Noncompete agreements, once reserved for executives with unique access to trade secrets, have gone mainstream in America. According to the Government Accountability Office, between 18% and 20% of U.S. workers are covered by one. From artificial intelligence organizations to sandwich shops, employees have been left unable to leave for competing businesses or start one of their own for defined periods of time.
These agreements have quietly become one of the most consequential and least examined restraints on the American labor market, but that’s beginning to change. The Federal Trade Commission (FTC) has come to oppose many noncompetes, especially in health care. A handful of states have taken action, such as Minnesota, which in 2023 passed laws making the agreements unenforceable. My new research shows encouraging early results.
Workers generally do not negotiate their noncompete clauses; they are handed a stack of onboarding papers and told to sign.
The deeper question is whether noncompetes serve the public interest, and the evidence increasingly suggests they do not. They may even shape the economic fates of entire regions.
Continue reading at the Chattanooga Times Free Press.
Morris M. Kleiner, PhD, is a labor policy fellow at the Archbridge Institute and one of the world’s leading labor economists. He is a professor at the Humphrey School of Public Affairs at the University of Minnesota and a research associate at the National Bureau of Economic Research. His work covers the role of institutions in labor markets and employment issues in enhancing productivity, with a specific focus on the role of occupational licensing for workers and consumers in the United States and other nations. Dr. Kleiner earned his Ph.D. in economics from the University of Illinois at Urbana-Champaign.
Economics of Flourishing
Noncompete agreements, once reserved for executives with unique access to trade secrets, have gone mainstream in America. According to the Government Accountability Office, between 18% and 20% of U.S. workers are covered by one. From artificial intelligence organizations to sandwich shops, employees have been left unable to leave for competing businesses or start one of their own for defined periods of time.
These agreements have quietly become one of the most consequential and least examined restraints on the American labor market, but that’s beginning to change. The Federal Trade Commission (FTC) has come to oppose many noncompetes, especially in health care. A handful of states have taken action, such as Minnesota, which in 2023 passed laws making the agreements unenforceable. My new research shows encouraging early results.
Workers generally do not negotiate their noncompete clauses; they are handed a stack of onboarding papers and told to sign.
The deeper question is whether noncompetes serve the public interest, and the evidence increasingly suggests they do not. They may even shape the economic fates of entire regions.
Continue reading at the Chattanooga Times Free Press.
Morris Kleiner
Morris M. Kleiner, PhD, is a labor policy fellow at the Archbridge Institute and one of the world’s leading labor economists. He is a professor at the Humphrey School of Public Affairs at the University of Minnesota and a research associate at the National Bureau of Economic Research. His work covers the role of institutions in labor markets and employment issues in enhancing productivity, with a specific focus on the role of occupational licensing for workers and consumers in the United States and other nations. Dr. Kleiner earned his Ph.D. in economics from the University of Illinois at Urbana-Champaign.
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