WSJ Your Money Briefing - Unlimited PTO Is on the Rise. Is This Perk as Good as It Seems?

Episode Date: January 27, 2025

More companies are offering unlimited vacation days, but that doesn’t necessarily mean employees can take more time off. Wall Street Journal columnist Callum Borchers joins host Ariana Aspuru to discuss the benefits and drawbacks of using your unlimited PTO.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey Spotify, this is Javi. My biggest passion is music, and it's not just sounds and instruments. It's more than that to me. It's a world full of harmonies with chillers. From streaming to shopping, it's on Prime. Here's your Money Briefing for Monday, January 27th. I'm Arianna Aspuru for the Wall Street Journal. As more companies remove the cap on PTO, employees struggle to balance the perk with the pressure to still be known as a hard worker.

It's largely because they don't want to look like they're slacking off. When they have a set bank, say three weeks or four weeks, they say, I'm entitled to this so I don't feel any guilt about using that time. But when it's supposedly unlimited, it really just comes down to what you feel comfortable using. We'll talk with Wall Street Journal on the clock columnist, Callum Borschers, about the limits of unlimited vacation time after the break. TD Direct Investing offers live support, so whether you're a newbie or a seasoned pro, you can make your investing steps count. And if you're like me and think a TFSA stands for Total Fund Savings adventure, maybe reach out to TD Direct Investing.

Seven percent of U.S. employers offer unlimited paid time off, according to human resources trade group SHRM. But employees say it's tricky to actually use it. Wall Street Journal reporter Callum Borschers joins me. Callum, unlimited PTO, it sounds ideal. What's the problem with it? Well, the problem is that there are always rules in life, whether they're written or unwritten. And so when they're not written, that means that they're sort of like this quiet code. How much can you really take without getting the stink eye from your colleagues or your boss that says, hey, you're taking too much. And so I hear mixed reviews on this. Some workers really like the freedom, especially if they're at a company for a long time. There's a year when I just need more

time off because maybe I'm caring for an elderly parent, but then in the next year I can take less and to not be beholden to a set limit is really great. But the downside of the unlimited in air quotes factor is that you sort of are just governed by your own conscience and other people's judgment. Why are some of the workers you spoke to so afraid to actually use it? It's largely because they don't want to look like they're slacking off.

When they have a set bank, say three weeks or four weeks, they say, I'm entitled to this. So I don't feel any guilt about using that time. But when it's supposedly unlimited, it really just comes down to what you feel comfortable using. The other hangup that some workers have too, this is kind of forward looking, but if you leave a company, you probably aren't getting any PTO payout. And that's not necessarily the point of it, but you're supposed to use it

and take the vacation time. But some people, especially if they're really ambitious, hardworking people, they like being able to bank that time, especially if it rolls over from year to year. So you know, okay, if I leave this company, I've got five weeks saved up and they have to pay me for that used time. If there's no bank that you have to draw down, there's also no bank to cash out on your exit. To your first point about why people are so afraid to use it. Do people like see it as a reflection of how dedicated they are, how hard of a

worker they are if they use more PTO than they're seen as less than? Yeah, that's a big part of it. And it also is sort of a calculation of like, how ambitious am I within my career, or at least within this company. One person I spoke with who says, look, I take five or six weeks off every year. That's probably more than, than most people can take. this company, one person I spoke with who says, look, I take five or six weeks off every year. That's probably more than most people can take. And she said, I'm a recovering workaholic is the way she described herself in the past.

She never would have taken more than three weeks off, but she said, I've got some new priorities, including caring for an aging parent in that case. And so she accepted that there's a trade-off there though, right? So she says, I don't feel guilt tripped by coworkers when I take my five or six weeks, but I also understand working less might mean I'm not up for that next promotion. This opens up a can of worms kind of like, am I asking too much, too little? Do some employees who currently have unlimited PTO and like maybe people think they're living the dream, do they miss finite vacation time?

Some of them do. And in fact, I spoke with one HR consultant who actually advised a client to go back to limited paid time off based on an employee survey, which was interesting. So you think the freedom to set your own vacation limits would feel like really liberating. But in that case, the workers said, no, it doesn't feel freeing at all. We feel this like guilt whenever we take time off. We'd rather just have a set three weeks or four weeks that we can use. It really just depends on the company culture, I think is the bottom line on this. I've heard from workers who say, you know, I feel like the company just uses this as a way

to project a commitment to work life balance, but really they expect everybody to grind as hard as they ever would. And then there's also the practical considerations of like, are there certain deadlines that you just have to be present for? So the notion that my time off is unlimited is really a farce. Really, there's half of my calendar basically that I can't touch.

Can managers say no to time off requests even with unlimited PTO? They can, but that's an interesting point because for workers, I heard, okay, there's this frustration that my manager really has it to his or her discretion whether to grant me this time off. And so that's a big caveat on the unlimited thing. But I also heard from some managers who feel like it can put them in a bind too, because they don't have a policy to cite if they want to say no.

I spoke with a manager, for example, who said, you know, I had a direct report who wanted to take three weeks off in a row to take a trip to Japan. That's a long time to be without somebody, at least all in a row, not three weeks spread over the course of a year in one big block, but like, you know, I didn't, I couldn't point to a rule and say, well, no, you can't do that. So I sort of felt like I had to give it the green light. That's really more, you know, a managerial style or a personality thing. Right.

But I think that it's, it's worth noting that sometimes the managers actually feel like they're put in a tricky spot as well. It's not just the rank and file workers. And what about a minimum number of PTO days? Is there a way to tell your company, at least make me take this, if I take more, that's up to me? Yes, and some businesses that say they're really committed to the work-life balance have done that. As opposed to a PTO limit, they've instituted a PTO floor. I think that's one of the ways that the unlimited PTO can work best. Katrina Gazarian, who's this HR consultant I spoke with said, the businesses that have unlimited PTO that do it the best really do two things, and that's one of the strategy. One is setting

a floor of vacation days. We expect you to take at least 15 days off, for example, and you may take more than that, but we really seriously do want you to take the time off. And then the second thing is really having clear performance benchmarks for your teams. For example, if you're in sales, let's say, and you have a goal for the quarter, if you hit your goal a little bit early, maybe you feel more comfortable taking an extended break that quarter because you know that your absence is not going to be mistaken for underperformance during that period.

How can someone with unlimited vacation days set themselves up in a better position to actually use them? Is there a magic number here, Callum? If there is a magic number, it's 16. It's not set in stone, but that's the average number of days off that people with unlimited, so-called unlimited PTO actually take according to a recent survey by Empower, the financial services firm, which by the way is only a couple more days than is average for people to take with limited time off. So they're barely exceeding the norm. And I think that's very telling. I mean,

look, there's a wide range from company to company. There are places where you could take significantly more than that, I'm sure. But I think what that speaks to that 16 day average for people with unlimited PTO is that there's sort of an expectation. It's not on a piece of paper, but most people in a company, they've worked at some other company that had a structured time off plan and people get used to like, what's the norm, like what is typical. And if you start to exceed more than three weeks or maybe four is pushing it, it starts to look like you're maybe taking advantage of the

system. If you feel like you're in a safe company culture where you actually can use the time off, then it can be beneficial for you too. That's WSJ on-the-clock columnist Callum Borschers. And that's it for your money briefing. This episode is produced by Jess Jupiter with supervising producer Melanie Roy. I'm Marianna Aspuru for The Wall Street Journal. Thanks for listening.