Mark Mullen's Blog - Posts Tagged "middle-class-vacation"
FIXING AMERICA’S ECONOMY: Give American Workers a True Paid Vacation
When politicians and the media talk of paid vacation, they speak of paid days away from work. I think corporate owes American workers more than that. Let me explain.
A smart investment for corporate America would be to provide each employee with a true annual paid (travel, accommodations, food, time) one-week vacation to anywhere in the U.S. Some may say that big business can’t afford this, but they can. According to the U.S. Bureau of Labor Statistics, average worker productivity has increased by 400 percent since 1950. In other words, it took just 10 hours per week in 2014 to produce the same results as a 40 week in 1950. More productivity means more revenue and higher profits for many industries. The New York Times reported that American companies earned $1.7 trillion after-tax profits, or 10 percent of the gross domestic product, during 2013. That is the highest level of profits since the government began tracking corporate profits in 1929. Now consider that employee compensation (as a percent of total expenses and including costs of all benefits and salary) was at its lowest since 1949. But wait, there’s more. Although the statutory top corporate tax rate is 35 percent, U.S. companies paid 20 percent in corporate taxes during 2013. When combined, increased profits, decreased employee compensation, and lower corporate taxes created a windfall of additional cash for corporate America. Let’s explore a little more to determine if corporate America can afford to provide a true week-long paid vacation for American workers.
USA Today reported that S&P 500 companies were “sitting on enormous amount of cash—a total of $1.25 trillion” during 2013. (This figure does not include S&P banks; just non-financial institutions.) Cash that was not used for operations or stock dividends. For all practical purposes, we are talking about extra cash just sitting in corporate vaults collecting a meager rate of interest and lots of dust. So what would it cost the S&P 500 to use some of this cash to support an employee week-long vacation with travel, lodging, and food expenses covered?
For the purposes of this argument, we will use $2,500 as the annual per employee vacation benefit. During 2013, S&P 500 non-financial corporations employed a total of 20,254,000 employees.
$2,500 per worker x 20,254,000 workers = $50,635,000,000
Fifty billion dollars may seem like a lot of money, but it is just four percent of the $1.25 trillion sitting idly in corporate vaults. Wouldn’t corporate America get a better return on its investment if it spent the four percent on employee health and welfare? The answer is yes. Assuming the $1.25 trillion is parked in interest bearing accounts, annual interest on the principal alone would more than cover the vacation pay out. Still not convinced corporate America could pay for week-long vacations for each employee?
Let’s examine corporate revenue through another lens—profit per employee (PPE). This is calculated by dividing the total profit by the number of employees. In this example we will use 116.6 million full time workers in the U.S. as reported for December 2013.
$1.7 trillion after-tax profits divided by 116 million workers equals a corporate profit of $14,579 per employee.
When you take into consideration that of the 116.6 million full time workers, 22.5 million of those were self-employed and another 35 million were employed by small business (less than 500 employees), you begin to realize the amount of money available to corporate America. So if we redo the PPE without employees of small business and the self-employed, we find that each full time employee working in corporate America is responsible for nearly $30,000 per year of after-tax profits for the employer. Once again, can corporate America afford to provide a better vacation experience for employees? Yes, they can and should.
America We Need A Raise(This also helps corporate America by reducing stress levels of employees which improves: (1) corporate productivity and profits, and (2) employee health resulting in reduced corporate health insurance premiums. This proposal would also support middle class workers employed in the travel industry. In 2013, there were 14.2 million jobs in travel related industries earning $209 billion in wages while generating $92 billion in tax revenue. A simple doubling of the tax revenue generated from leisure travel alone also has the potential to save the average household approximately $1,200 per year in taxes.)
A smart investment for corporate America would be to provide each employee with a true annual paid (travel, accommodations, food, time) one-week vacation to anywhere in the U.S. Some may say that big business can’t afford this, but they can. According to the U.S. Bureau of Labor Statistics, average worker productivity has increased by 400 percent since 1950. In other words, it took just 10 hours per week in 2014 to produce the same results as a 40 week in 1950. More productivity means more revenue and higher profits for many industries. The New York Times reported that American companies earned $1.7 trillion after-tax profits, or 10 percent of the gross domestic product, during 2013. That is the highest level of profits since the government began tracking corporate profits in 1929. Now consider that employee compensation (as a percent of total expenses and including costs of all benefits and salary) was at its lowest since 1949. But wait, there’s more. Although the statutory top corporate tax rate is 35 percent, U.S. companies paid 20 percent in corporate taxes during 2013. When combined, increased profits, decreased employee compensation, and lower corporate taxes created a windfall of additional cash for corporate America. Let’s explore a little more to determine if corporate America can afford to provide a true week-long paid vacation for American workers.
USA Today reported that S&P 500 companies were “sitting on enormous amount of cash—a total of $1.25 trillion” during 2013. (This figure does not include S&P banks; just non-financial institutions.) Cash that was not used for operations or stock dividends. For all practical purposes, we are talking about extra cash just sitting in corporate vaults collecting a meager rate of interest and lots of dust. So what would it cost the S&P 500 to use some of this cash to support an employee week-long vacation with travel, lodging, and food expenses covered?
For the purposes of this argument, we will use $2,500 as the annual per employee vacation benefit. During 2013, S&P 500 non-financial corporations employed a total of 20,254,000 employees.
$2,500 per worker x 20,254,000 workers = $50,635,000,000
Fifty billion dollars may seem like a lot of money, but it is just four percent of the $1.25 trillion sitting idly in corporate vaults. Wouldn’t corporate America get a better return on its investment if it spent the four percent on employee health and welfare? The answer is yes. Assuming the $1.25 trillion is parked in interest bearing accounts, annual interest on the principal alone would more than cover the vacation pay out. Still not convinced corporate America could pay for week-long vacations for each employee?
Let’s examine corporate revenue through another lens—profit per employee (PPE). This is calculated by dividing the total profit by the number of employees. In this example we will use 116.6 million full time workers in the U.S. as reported for December 2013.
$1.7 trillion after-tax profits divided by 116 million workers equals a corporate profit of $14,579 per employee.
When you take into consideration that of the 116.6 million full time workers, 22.5 million of those were self-employed and another 35 million were employed by small business (less than 500 employees), you begin to realize the amount of money available to corporate America. So if we redo the PPE without employees of small business and the self-employed, we find that each full time employee working in corporate America is responsible for nearly $30,000 per year of after-tax profits for the employer. Once again, can corporate America afford to provide a better vacation experience for employees? Yes, they can and should.
America We Need A Raise(This also helps corporate America by reducing stress levels of employees which improves: (1) corporate productivity and profits, and (2) employee health resulting in reduced corporate health insurance premiums. This proposal would also support middle class workers employed in the travel industry. In 2013, there were 14.2 million jobs in travel related industries earning $209 billion in wages while generating $92 billion in tax revenue. A simple doubling of the tax revenue generated from leisure travel alone also has the potential to save the average household approximately $1,200 per year in taxes.)
