amna: The federal trade
commission today issued a
proposal banning non compete
clauses that prevent workers
from switching employers or
starting a new business.
About 1 in 5 Americans,
approximately 30 million people,
are affected by these policies.
The ftc will accept public
comments for 60 days before it
can finalize the rule.
Elizabeth Wilkins, director of
the office of policy planning
for the ftc, has worked on this
proposal, and joins me now.
Most people associate
non-competes with high-paying
jobs, tech workers and so on.
What are some of the industries
and jobs that we don't typically
associate with non-competes that
are impacted by this?
>> You are right.
30 million Americans we think
are covered by noncompete spirit
everybody from minimum-wage
workers, security guards, folks
who are flipping workers --
flipping burgers, journalists,
nurses, or all affected by this.
Amna: About half of all states
have rules limiting these are
banning them.
Why is a federal rule necessary?
>> One of the really interesting
and disturbing pieces of
evidence we have is that in
states that ban non-competes,
you actually see them and just
as many contracts as states that
don't.
That means workers don't know
what the rights are and they may
be chilled from trying to find a
better paying job even when
those clauses are not
enforceable.
So a clear federal rule would go
a long way to making sure people
can actually switch jobs, find
better pay and better working
conditions.
Amna: What do you estimate could
be the potential impact on
worker wages?
>> Pretty big.
There could be an increase of
$300 billion for workers who can
find better wages and working
conditions and where employers
would have to compete for those
workers instead of preventing
them from moving.
Amna: We have seen unusually
high rates of quitting and job
switching, numbers from November
of 2021 suggest 4.5 million
workers voluntarily left their
jobs.
That seems to suggest that
non-competes are not an
impediment to worker mobility.
>> We have seen unprecedented
switching in the wake of the
pandemic.
It is one big shock to the labor
market.
What we are talking about a
long-term effect.
We are hoping this is good
long-term for their productivity
of the economy, when workers can
match with the jobs they are
best suited to, that is good for
employers also.
As we've seen in this moment,
employers will have to compete
come based on wages and benefits
for their workers.
Amna: It is a type job market,
workers have a lot of leverage.
If you don't want to take a job
where there is a noncompete,
can't you just not take that
job?
?
And going find another one >>
That is the idea.
Research suggests workers don't
even know they are signing a
noncompete.
You get a stack of paperwork and
you may not know what is in it.
Some workers are asked to sign a
noncompete after they start.
Even well-educated employees
don't know what they are signing
up for, until they try and get
another job and find out they
can't.
Amna: There is some competing
research that suggests
non-competes spur job creation
in some Sparta -- some startups.
They want to invest in the
people they hire so they don't
go somewhere else.
What do you say to that?
>> We acknowledge there are some
good reasons that employers
might want to use non-competes.
There are nondisclosure
agreements, if they are worried
about information or trade
secrets.
There is also trade secret law.
Thousands of lawsuits are
brought every year.
Obviously if workers are not
restricted, employers can say, I
will offer you better for you to
stay.
Amna: Some are suggesting it is
very vague and could face legal
challenges.
>> We think we have clear
authority to promulgate this
kind of rule.
Congress gave us this authority
and we feel obligated, and a
place that is appropriate, like
Nash that we should use it.
Amna: Elizabeth Wilkins, thank
you for joining us.