AUGUST traditionally has been a month of vacation for millions of Europeans - time off that, by law, can extend to five or six weeks for many workers. By contrast, most Americans must settle for two or three weeks of vacation.Shorter vacations aren't the only disparity between the American workplace and some abroad. Longer hours have become common in the past 20 years, with the United States now ranking second only to Japan in the hours industrial employees work. According to Juliet Schor, an associate professor of economics at Harvard and author of the forthcoming book, "The Overworked American," US employees added an average of 138 hours to their yearly work schedules between 1969 and 1989. Reduced staffs, stiffer competition, and slower growth in productivity have forced managers to put more pressure on employees. In a recent nationwide survey for Hilton Hotels, almost half of those interviewed said they would be willing to trade a day's salary for a day off each week. Working women felt particularly harried, especially those with children. Professor Schor offers solutions: Require employers to allow workers to trade income for time. Require standard hours for all salaried jobs, giving paid time off to employees who work beyond the standard. Offer paid parental leave. And legislate an annual four-week vacation for all workers. Already a California attorney, Richard Such, is proposing an amendment to that state's constitution that would guarantee six weeks of vacation to all employees who meet certain conditions. That approach, however, raises its own set of problems. Job creation in Europe has been made more difficult by the requirement that every employee receive a month or more of vacation, regardless of time on the job. Proposals such as those from Ms. Schor and Mr. Such are likely to generate new discussion of the relationship - or lack of one - between long hours and productive work. What ought to emerge is a clearer recognition that balanced lives - responsive to work and family, rest and industry - are a critical economic asset.