Commentary: Noncompete agreements are bad for workers, bad for consumers, and bad for the economy
NYSenate.govMay 16, 2023
FTC Bans Noncompete Agreements, Could Impact Millions of Workers
The Facts
The US Federal Trade Commission (FTC) voted 3-2 to ban noncompete agreements — which prohibit employees from working for competing companies either in a specific geographic area or time frame — for an estimated 30M employees.
The Democratic-majority panel's ruling bans companies from enforcing existing non-competes for all non-senior executive employees and prohibits them from writing new ones for future senior executives.
The Spin
Narrative A
Noncompete contracts rarely protect company secrets. In fact, their primary function is to shackle employees to their existing companies by forcing them to switch careers or move far away to find a new job if they seek to leave — something most people can't afford to do. By prohibiting employees from starting their own businesses, these contracts also weaken competition. If we want employees and entrepreneurs to thrive, these agreements should be banned at all levels of business.
Narrative B
Despite what these anti-business government officials claim, noncompete clauses actually promote competition and help, not hinder, employees. This is also an egregious, unconstitutional power grab by three unelected regulators who think they can decide what is and isn't a competitive market. The FTC has never been granted such overarching authority, which is why actual American business leaders will fight this in court.
Nerd narrative
There is a 50% chance that UK GDP per capita will be less than 50% of that of the world's leading major economy by July 2034, according to the Metaculus prediction community.