Press Releases

News from EPI Prominent Economists Call on Department of Labor to Set Overtime Pay Threshold No Lower than $50,000 a Year

In a letter sent to Secretary of Labor Thomas Perez, 12 prominent economists urged the Department of Labor to set the threshold under which all workers are guaranteed overtime protections to no less than $50,000 a year.

“As labor economists, we applaud President Obama’s directive to you to update the salary threshold for exemption from the Fair Labor Standards Act’s overtime protections,” the letter reads. “We believe a salary threshold of about $50,000 would be justified as a measure of bona fide executive, administrative or professional status and would improve the well-being of the affected employees without harm to the economy.  This level restores the 1975 threshold, adjusted for inflation, a level we view as reasonably balancing the goals of overtime standards and the flexibility intended by the law.”

In March 2014, President Obama directed Perez to update the regulations that govern exemptions from the requirement that employers pay time-and-a-half for work beyond 40 hours in a week. Currently, workers who are paid as little as $23,660 per year are not eligible for additional compensation for working more than 40 hours a week, as long as they meet criteria that classifies them as a manager, executives, or administrator.

The media have reported that DOL is considering raising the threshold to $42,000, which many economists consider to be far too low. A number of proposals for how high to raise the threshold have been suggested: EPI has previously recommended $51,168 a year, which is the amount of threshold at its height, adjusted for inflation. A threshold set at $58,344 a year would guarantee that the same share of salaried workers receive overtime protection as were protected in 1975, after adjusting for the different educational composition of today’s workforce. The highest figure proposed is $69,004 a year, which represents the salary level that would cover the same share of salaried workers as in 1975, but without adjustments for demographics changes.

“Restoring the number of salaried workers eligible for overtime pay what prevailed forty years ago is one concrete way to increase middle-class paychecks and help generate the wage growth Americans yearn for,” said Lawrence Mishel, president of the Economic Policy Institute. “The millions of workers who would benefit would not only earn more they would also have more leisure and time with their families.”

The full list of signers is:

  • Jared Bernstein, Center on Budget and Policy Priorities
  • Richard Freeman, Herbert Ascherman Professor of Economics, Harvard University
  • Daniel Hamermesh, Professor of Economics, Royal Holloway University of London and Sue Killam Professor Emeritus, University of Texas at Austin
  • Harry Holzer, Georgetown University
  • Lawrence Katz, Allison Professor of Economics, Harvard University
  • Adriana Kugler, Vice-Provost for Faculty and Professor of Public Policy, McCourt School of Public Policy, Georgetown University
  • Ray Marshall, Professor Emeritus, University of Texas and former Secretary of Labor
  • Lawrence Mishel, President, Economic Policy Institute
  • Paul Osterman, NTU Professor, MIT Sloan School
  • Michael Reich, Institute for Research on Labor and Employment, University of California, Berkeley
  • William M. Rodgers, Rutgers University
  • Jesse Rothstein, Goldman School of Public Policy, University of California, Berkeley