Paid Leave in the US
A Path Towards Equity
Among its peer nations, the United States stands alone in its absence of
a national mandate for paid time off (“PTO”).1 Like the pre-Obamacare
insurance market, workers’ ability to take part in this benefit, as well as its
limitations and contours, are left largely to employers. This report details
the current state of PTO in the US, assesses concerns surrounding
productivity and costs, and offers a glimpse into consumer perceptions of
paid leave and their impact on purchase intent.
Who has access to paid leave in the US?
Collectively, about 94.6 million US workers enjoyed access to paid leave
during the 2017-2018 fiscal year, according to data provided by the
Bureau of Labor Statistics (“BLS”). The remaining 49 million employees,
whose distribution varies widely by sector, are equivalent in number to the
populations of Colorado, New Jersey, Massachusetts, Pennsylvania,
Virginia, and Wisconsin—combined.
Key Findings
Fig. 1 (next page) details the distribution of paid leave by sector, with
industries offering paid leave to 50% or more of their employees listed in
the top half of the visual; and those in which PTO is extended to less than
50% of the workforce detailed in the bottom half. The three largest sectors
that provide PTO to a majority of their employees are education and health
services (69.5% of the workforce), wholesale and retail trade (61.3%) and
professional and business services (70%), which includes accounting,
advertising, law firms and the like. Among industries in which fewer than
50% of workers have access to paid leave, leisure and hospitality is the
largest (33.4% of workers have PTO), followed by construction (43.3%)
and “other services,” a category enveloping everything from hairstyling
and spa attendants to maintenance and household workers. This
classification also includes employees of religious organizations.
1
DATA BRIEF BY PATRICK DIOGENIA
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Workers in public administration are most likely to receive paid leave,
while those in leisure and hospitality are least likely to receive it.
A comparison of OECD nations suggests that paid leave does not reduce
worker productivity.
Offering paid leave increases purchase intent with 65% of consumers.
Although South Korea does not mandate paid sick leave, businesses are required to provide full-time
employees with a minimum of 15 paid days off per year.
OCTOBER 26, 2020
Page 2
FIG. 1: WORKERS WITH ACCESS TO PAID LEAVE, BY SECTOR
Note: Averages for 2017-2018 fiscal year. “Don’t know” responses omitted.
Source: Bureau of Labor Statistics, 2019.
Why are some industries more likely to offer paid leave than others?
Research by the Kaiser Family Foundation (2020) suggests that employee access to PTO is mediated by
several factors, including firm size, sector, the proportion of union membership among line workers, and
worker classification (e.g., full-time vs. part-time).
The leading offeror of PTO is the public sector, which is characterized by a rate of union membership that
outpaces private sector employers by 500% (BLS, 2020b). Industries with low or declining rates of union
membership, however, such as manufacturing and information, rank just behind the public sector and offer
PTO to about 80% of workers. The variability of educational attainment and firm size throughout these
sectors suggests that occupational culture also plays a role in management’s decision to provide paid leave.
This effect is most salient in the leisure and hospitality sector, which offers PTO to only about one-third
(33.4%) of its workers; approximately half of those employed in hospitality work less than 40 hours per
PAID LEAVE IN AMERICA: A PATH TOWARDS EQUITY
Page 3
week (e.g., Al Omar, 2011). This is also the case, however, for one-third of retail and wholesale workers
(e.g., Loprest et al., 2019), a sector that offers PTO to more than 60% of its workforce.
It is also important to examine the country’s largest employer by volume: education and health services,
which is treated as a single category by the BLS. Although nearly 70% of these workers receive paid leave,
more than 11 million do not. This coincides with the significant proportion of temporary workers, from
contract nurses to adjunct instructors, present throughout this category (e.g., Flaherty, 2018).
The key difference, however, between sectors that offer PTO to a majority of their employees and those who
do not is the type of services provisioned: in general, workers who provide finished goods (via
manufacturing) or professional/paraprofessional services are more likely to receive paid leave than those
who furnish support services, such as cosmetology, landscaping or cleaning. These are categories in which
high turnover and immigrant employment perpetuates a myth of “disposability” among workers.
Does the lack of paid leave contribute to hidden costs?
Although PTO roll-outs marginally increase back-office costs (e.g., payroll, timesheet processing), Asfaw et al.
(2017) conclude that US firms accrue $638 million - $1.88 billion in lost productivity due to influenza
absences alone. When combined with other illness-related costs (including intra-workplace spread),
reductions in morale and stress-induced cognitive impairment, the absence of paid leave is a net liability to
nearly all businesses that rely on an efficient and effective workforce.
Does paid leave decrease productivity?
There is no evidence that paid leave decreases productivity, gross domestic product (“GDP”), or other
measures of macroeconomic health relative to our peer nations. Fig. 2 (next page) compares governmentmandated paid vacation and holidays against GDP per hour worked in OECD countries (expressed in USD),
which ranges from $142 per person-hour in Ireland to $93 in Greece. Excluding the US, the mean number of
legal paid holidays among OECD nations is 9.55, and the average required vacation is 21.5 days, for a total
of 31.05 days annually. Among these nations, the average per capita GDP is $107.86, or $1.76 higher than
the current per person-hour GDP in the US of $106.
PAID LEAVE IN AMERICA: A PATH TOWARDS EQUITY
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FIG. 2: COMPARING GDP PER HOUR WORKED & PAID LEAVE IN OECD NATIONS
Note: Paid leave data is from 2018. GDP (in USD) from 2019, except for Belgium, Canada and Switzerland, which provided 2018 data.
Source: Adewale Maye (Center for Economic & Policy Research), 2019; OECD, 2020.
PAID LEAVE IN AMERICA: A PATH TOWARDS EQUITY
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Don’t some states legally require sick leave?
See Fig. 3, below, for a depiction of states with mandatory sick leave, shaded according to their
representation of the US workforce. While a handful of states have passed mandatory leave laws in recent
years, these requirements reach less than one-third of American workers by geography, and even fewer in
practice due to carve-outs for small businesses, supervisors, and other groups (e.g., LNI; 2014; LNI, 2019).2
Apart from California and Michigan, most states requiring paid leave have small or mid-sized populations
(e.g., Maine, Vermont), contributing to the limited reach of these policies.
FIG. 3: MOST STATES LACK PAID LEAVE MANDATES
The highlighted states, which represent 27.5% of the US workforce as of August 2020, currently require paid leave for
at least some workers under various laws.
Note: Maine’s sick leave law will take effect in 2021.
Source: Bureau of Labor Statistics, 2020a; Drew DeSilver (Pew Research Center), 2020.
2
In Washington and other states, paid leave laws adhere to the same exceptions initially created for minimum wage laws (and in some cases, add
additional restrictions and exclusions).
PAID LEAVE IN AMERICA: A PATH TOWARDS EQUITY
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Do consumers factor the provision of paid leave into their purchasing decisions?
According to a July 2020 poll by Morning Consult (Fig. 4, below), 65% of surveyed consumers indicated a
higher likelihood to purchase from firms that offer paid leave to their workers. PTO outpaces voluntary
reductions in executive pay, additional health benefits and the creation of teleworking programs in its
importance to consumers, a trend that has risen sharply with the onset of the coronavirus pandemic.
Consumer concern surrounding this attribute remained consistent in a survey conducted in late September
and early October (Sakal, 2020).
FIG. 4: PAID LEAVE MOST SALIENT WORKER BENEFIT, DRIVES PURCHASE INTENT
Source: Victoria Sakal (Morning Consult), 2020.
Summary & Conclusion
The prevalence of paid leave varies greatly by sector, union membership and worker classification, with
education playing a lesser role than cultural forces within each industry. Statutory requirements also provide
PTO to workers in 13 states, including most entry-level employees but excluding supervisors, salespeople,
and others. Overall, this issue affects more than one-third of America’s 144 million workers, particularly
those in hospitality, construction and other sectors with a significant minority and immigrant workforce.
Analysis of GDP per person-hour in OECD nations suggests that paid leave does not reduce productivity;
rather, the five most productive countries surveyed each mandate at least 25 days of PTO annually. By
contrast, research suggests that a lack of paid leave is associated with significant illness-related costs.
Survey data also indicates that a majority of customers are more likely to purchase from firms that extend
paid leave to their workers, an effect that has remained consistent throughout the year.
Although extending PTO accrues some short-term indirect costs, the long-term benefits to efficiency, brand
equity and workforce morale — especially amidst a public health crisis — vastly outweigh the liabilities.
PAID LEAVE IN AMERICA: A PATH TOWARDS EQUITY
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PAID LEAVE IN AMERICA: A PATH TOWARDS EQUITY