The Role of Paid Time Off in a Competitive Labor Market

There is a serious labor shortage in the construction industry and home builders are feeling the impact. Estimates vary, but the U.S. is in the midst of a housing supply gap of between 1.5 million and 5.5 million units while lacking the construction workers needed to build new homes that would shrink that deficit and better align housing pricing and availability.

And while the construction job openings rate fell to 3.5% in June of 2024—the lowest rate since March 2023—it’s essential that organizations within the industry do what they can to not only attract talent but to hire and retain skilled workers.

Is your home building business struggling to attract talent? If so, you’re not alone. One tool you may not be using enough to counter these challenges and to rise above your competitors in the hiring game is a well-coordinated paid-time-off (PTO) policy.

Why Prioritize PTO Policies?

Without sufficient downtime, the risk of burnout for workers is real. A survey by professional services network Deloitte found that while 87% of professionals said they have passion for their jobs, nearly two-thirds also said they frequently feel stressed or frustrated on the job; 18% said they feel that way every day.

Prioritizing PTO policies within your organization is something potential employees look for when job hunting and is appreciated by workers already in your employ. Practically, no one relishes the idea of leaving a job for one where they would have less paid time off.

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A competitive PTO policy can be a major differentiator in an intense labor market. It can improve employee morale and engagement, reduce absenteeism, and boost productivity on construction jobsites, allowing employees to take breaks that can help them return to work refreshed and more focused.

How to Create a Competitive PTO Policy for Your Business

There is no “one size fits all” approach when it comes to paid time off, especially in the construction industry where worker availability and needs are determined by project schedule and workload. However, the most effective PTO plans share some similarities.

Paid-time-off policies typically include vacation, personal, and/or sick time. How those break down depends on the company, its needs, and the needs of its employees. Some paid-time-off policies combine all types of PTO in one giant “bucket” for employees to use as they like, while others break it down into a specific number of days for sick time, planned vacation time, and personal days.

Other variables companies must decide on are whether to have PTO accrue over a year versus offering a set number of days at the start of the year, and whether to allow employees to carry over unused time off to the following year.

Increasingly, companies are starting to include time for “mental health” days in their PTO policies. Some businesses are also including nontraditional leaves of absence, such as for bereavement or family-centric events (weddings, the birth of a child, and so on), as part of their PTO plan. Additionally, different cities and states may have specific rules regarding employee PTO, which affects a plan’s design.

Effective policies stress the importance of flexibility for employees when necessary. This could be for unforeseen circumstances or could focus on an adjustment of policies to align with an employee’s situation. Stressing flexibility to your employees is crucial.

Establishing Guidelines for Paid Time Off

In addition to leave, there are specific variables that companies must consider when building a PTO policy. Will an employer’s PTO accrue over the course of the year or will employees be given a set number of PTO days to use at the beginning of the year?

Another variable is whether to allow employees to carry over unused time to the following year. It’s important for companies to be transparent and to make sure their employees know how paid time off accrues and if their time off can be carried over.

Additionally, employers should review any specific guidelines around PTO use with their employees. For example, are there any periods or busy seasons when employees should not take PTO? Are there any particular home building projects or specific phases within a project during which employees shouldn’t take time off? Is there a maximum number of PTO days that can be used consecutively?

Employees are seeking transparency and guardrails when it comes to their PTO plan, and employers should provide these details and clear structure.

PTO Culture and Leading by Example

It’s essential that upper management visibly buys into and supports company policies related to paid time off. Leadership should make it clear that they understand the need for employees to get time off and expect PTO to be used. If employees think taking time off is frowned upon, the company’s PTO plan loses its effectiveness in retaining talent.

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Communicating About PTO With Employees

The best PTO plan is useless if employees don’t understand what they’re entitled to. Your company’s paid-time-off plan must be understandable and clearly communicated to employees to ensure it serves both the company’s and the employees’ interests.

Ideally, PTO information will be readily accessible to employees in multiple formats. For example, sharing news about your company’s PTO plan through written or emailed memos and a page on the company intranet makes it more likely everyone will see the information, regardless of which platforms they prefer.

When making a policy change, whenever possible, include information from employee surveys or external data to support the change’s necessity. This approach can help mitigate the number of employee questions about the changes or any concerns employees may have and will show that the company is thoughtful and deliberate in managing its PTO policy.

The idea that giving employees time away from work can be a productivity-raising tool may seem counterintuitive at first glance. Yet we’ve probably all experienced the benefits of having that time off to recover from an illness or to “escape it all” for a while, returning to work refreshed.

A well-crafted PTO plan is a vital employee benefit and can be a powerful tool for companies to attract and retain top talent in this challenging labor market for home builders.