President Donald Trump expressed his concerns over America’s eight federal holidays just the other day. He’s right to think that they would significantly damage the long-term health of the economy. He argues that the current system of holidays leaves businesses operating below their potential, ultimately costing the nation billions of dollars.
Trump’s comments are at the center of a burgeoning conversation over productivity that concerns how reducing or eliminating time off affects the productivity of the workforce. Workers often schedule their vacations around these holidays. Consequently, workers who remain on the job experience increased production pressures. The result is that employees are experiencing more stress and less productivity. Yet a recent survey commissioned by Microsoft finds one in three workers unable to keep up with the relentless pace of work. This has been a consistent issue for them the last five years.
The president stated, “Too many non-working holidays in America. It is costing our Country $BILLIONS OF DOLLARS to keep all of these businesses closed.” He highlighted that most workers do not want to be overpaid for holidays. This perspective helps undergird his thesis that excessive paid unproductive days off hurt America’s competitive economic success.
Research indicates that when a federal holiday falls on a weekend and is not rescheduled for a weekday, the nation’s total output can increase by 0.08% to 0.2%. On the surface, this statistic may seem to indicate that fewer holidays would save money through increased economic activity. Research shows that the nature of the holiday is detrimental to productive work. In fact, it’s not the day itself that is most important.
Surprisingly, companies from a wide range of industries stay open even on federal holidays. Emergency responders, retail staff, and transportation workers continue to provide essential services, indicating that significant parts of the economy remain active even during designated non-working days.
A 2018 study in the United Kingdom found that small stores got a big lift on bank holidays. These holidays resulted in an average profit boost of £253, or just over $340. This indicates that even though some industries can profit off of holidays, other industries might experience negative effects that hurt their profit margin.
Economists are still studying the effects of holiday scheduling on both productivity and overall economic performance. A recent study by two economists sheds important light on the need to scrutinize how holiday policies affect total output. It takes a close look at a more recent practice of moving federal holidays.