All Work, No Pay: The Impact of Forfeited Time Off

0

As prepared by:

Oxford Economics

September 2014

All Work and No Pay: The Impact of Forfeited Time Off

October 2014

• Americans are taking less vacation time than at any point in the last nearly four decades. In 2013,

employees entitled to paid time off (PTO) took and average of 16 days of vacation compared to an

average of 20 days as recently as 2000.

• Among employees with PTO, nearly five days went unused in 2013. Of those five days, 1.6 days

will be permanently lost, totaling 169 million days across the workforce.

• By choosing to work instead of taking PTO, employees are essentially working for their employers

for free. The 169 million days of forfeited PTO equates to $52.4 billion in lost benefits.

• Employees who forfeit PTO do not receive raises or bonuses at a faster rate than those who take

all of their vacation time. However, employees leaving days on the table report higher levels of

stress at work.

1

Key Findings

Oxford Economics’ analysis is based on the Monthly Current Population Survey results reported by the

U.S. Bureau of Labor Statistics (BLS) and a June 2014 survey of 1,303 American workers conducted

by GfK Public Affairs and Corporate Communications in conjunction with Oxford Economics. The BLS

data compiles long-term vacation activity, while the GfK results indicate average vacation days taken.

By combining the two data sources, Oxford Economics determined long-term, historical vacation

activity among American workers.

For a full methodology, refer to page 41.

2

Methodology

Long Term Trends in Vacation Usage

Long Term Trends Vacation Usage Show Steady Decline

Analysis of BLS data shows a steady decline in the number of vacation days taken by Americans

over the past two decades.

In 2013, employees with paid time off took 16.0 days of paid leave. As recently as the 2005 to

2010 period, Oxford Economics estimates employed adults took an average of 18.1 days of

vacation annually. Over the long-term period from 1976 to 2000, annual vacation time used

averaged 20.3 days.

If Americans returned to vacation patterns experienced on average from 1976 to 2000 (20.3 days

per year on average), annual vacation days taken by employed people would increase 27%,

which would be equivalent to 768 million additional days of vacation at a national level (4.3

additional vacation days, times 179 million employed people based on Bureau of Economic

Analysis).

4

Long Term Trends Vacation Usage Show Steady Decline

If Americans were to use those 768 million days, it would result in $284 billion of economic

impact, including $118 billion in direct travel spending.

Full-week vacations have steadily declined over the more than 35 years covered by the survey.

The impact of this decline was offset by increased incidence of partial-week vacations through

the mid-1990s. Since then, the frequency of partial-week vacations has eased, even as the

frequency of full-week vacations has continued to decline.

5

Annual Vacation Days

6

14

15

16

17

18

19

20

21

22

1976 1981 1986 1991 1996 2001 2006 2011

Average Vacation Days Used, Among Employed Adults

Annual Vacation DaysLong Term Average

(1976 to 2000)

20.3 days

Estimated Annual

Vacation Days Used

(24-month moving

average)Recent Average

(2013)

16.0 days

Full-Week Vacation Activity has Steadily Declined

7

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1976 1981 1986 1991 1996 2001 2006 2011

Full-Week VacationsNot at work all week due to vacation, among employed adults

Percentage of Employed Adults on Vacation

Full-Week Vacations

(24-Month Moving

Average)Recent Average

(2013)

1.7%

Partial-Week Vacation has Leveled Off Since the Mid 1990s

8

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1976 1981 1986 1991 1996 2001 2006 2011

Partial-Week VacationsUsually work full time, but worked fewer than 35 hours due to vacation

Percentage of Employed Adults on Vacation

Partial-Week

Vacations by Full-

Time Workers

(24-Month Moving

Average)

Recent Average

(2013)

2.2%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1976 1981 1986 1991 1996 2001 2006 2011

Vacation Activity by TypeFull-Week and Partial-Week Vacations

Percentage of Employed Adults on Vacation

Partial-Week Vacations by

Full-Time Workers

(24 Month Moving Average,

Usually Work Full-Time but

Worked Fewer than 35

Hours Due to Vacation)

Recent average

(2013)

1.7%

Full-Week Vacation

(24 Month Moving

Average)

Recent average

(2013)

2.2%

Decline of Full-Week Vacations is No Longer being Offset

9

Analysis of Unused Vacation Time

• This analysis assesses the value of paid time off (PTO) forgone by US workers.

• For the purposes of this analysis, PTO includes vacation and personal days, but excludes sick days

and paid holidays.

• The study is based on a survey conducted by GfK and Oxford Economics on behalf of U.S. Travel.

11

Introduction to the Survey

20.9

16.0

4.9

0

5

10

15

20

25

EarnedPTO

TakenPTO

UnusedPTO

PTO Summary

Days PTO Utilization 77%

• On average, employees surveyed

earned just under 21 PTO days in 2013.

• Employees took an average of 16 PTO

days, and left 4.9 days on the table.

• On average, U.S. workers used 77% of

earned PTO.

12

Summary Metrics of PTO

18.5

23.2

18.2 17.9

11.5 10.7

0

5

10

15

20

25

1-10 11-15 16-20 21-25 26-30 31 ormore

Amount of PTO Earned% of respondents

Days of PTO

Average

20.9 days

13

• Nearly a quarter of employees earn

between 11 and 15 PTO days per year.

• Just under 60% of employees earn

between 11 and 25 PTO days per year.

Distribution of PTO

14

• Nearly 40% of workers take between 10

and 19 PTO days.

• Just under a quarter of employees take

less than 10 PTO days.

Distribution of PTO Taken

4.1

19.3

38.0

22.3

16.1

0

5

10

15

20

25

30

35

40

0 1-9 10-19 20-24 25+

Amount of PTO Taken% of respondents

Days of PTO

Average

16.0 days

• Not all unused PTO is actually lost.

• Most employees (56%) can either roll

over or bank PTO days for later use.

• But nearly a quarter (23.4%) lose it at

the end of the year.

15

Options for Unused PTO

4.0

8.8

16.4

23.4

47.4

0 10 20 30 40 50

Don't know

Bank it

Be paid for it

Use it or lose it

Roll it over

Options for Unused PTO

% of respondents

1.3

9.9

19.0

19.6

20.5

29.7

0 10 20 30 40

Don't know

16-20 days

11-15 days

6-10 days

21+ days

1-5 days

The Limit to Bank it or Roll it Over

% of respondents

• Of those that can roll it or bank, there

are caps and expiration periods.

• Nearly a third (29.7%) can only roll over

or bank five days or less.

16

Limits on Rolled Over PTO

3.7

5.0

5.2

5.4

6.5

0 5 10

<$29k

$30 to <$50k

$50 to <$75k

$75 to <$150k

>$150k

Unused Days of PTO in 2013Days by income group

Days of

PTO

Averag

e

4.9

Days

• Higher income earners tend to earn

more PTO, and also leave more PTO

days on the table.

• On average, the US worker did not take

4.9 days of earned PTO in 2013.

17

Unused PTO by Income

• After taking into account caps and

expiration of roll over and banked PTO,

a portion is actually lost.

• Higher income earners have more to

lose.

• On average, U.S. employees lost 1.6

PTO days in 2013.

18

PTO Lost After Constraints

1.3

1.4

1.9

1.7

3.8

2.4

3.6

3.4

3.7

2.8

0 2 4 6 8

<$29k

$30 to <$50k

$50 to <$75k

$75 to <$150k

>$150k

Lost PTO

Unused

Days of PTO Lost in 2013Days by income group

Days of PTO

Average

Days Lost:

1.6

• On average, U.S. employees lost more

than a third of their unused PTO.

• High income earners lost more than half

of unused PTO days.

19

Lost PTO

35.6

28.6

35.6

31.5

57.5

0 50 100

<$29k

$30 to <$50k

$50 to <$75k

$75 to <$150k

>$150k

Share by income group, %

Days of PTO

Average

Share Lost

34%

Share of Unused PTO Lost in

2013

• Based on total annual income and an

assumed 260 work days, the value of a

forgone PTO day was estimated by

income group.

20

Estimated Value of a Foregone PTO Day

$38.46

$105.77

$144.23

$211.54

$307.69

$432.69

$625.00

$0 $200 $400 $600 $800 $1,000

<$20

$25 to <$30

$35 to <$40

$50 to <$60

$75 to <$85

$100 to <$125

$150 to <$175

Estimated Value of a Forgone PTO

Income in Thousands

$ Per Day

• Lost PTO days multiplied by the value of

a forgone day yields an estimate of the

monetary value of lost days by income

group.

• On average, U.S. employees give up

$504 in paid time off – essentially giving

their employers that amount in free

work.

21

Value of Lost PTO Days

$108

$234

$470

$770

$3,427

0 2,000 4,000

<$29k

$30 to <$50k

$50 to <$75k

$75 to <$150k

>$150k

Value of Lost PTO Days$ by income group

Average

$504

$ Pay Cut

0.5

0.6

0.7

0.6

1.4

0.0 0.5 1.0 1.5

<$29k

$30 to <$50k

$50 to <$75k

$75 to <$150k

>$150k

Percent Value of Lost PTOBy income group, %

Average

1.1%

• By forgoing these days, employees are

essentially working for free.

• High income earners give up the most,

1.4% of their pay, on average.

• Overall, U.S. workers give 1.1% of their

salary back to their employer each year,

in the form of free work.

22

Value of Lost PTO Days

16.7 13.4 17.5

23.2

10.8

21.1

83.3 86.6 82.5 76.8

89.2

78.9

0

20

40

60

80

100

0 1-5 6-10 11-15 16-20 21+

Yes

No

Recent Bonus by Unused PTO% of respondents

Bonus in

Last 3

Days of Unused

• There is no evidence that taking less

time off boosts the chance of getting a

raise or a bonus.

• Employees who used most earned PTO

were just as likely to get a raise or

promotion than those who left PTO

unused.

23

Pay Raise Based on PTO Used

• Employees that worked between 40 and

49 hours per week were slightly more

likely to have received a recent pay

raise.

• But this relationship was not apparent at

higher levels of hours worked per week.

24

Pay Raise Based on Hours Worked

12.0

71.0

12.0

5.0

13.0

67.0

14.0

6.0

0

10

20

30

40

50

60

70

80

35-39 40-49 50-59 >60

Yes No

Weekly Hours by Recent Raise% of respondents

Raise in the

last 3

years?

Weekly Hours

45

7

13

8

2119

18

20

21

0

5

10

15

20

25

30

35

0 1-5 6-10 11-15 16+

Very

Extremely

Stressed at Work% of respondents

Days of Unused PTO

• Stress at work was clearly associated

with leaving more unused PTO days.

• The more PTO days employees leave

behind, the more likely they are to report

being “very” or “extremely” stressed at

work.

25

Stress at Work

1

2

1

6

3.16

7

8 9

5

2.11

0

2

4

6

8

10

12

0 1-5 6-10 11-15 16+

Very

Extremely

Stressed at Home% of respondents

Days of unused PTO

• While a relatively small share of workers

reported stress at home, the share tends

to increase the more days of PTO

workers leave on the table.

26

Stress at Home

• The amount of time off forfeited for the

entire economy is the average amount of

free labor hours times the total jobs in 2013.

• Average amount of free labor= $504

per job

• Estimated non-farm payroll jobs in

2013 that received PTO: 103.9 million

• Total economic impact= $52.4 billion, which

is greater than total wage and salary income

in several states.

27

Extrapolate to Total Economy

52.4

0 25 50 75 100 125

New Hampshire New Mexico

Nebraska Mississippi

Arkansas Nevada

Voluntary Pay Cut Utah

Kansas District of Columbia

Iowa Oklahoma Kentucky

South Carolina Oregon

Alabama Louisiana

Connecticut

Voluntary Pay Cut in ContextTotal wage and salary income by state, $ billions

Findings by Region

22.1

17.9

4.2

21.1

16.6

4.5

20.6

15.0

5.5

20.2

15.8

4.4

0

5

10

15

20

25

EarnedPTO

TakenPTO

UnusedPTO

Northeast (81.0%)

Midwest (78.6%)

South (73.1%)

West (78.0%)

PTO Summary by RegionDays, utilization in parentheses (days taken/days earned)

29

• Workers in the Northeast earn more and

take more PTO.

• The South region stands out as taking

less PTO than other regions and leaving

more PTO days on the table.

PTO Summary, by Region

30

• Workers in the Northeast earn an

average of 22.1 days of PTO per year.

• More workers in the South and West

regions earn less than 15 days of PTO.

Distribution of PTO Earned, By Region

0

5

10

15

20

25

30

35

1-10 11-15 16-20 21-25 26-30 31 ormore

Northeast (22.1)

Midwest (21.1)

South (20.6)

West (20.2)

Amount of PTO Earned% of respondents by region, average PTO earned in days in parentheses

Days of PTO

31

• Few workers in the Northeast take less

than 10 days of PTO per year.

• Just under 30% of employees in the

South taken less than 10 days of PTO;

this is a higher share than any other

region.

Distribution of PTO Taken, By Region

0

5

10

15

20

25

30

35

40

45

50

0 1-9 10-19 20-24 25+

Northeast (17.9)

Midwest (16.6)

South (15.0)

West (15.8)

Amount of PTO Taken% of respondents by region, average PTO taken in days in parentheses

Days of PTO

• The West region of the US reported

leaving more PTO unused and also

more PTO actually lost.

• The Northeast region left fewer days of

PTO on the table and also lost fewer

days of PTO.

32

Unused and Lost PTO, By Region

1.3

2.0

1.7

2.2

2.8

2.4

2.9

3.4

0 1 2 3 4 5 6

Northeast

Midwest

South

West

Lost

Unused

Unused and Lost PTO by Region

Days of PTO

33

• Of the unused PTO days, employees in

the West tend to actually lose a higher

share at 46% due to roll over caps and

expiration banked and rolled over PTO.

Lost PTO as a Share of Unused PTO, By Region

32.1

36.6

39.4

45.7

0 10 20 30 40 50

Northeast

Midwest

South

West

Share of Unused PTO Actually Lost

Share, %

• The value of employees’ forfeited time

off is highest in the South.

• This is due to the low utilization of PTO

days. Also, more unused PTO days are

forgone by those in the higher income

groups.

• For Southern employees, this is the

equivalent to 1.5% of their salary,

compared to 0.6% in the Northeast.

34

Findings by Region

0.6

0.7

1.2

1.5

0.0 0.5 1.0 1.5 2.0

Northeast

West

Midwest

South

Percent Value of Lost PTO

Findings by Gender

• There were no major differences

reported by gender in terms of PTO

earned.

• Men tend to take less PTO and leave

slightly more on the table.

36

PTO Summary by Gender

20.7

15.8

4.9

21.2

16.4

4.8

0

5

10

15

20

25

EarnedPTO

TakenPTO

UnusedPTO

Male

Female

PTO Summary by Gender

Days PTO utilization

Male: 76.4%

Female: 77.2%

37

Distribution of Earned PTO, By Gender

17.5

23.0

19.9

17.5

11.6 10.4

19.8

23.4

15.8

18.5

11.3 11.2

0

5

10

15

20

25

1-10 11-15 16-20 21-25 26-30 31 ormore

Male Female

Amount of PTO Earned% of respondents by gender

Days of PTO

Male avg: 20.7 days

Female avg: 21.2 days

38

Distribution of PTO Taken, By Gender

5.5

19.1

38.0

21.1

16.3

2.2

19.5

38.1

24.0

15.9

0

5

10

15

20

25

30

35

40

0 1-9 10-19 20-24 25+

Male Female

Amount of PTO Taken% of respondents

Days of PTO

Male avg: 15.8 days

Female avg: 16.4

days

• According to survey results, female

workers tend to lose slightly more PTO

days compared with male their

counterparts.

• Women lost an average of 38% of

unused PTO, compared with 31% for

men.

39

Lost PTO, By Gender

1.5

1.8

3.4

3.0

0 1 2 3 4 5

Male

Female

Lost

Unused

Unused and Lost PTO by Gender

Days of PTO

• Both men and women gave their

employers just over $500 of free labor

per job.

• In percentage terms, women work for

free more than men, equivalent to 1.3%

of their salary vs. 0.8% for men.

40

Benefits Lost, by Gender

$503

0.8%

$505

1.3%

$ value % pay cut

Male

Female

Benefits Lost per Job, By GenderIn dollars and % cut per job

Per Job

Methodology

The analysis uses two sources of information. The first is the Current Population Survey (CPS),

which is a monthly survey of U.S. households that provides the national unemployment rate and

other labor force information reported by the Bureau of Labor Statistics.

For the purpose of this analysis, Oxford Economics focused on two categories of employed

people as tracked by the CPS. Those who were not at work all week, due to vacation, which we

refer to as “full-week vacations.” Those who usually work full time, but worked fewer than 35

hours during the week, due to vacation, which we refer to as “partial-week vacations”

We have referred to these two categories combined as: “employed, on vacation during part or all

of the week”.

These categories are focused on vacation time (including personal days), and exclude other

reasons such as illness, bad weather, labor dispute, or economic reasons such as a furlough.

The CPS asks respondents about their activities during a specific reference week each month.

This is defined as the week (Sunday through Saturday) that includes the 12th of the month; it is

modified on occasion to avoid major holidays that could impede data collection.

42

Methodology

Our analysis of CPS data found that people that were employed, but on vacation during part or

all of the week, represented 4.0% of employed people on average during 2013.

To put this measure in context, if an individual took vacation two weeks a year (either the full-

week, or partial-week) it would represented 3.8% of the year (e.g. 2 weeks / 52 weeks).

The second source of information used in our analysis is the Vacation Time Opportunity Survey

conducted by GfK and Tourism Economics in 2014 that shows the average employee with paid

time off used 16 days of vacation time in 2013.

Starting with this survey-based average of 16 days of vacation during 2013, we estimated days

of vacation historically, and forward into 2014, based on the CPS survey results.

The process of scaling the CPS data based on the 2013 survey result included assumptions on

the number of vacation days being taken by the two categories of survey respondents (full-week

and partial-week).

43

Methodology

The CPS provides an indicator of vacation activity, but it has some limitations. For example:

During the CPS interview, households are asked about the time they spent at work during

specific mid-month reference weeks. These weeks are selected by the Bureau of Labor Statistics

to measure stable work weeks, minimizing the impact of major holidays. As such, the CPS data

is an indicator of how vacation activity has changed during mid-month periods over time, which

may differ from vacation activity during major holidays.

The CPS provides an indicator of vacation activity, but it has some limitations. For example:

• During the CPS interview, households are asked about the time they spent at work during specific mid-month

reference weeks. These weeks are selected by the Bureau of Labor Statistics to measure stable work weeks,

minimizing the impact of major holidays. As such, the CPS data is an indicator of how vacation activity has

changed during mid-month periods over time, which may differ from vacation activity during major holidays.

• Changes in the ways Americans use their vacation time during the year could impact the survey results

independently of the actual quantity of vacation time used. For example, taking multiple short vacations, such as

two days of one week and three days of another week rather than a full five-day week, could result in a greater

incidence of vacation activity being measured in the CPS approach, even though the quantity of days could be the

same. Similarly, a trend of taking shorter partial-week vacations such as two days off rather than three, would not

be evident in the CPS-based results as a reduction in vacation activity.

44

Methodology

• The CPS survey has been periodically redesigned, such as to improve the sample process or refine the interview

process. One such redesign was implemented in 1994. To support comparability across the full period of available

information back to June 1976, Tourism Economics has adjusted the data for the 1976 to 1993 period based on a

comparison of survey results directly before and directly after the redesigned survey was implemented.

• In addition to stable seasonal patterns that do not detract from the analysis, such as higher vacation activity in

summer months, there are also less stable patterns. For example, the impacts of certain religious holidays that

occur during the reference week on certain months, as well as major weather events. Lastly, though there are

60,000 households included in the sample, there are also typical survey-related sources of variability.

• The CPS survey has been periodically redesigned, such as to improve the sample process or refine the interview

process. One such redesign was implemented in 1994. To support comparability across the full period of available

information back to June 1976, Tourism Economics has adjusted the data for the 1976 to 1993 period based on a

comparison of survey results directly before and directly after the redesigned survey was implemented.

• The raw CPS data on vacation activity is volatile from month to month, requiring the use of longer-term averages,

such as the 24 month moving average, to smooth the results.

• In addition to stable seasonal patterns that do not detract from the analysis, such as higher vacation activity in

summer months, there are also less stable patterns. For example, the impacts of certain religious holidays that

occur during the reference week on certain months, as well as major weather events. Lastly, though there are

60,000 households included in the sample, there are also typical survey-related sources of variability.

45

Methodology

All Work and No Pay: The Impact of Forfeited Time Off

October 2014