How to Turn Your Extra Vacation Days Into Cash

Employee benefits documents shown with a highlighter

Employee benefits paperwork |

Americans may be bad at saving money, but there is one thing we’re really good at saving: vacation days. Collectively, we’re sitting on a bank of 658 million days of paid time off, according to Project: Time Off. That’s the equivalent of $61.4 billion in lost benefits. PTO Exchange, a Seattle-based startup, wants to help convert those hoarded vacation days into cash.

The company recently launched a platform that allows workers to trade in banked days off for other benefits. An employee might cash in PTO for additional contributions to a 401(k), health savings account, or flexible spending account, or to pay down student loans or cover college tuition. Employees can also use PTO Exchange to purchase flights and book hotels through Priceline or make charitable contributions to more than 1.2 million different nonprofits. They can even donate unused time off to a sick colleague.

“We help salvage billions of dollars each year by allowing people to self-direct how they use their earned PTO benefits,” Rob Whalen, founder and CEO of PTO Exchange, said in a statement. As of October, one large employer, health insurer Premera Blue Cross, had signed up. At least 150 other businesses had expressed interest in the service, The Washington Post reported.

The benefit to businesses

Companies that sign on with PTO Exchange will be able to offer benefits that better match an individual employee’s needs. A younger worker who likes to travel could use part of their PTO balance to buy plane tickets and the remaining balance to take a week-long vacation. An older worker could turn extra vacation days into additional retirement contributions.

But PTO Exchange isn’t just about making sure employees enjoy all the benefits they’ve earned, even if they can’t or don’t want to take time off. Businesses have a financial incentive to get unused time off off their books, so they don’t have to pay out a big chunk of money when an employee quits. Currently, U.S. companies have $272 billion in accumulated vacation days on their balance sheets, Project: Time Off found. PTO Exchange is a way for them to reduce that liability.

A no-vacation work culture

stressed out, overworked young man in a cubicle

An overworked employee |

While there’s plenty of evidence that taking time off is good for employee morale and productivity, more than half of employees and managers aren’t using all their allotted time off. These workaholics might be taking a cue from senior management. Only 33% of executives and senior company leaders used all their PTO last year.

Even if a company gives lip service to the idea of time away from the office, day-to-day realities often make people reluctant to take breaks. Forty-one percent of people Accountemps surveyed said they’ve skipped a vacation or taken less time off because they were worried about how much work they’d have on their desk when they returned. Pressure to keep working is even greater when the boss doesn’t encourage time off.

“As a manager, if you rarely take your vacation days or you choose to check in frequently while on vacation, your team will model your behavior,” Bill Driscoll, district president for Accountemps, said.

Some experts are worried that pressure from bosses to minimize time off combined with the ability to trade in PTO for other benefits will make it even less likely that people will take needed R&R. Stressed, overworked employees may show up to work sick or deny themselves vacations if they have an additional incentive to do so, Lonnie Golden, a Penn State University economics professor who studies vacation, told Bloomberg. “I don’t think that’s a real positive development for our performance and productivity,” he said.

Saving vanishing vacation days

a young couple taking a selfie on vacation

A young couple on vacation |

Still, a service like PTO Exchange could bring a real financial benefit to the 41% of employees who didn’t take a single vacation day last year, according to Skift. Those people are already missing out on a valuable benefit, and trading in vacation days allows them to salvage some of their unused perks, particularly the 222 million vacation days that vanish every year because they can’t be rolled over.

Employers who sign up for PTO Exchange can avoid creating a no-vacation work culture by requiring people to use up a certain about of vacation days before converting the remainder to other benefits. Todd Lucas, the company’s co-founder, told Bloomberg that his startup is a “vacation-first company.” The point isn’t to eliminate vacations. Rather, people need more flexibility to take better vacations and use their accrued time off in a way that makes sense to them.

The idea of trading in vacation days doesn’t come completely out of left field, either. Some employers already allow their employees to donate PTO to a co-worker in need. Other companies permit people to donate time off to charitable organizations. PTO Exchange promises to make those transactions easier for employers to manage.

Why you still need a vacation

The opportunity to add a bit more to their 401(k) balance or donate to a favorite charity will likely convince some employees to sacrifice their vacation days. But before giving up too much PTO, they’d do well to remember the benefits of taking time off, which include reduced stress and increased productivity. And then there’s this: People who took 11 or more vacation days were 30% more likely to receive a raise than those who took 10 or fewer days, the Harvard Business Review reported. Ultimately, the way to get the most out of your PTO may be to use it as it was intended.

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