last two years with The Wall Street Journal demonstrate this. They have seen average three-year revenue growth of 23% and still offer an average of 26 paid days off to employees per month (includes holidays and sick days as well).
April, there are 27 million Americans who do not get a single day of paid vacation, almost 30% of all employees. Few people know that.
Ordering us to give employees vacations? It is absolutely unbelievable that some politicians want the government to control every aspect of our lives including what we do, where we live, and how we live. It may be helpful to remind people that we fought the American Revolution to get the government (i.e. the British) out of controlling our lives. Anybody remember the Boston Tea Party? Or do they teach history in our schools anymore? This country and people used to value freedom above all other values? We did not want government to control our lives. Isn’t that why the U. S. Constitution says that all powers NOT specifically stated belong to the STATES–NOT to the federal government? I think some people need to learn more about our history.
Like April said, all the companies that I have worked for over 30 YEARS have provided paid vacation. Also, I too really don’t know any company that does not provide for vacation. However, like you said, Susan, is it possible that any such employer that does NOT provide vacation MIGHT have a legitimate reason for that practice? WHY do employers provide vacation? Do Brian or Todd know why? Do people understand that employers DO provide vacation as one means to attract quality employees? We live in a market economy in which employers compete in products or services and for employees as well. That means we tend to get better wages, better working conditions, and better benefits, among other things as compared with other countries around the world. Have anybody lived in Africa, as I have, as one example?
Has anybody noticed that China has adopted a market economy (i.e. capitalism) and is prospering beyond belief? Does anybody realize that it is predicted that China will be the next superpower (replacing the U. S.)? Is there a reason for that? And please don’t get sidetracked by erroneous issues like low pay–that misses the point. Do people realize that Western European countries are starting to turn away from socialist policies because their economies can no longer support the economic burden of such policies? This is in addition to the collapse of the Soviet Union and the communist governments. It is wrong to use ideology to make government policy, in my opinion.
I have seen my family get all twisted up over religion, and I see people doing the same thing today over ideology in making government policy. I am happy I am closer to the end of my life and will not have to see this evil come to pass much longer. Government can NEVER know more about a company’s employees than the company does. NEVER!!
Some people need to remember some of these things so that they have a balanced picture of reality based on truth–not based on prejudice.
My first job, in radio, did not offer any time off except weekends, and even then I was expected to come in if my employers wanted me to. It was a horrible place to work, and my employers were real bullies. My hours were horrific, and finding another job at that time was difficult. I believe a minimum of two weeks’ paid holiday a year should be required by law. It’s in the smaller companies where it’s needed most — if you don’t have time off to depressurize, you end up getting the sack for finally not being able to take the stress anymore or you collapse of exhaustion. A lack of paid vacation amounts to slave labor.
Yes, I believe that there has to be a force that backs the little guy from the corporate/business owner’s “over-riding-all-else” philosophy, which is that all must be done to maximize profits! The force that moderates this self-serving perspective is government regulation or strong union negotiation. Look back into history, or just to the recent past, and see what unregulated greed can do to those that make the engine of the economy run: the consumer who is the employee of those who only wish to maximize profit.
Has anyone read Ayn Rand’s book, Atlas Shrugged? It paints a picture of what happens when government thinks it can run business better than the business owners can. Go to the Ayn Rand Institute website to learn more.
I agree with Gary. I think it is scary to give the government that much control. I have always worked with companies that have vacation policies and have seen where other areas that government has gotten control have “tied the hands” of small employers trying to do right by thier employees. I think small companies will be forced to cut other benefits, especially in light of the potential of this Act to require paid vacations to part time employees. I have never worked for a company that provided paid vacation to part timers.
I have lots of thoughts on this one. They can be summed up in Thomas Jefferson’s famous quote: “That government is best which governs least.” What the lawmakers forget is the unintended consequences of this kind of law. Just one: Many employers would just let employees go after a year. It is also ridiculous to give paid vacation to part-time employees – most part-timers get no benefits; they are paid by the hour.
I would need to know more about the “27 million Americans” who don’t get paid vacation. Many of them might be seasonal or temporary workers, or part-timers. Or maybe they haven’t worked long enough at any one job because they can’t keep a job.
Finally, who said it was a “Right” to have paid vacation? Sure, everyone needs time off, but that doesn’t mean your employer has to pay for it.
I’m a freelance writer; if I take time off, I don’t produce, and I don’t get paid. So I guess the next step is for Congress to say that all small business owners are entitled to paid vacation too! Ridiculous.
Finally, if this stupid legislation were to be enacted, who is going to pay for it – you’re right – the consumer. It would result in (1) more layoffs, (2) higher prices.
Remember those unintended consequences.
I agree with Cathy – I have never known of part time employees receiving the same benefits of full time employees. There are better ways of encouraging American business to give paid time off than making a law. There would be many unintended consequences, as Jean Murray points out. How can you make a law about vacation without considering sick time? The law may limit forward thinking concepts such as PTO.
I’m sure no one will be interested in this comment given that it is from Australia but thought you might be interested to know. Legislation requires all Australian employers to provide four weeks annual per annum regardless of the number of employees. We also have a Long Service Leave Act that provides for 8 and 2/3 weeks paid leave after 10 years of continuous service (varies slightly by state and industry sector). It is just the way we do business, now paid maternity leave….that is another issue altogether pretty much only seen in the Public Service and large companies.
It is important to examine the facts about the actual state of vacation time in the U.S., rather than engaging in conjecture about what businesses might do if the Paid Vacation Act passes:
FACT: Only 14% of Americans take two weeks of vacation each year. [http://media.expedia.com/media/content/expus/graphics/promos/vacations/expedia_international_vacation_deprivation_survey_2008.pdf]
FACT: 50% of Americans will take less than one week of vacation this year. [http://www.timeday.org/right2vacation/poll.asp]
FACT: The Framingham Heart Study has established that taking regular vacations increases the overall health of the employees who take them. [http://www.psychosomaticmedicine.org/cgi/content/abstract/62/5/608]
FACT: Stress and burnout at work cost the U.S. economy more than $300 billion per year. [http://www.timeday.org/right2vacation/care.asp]
It appears there is no empirical evidence to support the statements about caps on workers, decreases in benefits, or freezes in compensation. While the extent of government involvement in U.S. businesses will always be a hot-button political issue, the Paid Vacation Act is not about politics, but about the health and well-being of the American worker.
Generally I agree that the government should stay out of our lives but this is a Humans Right Issue. Corporate America has cut and cut benefits since the 1970’s to the point where I’m starting to think we’re in the 1920’s. The government needs to have a better over arching bill of rights for employees from Health Care to Vacation. Otherwise corporate america will take us to sweatshop style employment.
I appreciate Andrew’s comments above and I agree with Nate–it is a human rights issue. I would also usually tell government to stay out of private business, but I have experienced corporate greed first-hand.
I work for a company that started as a division of a larger company with that company’s benefits, including paid vacation, floating holidays and other things like a mileage reimbursement for business use of a private vehicle. I put about 20,000 business miles on my personal car every year.
A few years ago, my former employer decided to ‘partner’ with another large company and separate our division into a freestanding ‘joint venture’ owned half and half by the two larger companies. When this occurred, I remained an employee but lost my salary and went entirely over to incentive pay. Although I was technically still an employee with tax witholding, an emloyment contract that forbade outside work and I was still in the company health and pension plans, I became known as a ‘vendor’.
All of the hourly administrative workers, managers and executives were still called employees and kept all of the benefits they previously had. I now have no paid vacation (but I have to give notice before taking off), no floating holidays, no mileage reimbursement and can no longer expense about half of what I did previously. Our comp rate is still the same as it was from the beginning, but our responsibilities have increased tremendously.
I find it very hard to justify anything other than an occasional long weekend because I lose income every time I take off. For a while, the new company paid us an annual retention bonus and I used that for a vacation, but after two years that stopped. They also stopped leasing office space for us, moved us home, and have since cut what they originally paid toward our phone, internet and office expenses in half, telling us to deduct it and the mileage on our personal income taxes. I do take the mileage deduction, but anyone who has tried to justify a home office deduction on their taxes knows how well that works.
I tried protesting all of this but was told nothing could be done and that I was replaceable. It’s not important to the discussion, but if I told you what my job was, all of this would make perfect sense in light of what has transpired in the economy over the past year.
Certain companies have gamed the system and this MUST be addressed by government because no one else can do it. No right-minded medium to large corporation would object to a week’s paid vacation. Smaller businesses, start-ups and sole proprietors should be exempt. To those who want absolutely no government involvement, let me remind you that ‘let them eat cake’ has already been tried.
You do realize that virtually every country in the world has some sort of mandatory vacation policy, except the US?
I am so sick of US employers moaning that they cannot afford what the entire world manages with no hardship.
http://money.cnn.com/2007/06/12/pf/vacation_days_worldwide/#table
for example:
Australia: 20 days minimum
Finland 30 day minimum
Egypt 21 days minimum
India 12 days minimum
Ireland 20
Japan 20
Lebanon 15
Poland 26
South Korea 19
UK 20
Vietnam 14
I intentionally mixed in non-European countries as well.
So I ask again, if every other country in the world can offer paid time off to its employees, why is it seen as such a radical concept here? My boss can legally make as much in a day as I earn in a year, but we are meant to feel eternally grateful for 2 weeks off, and if we lose a job for any reason and need to start over at 40 with no paid time off again, well then too bad for us?
Sorry, I have no real sympathy. When Japan and India, not example bastions of liberal policy, can manage it and our businesses can’t, I have to ask why our businesses are so poorly run that they cannot “afford” to give people paid time off.
AMERICANS, what is WRONG with you??!!
After living most of my life in the USA, and tired of the BS, I left for a better life in Sweden. Here, we have 25 PAID vacation days, by law! Studies showed that swedes are MORE productive than the average American in the workplace. Much of that is due to well rested, de-stressed workers! Swedes cannot believe that Americans get so little paid vacation. Neither can I! Nay-sayers keep using the same old card…”we will have to cut employees, hire less, make less money”…yadah yadah. Same old excuse. Guess what, Swedish businesses do quite well financially, while at the same time giving their employees generous vacations. TAKE BACK YOUR TIME! GIVE AMERICANS 4 weeks MININUM of vacation, like the rest of the western world! Out of 21 countries ranked for R&R, the USA ranked DEAD LAST!
Food for thought!
I believe in vacation time! We give our employees up to 4 weeks depending on length of service. It is one our competitive edges in securing good, long-term employees. However, I cannot make my employees take the time off unless I do a shutdown of production. Will there be a mandate for taking the time too?
I work for a highway road construction company where office employees get paid vacation, but field employees do not. No work, no pay. These men are probably the hardest working in my company, yet they are not eligible for paid vacation or medical benefits. It’s about time all Americans received paid vacation.
This hits Real close to home I was hired and was told I would have 2 weeks paid vacation as management after a year. First of the year our “small” business took our vacation away and consolodated ( that was not needed) now we all work 2 to 3 jobs and see exhausted! There needs to be some mandates on these businesses to help the people who work HARD everyday!
Some people had been there 10 or even 20 years!
That’s just plain cruel
And greed