Who Pays For "Paid Vacation"?
Who Pays For “Paid Vacation”?
Professional malcontents have invented yet another faux reason to hate America:
The United States is the only advanced economy that does not guarantee its workers any paid vacation time, according to a report by the Center for Economic and Policy Research. As a result, 1 in 4 private-sector workers in the U.S. do not receive any paid vacation or paid holidays.
This is, of course, utter nonsense. It is flunk-the-final wrong.
Consider three alternative work arrangements, each entailing the same job function and pecuniary compensation:
A. Work eight hours straight.
B. Work nine hours with a one-hour break.
C. Work nine hours with two 30-minute breaks.
All tastes and preferences are subjective, and different people might prefer one schedule over the others for a variety of reasons. But by what bizarre calculus would anyone summarily declare one arrangement “superior” to the others for all workers in all contexts? And who would dare say that Option A is “oppressive” relative to Options B and C simply because Option A does not provide a “paid lunch break”? Finally, who could, with a straight face, insist that a society that restricts the ability to even offer Option A is morally superior to a society that permits it? Since when is a more free society ethically subordinate to a less free society? What are these fools thinking?
Meanwhile, who really pays for those “paid” breaks in Options B and C? Of course not the employer — he’s paying the same money for the same work in each scenario. The employee is obviously paying herself for the breaks — by foregoing an hour of free time elsewhere during her day.
The analysis regarding “paid vacation days” rather than “paid lunch breaks” is exactly the same — no difference whatsoever. The only person who can “pay” an employee for a paid day off is the employee herself. Working in the private sector means you perform a certain quantum of work over a certain quantum of time and receive a certain quantum of compensation in free exchange. The fact that the quantum of work is spread out over the quantum of time in a certain irregular pattern due to “vacation days” is as irrelevant as whether the “paid” days off are called “holidays” or “vacation days” or “personal days” or “family care days” or “zoop days.” You work what you work and you get paid what you get paid. And if you don’t like it, then don’t take the job.
And the fact that, in America, competent consenting adults are free to make whatever mutually voluntary “days off” employment arrangements they want — including having no “paid days off” at all — is precisely what makes our system superior — morally and consequentially — to those who feel a need to baby-sit workers and assume that they are all gullible drones who will inevitably be “exploited” by their employers. To imagine that it could somehow be the other way around (i.e., that less free is morally superior to more free) is to demonstrate either an unforgivable naivete or (far more likely) an intentional, dishonest, ulterior motive.
This is the same obnoxious fraud that underlies the notion that “corporations don’t pay enough tax.” Corporations cannot pay any tax — only individuals can pay tax. Every cent in tax that a business remits to a government was in fact paid either by a customer (as a higher price), by a worker (as a lower wage) or by an entrepreneur (as a lower profit).
And this fraud reaches its apogee — it is the most true — in the context of Social Security taxes: the fact that one’s employer remits a “matching tax” to the federal government on top of the tax directly deducted from a worker’s paycheck does not mean that the worker isn’t the one actually paying both. Whether the tax — which the worker pays in its entirety — actually appears as a line item on the worker’s pay stub or not is utterly irrelevant: the worker pays it all. It’s an accounting scam deliberately concocted by the New Deal government to confuse people into thinking that “someone else is paying for me.”
Bottom Line: There ain’t no such thing as a free lunch break. Or a free day off. Or a free Social Security “contribution.” And shame on those who, like CEPR, insolently try to persuade the economically illiterate otherwise.
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Filed under: Activist Legislators & Nanny Statists, Economics & Finance, Law
What you're saying is pretty obvious to anyone who's ever worked for a company that has a flex benefits program that includes vacation benefits. For people unfamiliar with this idea, here's how it worked at one of my former employers:
Each employee would get a budget at the beginning of the year equal to some percentage of our annual salary. We could allocate those funds to pay for a variety of benefits such as healthcare, disability, and life insurance. We could also buy vacation days at a cost of one day's wages per day of vacation.
(There was no such thing as a sick day. Being sick would cost you a vacation day, but the 100% short-term disability plan would kick in pretty fast if you had a serious medical problem.)
Any money left over was added to your salary. If you bought few vacation days, your paychecks got bigger. If you bought a lot of vacation days, you used up your benefits budget and they took the money out of your salary, so your paychecks got smaller.
If you ran out of vacation days (or never bought them) they just deducted your vacation from your next paycheck. Essentially, you had the choice of buying your days off on a year-long payment plan or only when you needed them. At the end of the year, you could roll over your vacation into next year or take a payout.
Later, the company became a little more lean and leveraged, and they didn't want to give employees so much control over the company's cash flow, so they switched to a traditional vacation plan. Few of us thought this was an improvement.
It sounds like you receive a paid holiday. As a food server in the US, I made minimum wage, reported my tips and if I wanted a vacation, had to arrange it myself and pay for it myself with lost wages for the week. I was down with that. But then, after moving to Canada where the law requires ALL employers to pay a minimum supplement of 4% for two weeks vacation, I still received minimum wage, reported my tips, but then I received this 4% "bonus" from the employer as mandated by the law(including 4% of my reported tips). Clearly I liked the Canadian system better. If consumer prices are higher to guarantee a minimum "break" period during the year, I see nothing wrong with that. If we go back a hundred years, people didn't even have weekends. I think it's a good balance against the corporation, which as you said is not a person, so by definition has no need for a "vacation", nor the minimum amount of empathy to see that it's necessary for human beings to relax and get some downtime.
tornword – all of that analysis by Kip and you still don't get it, do you?
What is likely is that your wages/tips in Canada were approximately 4% less than they otherwise would have been; in order to make up for the 4% "bonus" you claim to have received. It wasn't a bonus, you got paid arguably the same amount for the same work, it was just spread over a different period of time.
My roommate is a teacher – he has the option of taking his salary in 26 bimonthly installments, spread over a fiscal year, or in 18 bimonthly installments spread over an academic calendar year. It is the same amount of money, whether he gets a paycheck in July or not.
"If consumer prices are higher to guarantee a minimum "break" period during the year, I see nothing wrong with that."
Also, if consumer prices are higher, don't forget that you're primarily a consumer, not a producer. You bear the burden of higher costs because of that phantom bonus.
Whether the tax — which the worker pays in its entirety — actually appears as a line item on the worker's pay stub or not is utterly irrelevant: the worker pays it all.
I can certainly attest to this, since I write the check for both sides of this tax for myself. Seeing it leave my account that way, and knowing what I'll allegedly get in return, drives me nuts. How can people be so economically illiterate?
…26 bimonthly installments, spread over a fiscal year, or in 18 bimonthly installments spread over an academic calendar year.
I hope he takes the 18 bimonthly installments. When given the option, I'm amazed that people take the longer payout, especially when the total value is the same, regardless. I suspect those are the people who get large tax refunds so they can pay off the debt they accumulate during the year.
I can certainly attest to this, since I write the check for both sides of this tax for myself. Seeing it leave my account that way, and knowing what I'll allegedly get in return, drives me nuts.
Oh, God, I'm right there with you. It's really depressing to do the work and earn the money and then realize that to move the money from my corporate account to my personal account I'm going to have to write the government a check for $4000! Don't ever let anyone tell you that withholding is painless.
Economic illiteracy really is the key point here, isn't it.
Of course I get it. I only offered an example (from my own personal experience) that demonstrated I actually make more here for working the same hours and performing the same level of work. You are flat out wrong about the compensation and tips. Minimum wage is higher in Canada (even with the exchange rate factored in) and consumer prices are higher, so tips (which is a percentage of sales)are actually higher. I understand the point Kip is trying to make, but I cannot abide the way too generalized statements. I was once staunchly (and card carrying) libertarian, but then I found out that greed would end up ruling the world.
(Sorry Kip, I probably won't comment anymore.)
Tornwordo, you apparently don't "get it." You're apparently offended by libertarian greed – yet quick to point out that you're "making more" and working less – at the expense of others. If that's not the pot calling the kettle black…