FTC Ban on Noncompetes Is a Victory for the US Economy
By giving workers more bargaining power, the new rule will make businesses more competitive.
FTC Chair Lina Khan: Striking a blow for workers.
Photographer: Valerie Plesch/Bloomberg
It’s easy to understand why the US Chamber of Commerce is so upset about the Federal Trade Commission’s decision to ban noncompete agreements. The problem for businesses is not that they will lose trade secrets or valuable investments in workers to competitors. It’s that they just lost bargaining power to workers — and that’s exactly what the FTC intended.
Despite the common perception that noncompete agreements are relevant only for employees who possess critical trade secrets, the reality is that they are often imposed across various industries on a wide spectrum of workers, many of whom do not handle any sensitive information. It’s also the case that most hiring in the US involves people leaving one job for another — which is a critical factor shaping the dynamism of the labor market.