The Role of Unions and Benefits

This message comes from Avalera. What's it like running a business with Avalera? No thinking about tax and compliance. It's handled. Calculating, filing, validating, accurately, and audit defensibly. Avalera, Agentic Tax and Compliance with Confidence. This is Planet Money from NPR. Aduale Maya went on this big vacation to Europe. It was my very first time in Europe. It was It was beautiful. I think Addwali's first stop was Spain. He was there during the week, Monday, Tuesday. And everyone's outside, you know, eating, catching a coffee, there Playing, just like having fun, doing things, just Flying kite. And I know the like adults like adults, yeah, like adults, okay. I I legit saw someone who was like fifty years old. Who was just like playing outside. I I think they were playing Frisbee. And I was just like, wow, that's that's just very, very nice. Working age adult. Working age adults outside during the workday, during work hours. Adwali is just noticing this, taking it in. He's with the buddy. They're at lunch early into the trip. So we're we're having paella. Um And my friend was like looking around and he was just like Bro. What do people do here for a living? His friend was thinking the same thing that Ottawali was thinking, which was, why does it seem like so many locals are not Work. And Like we're asking around and just like, hey, like what do you do for work? And there's we got all of these different responses where, you know, someone's a seamstress and someone's works at like an interior design studio. Adawali knew that this entire continent basically has a different relationship with work than the US does, especially in the summer. Businesses are just completely closed. Actually seeing the European attitude toward work in person felt And it made Adawali think of this report he worked on a few years back. The name of the report is No Vacation Nation. No vacation nation. Very, very on on the nose. In this report, Idawale looked at the twenty one richest countries in the world and he listed how many paid vacation days they all get. Not because of the kindness of their employers, but How many paid vacation days every single person in these countries And he found that Japan, for example, gets Ten paid vacation days for everyone on top of Paid holidays. Australia twenty paid vacation days plus eight paid holidays. Spain. twenty five vacation days paid. Plus fourteen paid holidays. We are talking Thirty nine days off. Paid. For everyone. Hairdressers, mechanics, doctors, bakers, daycare workers, train operators, every worker in these countries is guaranteed paid vacation. Actually Every worker in all of the richest countries in the world has to get paid vacation. Except for workers. In one rich country. The US. In America if I could have 31, 29 days of paid vacation. that look like for you? What would that look like for you as a worker? And it's not just a rich country thing. Mexico, Afghanistan, Thailand, Tanzania, they all, at least in the formal job sector, guarantee paid vacation from work. The US is the outlier. Zero paid vacation days and zero paid holidays. By law. And the vacation that those of us in the US do get from our employers, we don't even take it all. In 2018, US workers left 768 million days of earned vacation on the table, literally forfeited about $5 billion worth of vacation benefits. What is wrong with us? Hello and welcome to Planet Money, I'm Sarah Gonzalez. Today on the show, why and how did this happen? We have an episode from 2023 about how an entire continent, basically, and much of the world got all of this guaranteed paid vacation. and the US missed out. This message comes from Superhuman, the AI productivity suite that gives you superpowers everywhere you work. AI that works alongside you, understanding where you're at, and proactively offer suggestions when you're building ideas, drafting emails, collaborating, and so much more. Superhuman helps you go from to do to done faster. time back you didn't know you had. Unleash your superhuman potential with AI that meets you where you work. Lear more at superhuman.com. I've been thinking a lot about time and free time lately and a little Personal vacation backstory. I recently had 200 hours of vacation that I had not used and could not roll over into the next year. I was going to lose them. And one of my editors was like, Can probably go to bat for you and get you to keep those vacation hours. Like like just this this one time. And I said Nah. It's fine. I'll just lose them. Because I had just had a baby I took maternity leave and I was like, I can't just come back from leave and then bunch of vacation I would feel so guilty. But recently I've been like Hold on. Two hundred hours that? whole month off of work. That I left on the table. That is that is so much free time when free time feels so scarce to me these days. It's not just me, more than half of the people in this country who are lucky to get paid vacation. Don't use it all. Why? Why do we do this? Why do we not use our vacation? And and why is vacation scene like a privilege here? Something you wait to accrue if you get it at all? Half of low wage workers in the US. Don't get any paid vacation. So I started calling economists and historians. Asking them why. And I kept hearing the same thing. Europeans just value leisure. Far more than Americans do. I do not accept this response because the there has to be more to it. Why? Why do they I I mean, like I value free time, I think. Well I okay. Why don't Americans The US. has never even gotten close to seriously trying for paid vacation as a right. Of all the things the rights that people have pushed for. Paid vacation has never been a part of that list. It's it's never been. In Europe, countries did push for vacation in in big, big ways. And they didn't ask their individual employers. They asked their federal government in the 1920s and the 1930s. And they got it. They'd been saying, like, why do just the aristocrats get leisure? And This idea spread across Europe. that everybody should have some moments of s some period of release from from ordinary urban and uh modern economic life. Gary says time off from work, vacation was popular across many political parties and religious groups. And it was also used for some Pretty Awful things too. The the fascist party in Italy, the Nazis in Germany, Gary says they actually encouraged leisure also. even as they were preparing for war. It's kind of ironic that one of the tools to make your citizens into warriors was to give them a vacation. But that's one of the things. That that they did. you know, uh workers would be sent to the lakes or to the seashore, uh, but they would, of course, develop loyalties to the regime. Yeah, it was loyalty through leisure. And Gary says this emphasis on downtime, on time off from work, did not just pop up out of nowhere. He thinks stems from Europe's long tradition of festivals. Like Days long folk festivals and customs in medieval times. Carnival and Mardi Gras and midsummer celebrations which were kind of like the the early version of the vacation in the sense They were multiple days. People stop. doing ordinary work. Yeah, it was multiple days of playing and the US just didn't have this same kind of festival all work stops tradition. When Europeans came to the US to what is now New England, Gary says it was largely Christians who rejected those kinds of festivals. Which brings us to a big commonly held belief that Americans just have this deeply ingrained work ethic that stems from We are talking about the Puritan or Protestant work ethic here, that that it is godly to work and ungodly to waste time. You know, the traditional view is of course Idleness is the devil's workshop or, you know, there are various versions of that. But you don't have to believe in the devil to feel When you're idle, you are somehow or another wasting Precious time. Yeah, Gary says you don't necessarily have to believe in the Protestant doctrine to adopt this work ethic. He thinks it's evolved and changed. You could make the argument. that the so called Puritan work ethic is really the kind of capitalist work ethic. Gary says Other societies don't really have the same kind of guilt for idleness that the US does. I mean, I'm like that, you know, and I get a little anxious if I'm just hanging around a beach for a week, you know? And I have German friends who don't aren't anxious at all. And uh and you know, where did I get it? Uh I don't know. Yeah, but some economists really hate this Protestant Puritan work ethic argument. But look, but come on now, Protestant ethic, I get that all the time. And yet This is Daniel Hammermesh. And yet where'd the Protestant ethic originate? In Switzerland, but the Calvinists, okay? And yet the Swiss get a lot of public holidays. They get four or five weeks of paid vacation. So the ultimate Protestant ethic people are taking a lot of time off also. Daniel is a labor economist at the University of Texas at Austin, who also wrote a book about time. And for him, the Protestant work ethic argument doesn't fly because in nineteen seventy nine The US worked about the same amount on average as other rich countries, Canada, Australia, France, we all worked the same amount of hours per year. It's just All of those rich countries. simply began cutting their hours, working less. But на the US. We are an absolute outlier in this regard. It's very depressing. Daniel feels very strongly about time and how we spend it. For him, this is the ultimate economic choice we make. Because in our lives we combine time with money. Money and time go together, and one of them is always scarce for you. Do you work more for more money? Or work less for more time. This is the the model of the economic man theory, which basically says that the model person maximizes Happiness or you know, utility and that happiness comes from not just Having money to spend. Also having time. Spend that money. Now, Daniel has looked at data on how people spend every minute of their day. And he says actually people in the US and Europe work the same amount of hours every week. We all generally have a forty ish hour work week. It's just The US works more weeks. And the only, only reason for this, he says, is because we take less vacation. If you do the math, Daniel says people in Europe work about an hour and a half less every day. So this this one point five hour difference to me feels so small. An hour and a half a day out of eight? That's a huge amount in economic terms. It's the equivalent of one day off a week. Right. That's bas that's Friday that would be like we got every Friday off. Every Frida off or every Monday. Uh okay. Yeah, that's that's a big difference. So all right. Daniel, who has looked at data on how people spend every minute of their day, he was gonna be my ticket. He's gotta have the answers for why the US, relative to other countries, started working more. I have no answer to that one. It just factually did. So wait, I mean you you are like a time work guy, a time work economist, and you don't have an answer for why we work so much? No, complicated I have a lot of non answers. Non-answers. I'll take it. We're gonna do a little process of elimination here, people. Uh there are two fun non-answers, and the first has to do with Taxes. Daniel says some right leaning economists and macroeconomists believe that we in the US work more because our income tax is lower than some European countries. The argument is Because Europe tends to have a higher income tax. People in Europe will go like, Why am I gonna show up for work so much? They're gonna just tax me so much. Let me just work less. It doesn't make sense. That's the Because our income tax is lower in the United States. We go like Ooh I get to keep a little bit more money so it makes sense for me to keep showing up. to work and not take time off. This is one of the oldest ideas in economics that if you get to keep more of your paycheck, there's more incentive to work. And you have to remember here that a lot of people in the US do not get paid vacation. So the incentives for them to work instead of taking time off. Bigger. And Daniel agrees with this premise. When you look at the data, Daniel says getting to keep more of your paycheck does make you work more. Just a little bit more. It's quite small and far too small to account for any differences between Europe and the U.S. So that European American difference because of taxes just is not consistent with the evidence on how people in an individual society behave. So I'll I'll erase that one. Although some macro economists and conservative economists would say no, yes, that is still a reason. Yes, but the people who quote that are typically macro economists who really haven't look at the evidence of an individual's. The lefty argument is that Americans are a consumerist society and rich corporate advertisers are exploiting the consumers, holding these little carrots in front of our nose like a horse being urged to run, incentivizing us through these Advertisements to want to work more and more to afford all these wonderful things we want to buy, a third car, a larger house, uh you name it. This argument is basically that people in the US are programmed to work more Because we want to make more money to buy more stuff because we are inundated with advertisements. And You know, it's quite possible. But the empirical problem with that is there's just as much corporate control in Europe. There's just as much advertising. And I can't believe that Europeans are so much smarter than us. that they don't get themselves get led by the nose by these people. So it's hard to see why with no difference in the amount of advertising, no difference in our basic nature, why they should have this different outcome in terms of vacations from what we have. So the fun dark lefty argument that we work more to buy more because of advertisers, Daniel says this one doesn't fly for him either. So so far we have No great answers. I'm like at this point desperate for an answer. And I'm like, there has to be something. Like there has to be we're not just like so inherently different as people. No, we're not at all different as people. Okay, right. I mean again. I can refute certain things explaining it as I have. So I can say no, but I can't say why yes. Okay? Uh no, not okay, Daniel. Uh so I just kept asking more economists and more labor historians what really does explain why vacation has never been a big priority in the US and why we don't even take the vacation that we do get. And eventually someone said, try this guy at MIT. And finally, I got a satisfy answer. after the break. This message comes from Superhuman, the AI productivity suite that gives you superpowers everywhere you work. AI that works alongside you, understanding where you're at, and proactively offer suggestions when you're building ideas, drafting emails, collaborating, and so much more. Superhuman helps you go from to-do to done faster. time back you didn't know you had. Unleash your superhum potential with AI that meets you where you work. Lear more at superhuman.com. So Yes, the US has a reputation for being workaholics. We worry we won't be seen as hard working if we take a lot of time off, or that we'll miss out on career opportunities. And kind of because this, the US has this reputation that we value money. more than time and and Europeans have this reputation of valuing time more leisure. But I mean, you know. French people are not just born valuing leisure, but but we come out valuing money, that's not a thing. Something must have caused this, right? So for a satisfying answer on this one, I went to Tom Cohan at MIT, who Yeah left a lake house during vacation to do this interview. So you're a workaholic also, like the rest of us. Uh guilty as charged. Tom studies work and employment and unions, and he says there was a time when unions helped workers. Get the things that they asked for in the 1930s. That's when we got the minimum wage and overtime and social security. But Tom says it was a very unique moment in history when workers had more power than businesses. But after that, Tom says. businesses regained power again and and they started saying we don't want the federal government to mandate worker benefits. We'll decide that. We will be competitive in the labor market, but don't tell us how we should run our enterprise and how we should treat our workforce. Tom says the nineteen thirties was kind of our window, our our chance to get something like guaranteed paid vacation. But Tom says back then some unions actually kinda drew a line at vacation. There's also a view among unions that look we don't necessarily have to push. for all of these things uh through legislation because then if we did, then people might say, Well why do I need a union? Oh, so this is like an this is like a known thing that unions like if we ask for everything at the federal level, there would be no point in unions. Absolutely. The AFL. American Federation of Labor in particular. was very strong on saying uh this is this is for the private sector. This is for uh uh what unions exist to do. The plot thickens. We were sabotage. No. Uh but yeah, this is one of the interpretations for how things went down back then. And Tom says This is maybe why, in the end, we didn't get a bunch of benefits guaranteed by federal policy. Vacation was just one example of this concern. What were some of the other things outside of vacation? Pensions. Pension uh private pensions, health insurance. Those are the the the the big three. Big three. Pensions, health insurance, time off through vacations were left off the table. Instead we got collective bargaining rights, which basically say we can bargain and negotiate with our individual employers for pension, healthcare, and vacation. We should say that the US is also known for not passing these work benefits because of racism. A bunch of people in the US back then didn't want black people, for example, to get these benefits. So No one got them. But in Europe, everyone gets the big three, vacation, pension, healthcare as a right. Vacation started spreading in Europe in the nineteen twenties and thirties, and healthcare came in waves in the nineteen forties, seventies, and eighties. And Maybe this is why European countries started cutting their hours after nineteen seventy nine. But not the US. Like maybe Europeans were like Okay, we're getting all these benefits. Plus we're just generally getting richer, maybe work is not so important anymore. But when you do have to pay for these things like we do in the US Maybe that's why I work. is so important here. And so when you do have to negotiate for health insurance pension asking for a vacation kinda falls to the bottom of the list. Yeah, it's a much lower priority. I mean this does seem like the best argument to me about wh why we differ. Yeah. Yeah. Okay. Yes. If given the the the option, workers are historically more interested in seeing their take home pay increase than they are um in getting another day or week of vacation. It makes so much more sense to me now. Like we don't just value money more than other people. Maybe, maybe we just need money to pay for health insurance or whatever. This this feels good. This feels right to me. And even Daniel Hammermesh, who doesn't like any of the theories on this He likes Tom's theory. I like that one. I hadn't heard it. It'd probably be wrong, but at least I can't prove he's wrong. And that's pretty good compared to all the other explanations. I'm gonna tell him you said that, Daniel. Uh no, I I like it. Okay, he likes it. Uh But really, Daniel says We're looking for answers in the wrong place. He says economics. Cannot answer this one. Can't stress enough. As much as I love economics, in the end this is a political issue. Daniel says this is really about political will and the political appetite. But he says Thinking about vacation and and questioning why the US is the only rich country that doesn't guarantee it is valuable. Because it can put in people's heads the idea that maybe there is a different way. And the very fact of talking about it and getting it out there in the public, I think, should stimulate people to worry about that. That's the reason I'm talking to you today about this. Daniel says talking about vacation can help change the culture. Like maybe bosses will start taking more vacation and encourage workers to take more too. Like if if we're all taking vacation, maybe that will make us feel less guilty about it. Cause you know, working a lot and not taking vacation because that is what you want to do, that's fine. But A lot of people