Monday, July 16, 2007

I wrote this post on a vacation day...

Interesting ongoing discussion on whether the US should adopt European-style vacation policies.

Tim Lee and Matt Yglesias have come out against it, while Ezra Klein has argued for it.

Lee writes:

It seems to me that basic economic suggests that in the long run, at least, if people work 5 percent fewer hours they’ll produce 5 percent less stuff. And if a worker is producing 5 percent less stuff, he’s going to receive (again, on average and in the long) 5 percent lower wages. Which means that regardless of what the law says, if you mandate that an employer provide 12 extra vacation days, that’s going to mean that in the long run, employees’ wages will be 5 percent lower than they otherwise would have been.

Lee goes on to list "several plausible answers to this argument," but one that he doesn't is that it is doubtful that the marginal value of the last 5% of a knowledge worker's time spent working is equal to 5% of her total value. In other words, that workers would not respond to increased vacation by compressing more productivity into their working days, and that the current vacation schedule is optimal.

Companies offer vacation as a benefit to lure workers, yes, but also in recognition that people need breaks in order to be maximally productive. Is the current two or three week norm the magic number? Europe seems to have arrived at a different conclusion. My suspicion is it varies. For some professions and individuals, the European model yields the maximum productivity. For other, the optimal amount of vacation may be zero.

Lee cites the example of the lawyer working 80 hour weeks. But the associate working 80 hour weeks isn't doing so just to be more productive; she is doing so to demonstrate dedication to the company.

The real problem is the cultural association of productivity with hours worked. And it's going to take more than mandated vacation to change that.