Introduction and Background

The June, 2019 Issue of The Atlantic featured an article, “Hell Is Other People’s Vacations (So please stop Instagramming your travel pictures)” the author noted that one of the best reasons to take a from work may one’s own health.

The article quoted the results of the Helsinki Businessmen Study. From 1974 to 2004, test subjects who took at least three weeks of vacation were 37 percent less likely to die than those who took fewer weeks off. Shorter vacations were also associated with longer work time, higher Body Mass Index, more coffee consumption and worse self-rated health (SRH). 

The article also noted that vacation can yield purely economic benefits, as well. In 2017, the average U.S. worker left six paid vacation days unused, which works out to 705 million days of travel nationally, enough to support 1.9 million travel-related jobs.

The following is an attempt to quantify the impact of a single day of vacation terms of gross output, gross domestic product, jobs, and labour income in the Saskatchewan context.

Methodology

In order to assess the economic value of a single vacation day, a number of assumptions must be made. First, the economic value of a single vacation day must be offset by the economic value of that day if it was worked. Annual gross output per employee by industry was multiplied by employment by industry and, in turn, multiplied by 1/365. These were used as economic model inputs. 

The Praxis economic model uses the latest provincial input-output tables available. Input-output analysis (I-O) is a form of macroeconomic analysis based on the interdependencies between different economic sectors or industries. This method is commonly used for estimating the impacts of positive or negative economic shocks and analyzing the ripple effects throughout an economy. The Praxis Saskatchewan model contains 35 industries and 66 commodities (aggregated to 25 industries in detailed results by industry) and based on a standardized method (Statistics Canada’s) and will yield results similar to Statistics Canada’s inter-provincial model and the Conference Board of Canada’s STEAM Model.

The Praxis Saskatchewan Tourism Economic Impact Model was used to estimate vacation day impacts. The model is of the same dimensions but allows the user to specify person nights by origin. Statistics Canada’s 2019 National Travel Survey of Canada (NTS) data for Canadian and Saskatchewan visitor spending per visitor per day by category (auto transportation, accommodation, food and beverage, amusement and recreation, and retail) were used as economic model inputs. NTS spending per visitor per trip was aggregated into input-output commodities/industries: Retail Trade, Arts, Entertainment and Recreation, Accommodation and Food Services multiplied by number of days/nights.

Results below for a single day of work are in Table 1, below.  Direct impact is the total initial expenditure for tourist spending.  Indirect impact is the secondary impact that includes inter-industry transactions, i.e., purchases of inputs from supporting industries.  Induced impact is the additional impact from changes in household spending as additional labor is hired or reduced.

Gross Domestic Product (GDP) measures net economic activity within a prescribed geographic area.  It represents the payments made to final factors of production such as labour income, unincorporated business profits, and other operating surplus (corporate profits, interest income, inventory valuation adjustments, and capital consumption allowances).  GDP excludes the value of intermediate goods and services used in production.  Labour income includes wages, salaries, and employer contributions to pensions and benefit packages.

Gross output measures total expenditures on local goods and services as well as payments to labour and business profits.  Gross output is the total value of goods and services produced by an industry and includes intermediate inputs that are foreign and domestically produced goods and services used by an industry in the production of its gross output.  Value added is the difference between gross output and intermediate inputs and represents the value of labour and capital used in producing gross output.  The sum of value added across all industries is equal to gross domestic product for the economy.

Employment impacts are measured in positions and contain a mix of full and part-time positions. Employment results are rounded to the nearest whole number.

Table 1: Economic Impacts – Saskatchewan - Single Day of Work

In all vacation impacts, it is assumed that the single day of vacation will take place within Saskatchewan. If it takes place outside of Saskatchewan, the bulk of that spending is lost. With 575,000 persons currently employed, this accounts for 575,000 person nights.

If the vacation day spending equals that of a Saskatchewan tourist within Saskatchewan, with a significant amount of “staying with family and friends” and relatively little accommodation and food spending, the economic impact of 575,000 person nights is below:

Table 2: Economic Impacts – Saskatchewan – 575,000 person nights – Saskatchewan Resident Spending

Similarly, 575,000 person nights in Saskatchewan using average Alberta/Manitoba resident spending patterns, also with a significant “staying with family and friends” component, yields the following:

Table 3: Economic Impacts – Saskatchewan – 575,000 person nights – Alberta/Manitoba Resident Spending

Finally, 575,000 person nights in Saskatchewan using average “Other Canadian” resident spending patterns, with a significantly less “staying with family and friends” component and a higher travel component, generates the following economic impacts:

Table 4: Economic Impacts – Saskatchewan – 575,000 person nights – Other Canadian Resident Spending

Conclusion

In order to offset lost productivity by not working a day (2,939 jobs and $375M in gross domestic product), a Saskatchewan resident must spend per day on vacation in Saskatchewan somewhere between “Other Canadian” and Alberta/Manitoba residents on the same vacation within the province. 

This would necessitate a hotel stay and restaurant meals and would approximate $280 per working person per day.