Will you be barbecuing this Labor Day, or slaving away at the office? According to new survey data from Bloomberg BNA and Beyond.com, many Americans will have the somewhat ironic pleasure of laboring on the day that’s meant to commemorate the “social and economic achievements of the American worker.”
Bloomberg BNA data shows that 39 percent of employers will keep operations open and require some workers to come into work, while a seperate survey of Beyond.com users says that 45% of those folks will spend Labor Day working or looking for work.
Surely the Beyond data isn’t representative of the American population, as people using that service are more likely to be on a job search. But these numbers do call to mind an empirical fact: When it comes to getting paid time off, American workers are far behind their peers in other developed countries.
The above chart from The Center for Economic Policy Research (CEPR) highlights the differences in legal requirements for paid time off in the developed world. The United States is a major outlier among its developed peers when it comes to mandatory time off, and that ends up effecting poorer workers more than anybody else. According to the CEPR, though 23% of American workers don’t receive paid time off, that number jumps to 49% for the bottom fourth of wage earners.
So do we benefit at all from working so much more than our developed peers? Left-leaning economists think not. TIME investigated the issue last year, quoting CEPR economist Jason Schmitt who argued the macroeconomic effect of mandatory paid time off is “actually pretty small,” and that “It’s very hard to say that those policies are connected to any kind of a reduction in economic performance.”
But does this make sense? If employers are required to give a worker a lot of time off, that worker is going to produce less. All else equal, this will make the worker less valuable to an employer, and lower his pay. In this time of over-indebtedness, both among citizens and the government, it hardly makes sense to enact restrictions on how much people are allowed to work, as it’s only through work that we’ll lower these debts.
That being said, there is evidence that countries that have higher paid time off requirements actually work more efficiently than workers in America do. Take Belgium for example, which requires a whopping 30 days of paid time off. Though Belgium’s output per person was just 71% of America’s in 2012, its output per hour worked was 100.5% of America’s. In other words, when Belgian workers are on the job, they’re slightly more efficient than Americans. Then again, Belgium consistently has a higher unemployment rate than the U.S., which may mean that its least efficient workers simply can’t find a job at all.
Furthermore, apart from a few small outlying countries, American workers are the most productive in the world. Since that’s the case, we must be doing something right. Many economists believe our relative productivity is a product of having fewer restrictions on businesses, like requiring paid time off.
The debate over paid time off is actually quite similar to that over the minimum wage. After all, vacation time is just another form of compensation. Logically, requiring employers to give vacation time is going to decrease pay, and increase unemployment on the margin.
But the real economy is a much more complicated place than theoretical models suggest, and there are most likely cases where labor markets just aren’t that competitive, allowing employers to pay workers less than they’re worth. In those situations, mandated paid time off would have little economic downside — and let more of us celebrate Labor Day together.