Sunday, April 13, 2014

I don't understand govt-mandated paid vacation

Laws that require all employees to get X number of paid vacation days per year don't make sense to me. A lot of people support it, but it seems like it's based off misunderstandings of what that would really mean. I haven't read much on this so maybe I'm missing important factors that I should be considering, but here's why it sounds like a bad idea to me:

1. "Paid vacation" is meaningless. My wife is a teacher and gets summers off. When you do this, you get to choose between 2 different ways of getting paid: a smaller amount every month, or a larger amount in only the non-summer months. Either way, you get paid the same salary, but one of those is "paid vacation" and the other is "unpaid vacation".

2. When people work less, we collectively become poorer. Money is only as valuable as the goods and services you can exchange it for. Goods and services are created by people's labor. If we pass a law forcing people to work less, then there will be less goods and services. So if we pass a law that leads to less goods/services, yet somehow force everyone to get paid the same salary, we have only tricked people into thinking they are getting free vacation because the way we've really paid for it is by lowering the value of that salary.

There is a trade-off to be made between paid work and time off. In other words, even though the cost can often get hidden, vacation has a cost. Different people will value that trade-off at different points. But tricking everyone into mistakenly thinking they are getting free vacation seems like a bad way to arrive at that right mix for each person. Because vacation has a cost, the well-off have more freedom/ability to get it than the less-well-off. So the best way to provide more time off to the less-well-off, to the extent that they want it, is to help them with the means to afford it, through something like a NIT or wage subsidies or tax cuts.

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