Non-Compete Agreements: A Surprising Trend
Kurt Stanberry discusses the motivation behind “Would an FTC Ban on Non-Compete Agreements Lead to Higher Wages for American Workers?,” which was published in Compensation & Benefits Review. His reflection appears below the paper’s abstract.
What motivated you to pursue this research?
There has been a recent proliferation in the number of American workers being required to sign non-compete agreements, especially at the lower and middle levels of employment. This has had a downward impact on the wage growth of these employees, due primarily to reduced job mobility (which is the way many lower and mid-level workers increase their pay.) My research interest has consistently addressed issues affecting middle-class workers, and those areas in which policy changes might be warranted, and non-competes is an example of an area in which policy changes seem to be warranted.
Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?
Yes, the Biden Administration recently promulgated an Executive Order, requiring the Federal Trade Commission to address the issue of non-compete agreements. In January 2023, the FTC proposed a rule to ban non-compete clauses. Final action from the FTC is still pending.
Were there any surprising findings?
Yes, recent studies indicate that more than one in five workers earning less than $40,000 are now required to sign non-competes, which were originally intended to be utilized for higher-earning employees.
