Chances are if you’re like about half of American workers this year, you won’t use all the paid time off you’ve earned. But, you’ll be making a big mistake—a mistake that hurts you, your company and our national economy, according to a recent study by Oxford Economics.
Just look at the numbers. Each year, American workers throw away about $52.4bn of earned benefits simply because they fail to use all their vacation time despite all the obvious personal benefits of taking time off to regenerate and reconnect. Today’s American workers as a whole take fewer vacation days than they did in 2000, although those who work for a company with a “use it or lose it” vacation policy are more likely to use all their vacation time than those who do not. However, only about 25% of all US companies today have “use it or lose it” policies.
This reluctance creates a huge financial liability for US companies ($224bn) in accumulated vacation time, amassed over the years by employees rolling over their paid time off until they eventually retire or leave. On average, the Wall Street Journal reports, businesses owe each employee $1,898 in accrued paid time off and carry 5.7 vacation days per employee on their books. For firms with more than 500 workers, the cost is higher, at $2,609 per worker. This represents a potential burden on a business’ financial health and outlook. Instead of being able to reinvest in its corporate growth, vacation liability holds its business assets captive.
Further, if everyone actually used all their annual paid time off, our national economy would benefit from an estimated more than $160bn in business sales and $21bn in tax revenues that using their time off would generate—spending that would support the creation of 1.2mn jobs in industries such as retail, manufacturing and transportation.
Clearly, skipping vacation time hurts everyone and some companies are taking steps to change the game as they look to attract and retain talent. Just last year, General Electric introduced unlimited vacation as part of a broader cultural shift coinciding with its campaign to reintroduce the company as a digital industrial leader to a new generation of talent.
Sounds great, doesn’t it? Vacation time on demand. The obvious question is why did GE take this step?
Top-performing organizations understand the value of vacation and have come up with a number initiatives to encourage their employees to take time off. Great ideas like DropBox and Instagram were born out of vacation thinking. Netflix, a pioneer in unlimited vacation, redefined the movie rental industry and continues to innovate—even with their CEO taking 6 weeks of vacation last year. TED, a driver of cultural conversation, offers shared vacation where the entire office closes down for 2 weeks each summer to allow employees the chance to unplug without pressure.
The impact of not taking advantage of your annual vacation is something you should not ignore. So, this year, make it a point to take the time off: you earned it, now use it—whether it’s to take a dream getaway to some exotic or big city destination or simply enjoy a Staycation closer to home.