Many people don't use up their vacation days. Here's how it is costing workers -- and businesses.
One editor at a weekly magazine admits that he skimps on vacation. In more than two decades, he says he has only used all of his annual vacation days twice–the years his child was born and when he was promoting his book.
He is far from the exception. Paid leave, whether in the traditional structure of vacation and sick days or as the more general bank of hours paid time off policy, makes up nearly 7% of total compensation in private industry, according to the Bureau of Labor Statistics. But employees rarely use all the time allotted. Workers, on average, fail to use nearly five vacation days a year, the U.S. Travel Association found.
As a result of all these unused days off, one study puts the liability taken on by U.S. businesses at $224 billion, due to workers’ rolling over unused paid time off. And that doesn’t take into account the fact that when people don’t take time off to reset, their resulting stress and burnout can be detrimental to both workers and their employers.
“I didn’t realize how extreme it was until I saw the research,” said Cheryl Rosner, CEO of Stayful.com, a hotel bidding and booking site. “It’s an epidemic of overwork. Forty-one percent of Americans don’t take their paid time off. On those days, you’re paying your employer to be at work.”
What could possibly explain not taking advantage of paid time off?
One oft-cited reason is facing too much of a mess upon return to work.
A reporter who divides his time between three publications in the Baton Rouge area said he leaves vacation days on the table quite often. “In the newspaper business, it’s risky,” he said. “You just don’t know how far behind it puts you.”
The editor from the aforementioned weekly magazine added, “I always felt (whether it was true or not) a mild pressure not to skip more than one issue. So you’d have to go away three or four times a year to use it all, which is not so easy. Also, because I have been here forever, I’m up to five weeks’ vacation. We have a pitch meeting every week, probably 50 times a year, and I can’t really see missing 10% of them. It would be a little too visible an absence.”
The amount of unclaimed days may also rise depending on an employee’s seniority.
When Latham Pali, the President at JP Nissen Co. was considering moving the company to paid time off versus the standard sick day/vacation day split, he surveyed employees and noticed a trend: “The higher up the person was in the company, the more time they left on the board. The lower down, the more they took. Now, often, people higher up have more to start with, and I did not look at if from a percentage standpoint, just the trend. What I also saw was that when a company switched from a sick day/vacation day pool to an all paid time off, they generally took more days off over the course of the year.”
But that blurring of lines between vacation and sick days can have drawbacks when there’s a limited number allotted. An administrative worker at a New York City law firm said, “If you’re sick and use all your days on that, you’re pretty much screwed. We also have to use it to do things like doctor appointments. If you have an appointment for an hour or so during the day, you have to use PTO to cover it.”
She also pointed out that workers may be more likely to come in when sick rather than use up their potential vacation days or take unpaid time off. “We had someone die in the office–die IN THE OFFICE–last year. She was pushing herself to come to work because she had no more days and could not afford to take unpaid time off.”
Inflexible scenarios like that can reflect deeper issues in the corporate culture, not just a lack of a progressive paid leave policy.
“If no one’s taking time off, that’s company culture,” Rosner said.
Like a few other tech startups, Stayful has unlimited paid leave. There is no asking for vacation days. Instead, employees use a team calendar. “It’s a culture of accountability…they’re self-monitoring, like adults do,” said Rosner.
Of course, people won’t take advantage of the policy unless the culture really supports it. If the startup has a 24-7, workaholic culture, workers still may not feel comfortable taking vacations, regardless of what the policy says. “It’s super important to model the behavior you want to see, and we want people to get out and take their time off,” Rosner said.
She has worked at startups long enough (including roles at Expedia and Hotels.com) that she doesn’t remember a time when she was counting an employee’s vacation days. But she has been in a position where she had to push someone who was burning out to take time off.
In fact, the company provides employees with $200 in hotel credits per year–use it or lose it– as incentive for taking time off. And even when employees can’t afford to travel, she says they should still take some days for a stay-cation–spend time with family and friends, take a hike, walk around the city, go to a spa. That paid time off is necessary to be happy, healthy, and productive.
“We need to help people shift their perspective,” said Rosner. “It’s not a perk.”