The Federal Trade Commission’s ban on noncompete clauses is, as Joe Biden would say, a BFD — a big [financial] deal. Here’s why.
Hear the Signal Amid the Noise
A story about it made the New York Times front page on April 23, but it looks like that’s going to be it. The Times, in its unilluminating “Fair and Balanced” mode, reported today (April 24) that the U.S. Chamber of Commerce has mobilized to sue to stop the ban before it goes into effect. That’s probably the end of the story for now. The op-ed writers at the Times are all braying about Trump, or about how Biden’s gonna lose in November, or about Marjorie Taylor Greene, or about student unrest on some elite campuses. I’m not linking to them; fact-check me. You know I’m right.
They are all utterly missing the big, big story here. You can do better.
Noncompetes: American Businesses are Worse Than the NCAA
If you have ever known anyone subjected to a noncompete clause, you know how unfair and bottlenecking they are for people’s careers and for our society at large. These clauses prevent a worker from moving to one employer to another immediately; they have to sit out for a period of time, often up to one full year.
Think of noncompetes as the workplace version of the old-and-discarded NCAA rule about transfers having to sit out (“redshirt”) a year before playing for another team. The NCAA got rid of that rule for most players in 2021 because of its inherent unfairness to the players and a growing resentment across the sport. But noncompetes are an even worse form of redshirting that’s taken over a sizable chunk of the U.S. workplace.
A huge number of people have gotten snared into having to sign these stupid clauses… 30 million Americans is the estimate. THIRTY MILLION.
That’s about 18% of the total American workforce. And these people are in all sorts of different professions, from hairdressers to computer engineers to financial services professionals to, in my own profession, broadcast meteorologists. Some of my former students who have gone on to very successful careers in broadcast meteorology have had to sit out of their profession for many months to a year because of noncompete clauses. (And this isn’t because they are on-air personalities; the same noncompetes exist for behind-the-camera employees, too. This Times story about noncompetes in the TV news industry generated a tepid 31 comments.)
To repeat: your TV weatherperson can’t move from one TV station to another, unless they stay in the same company’s roster of stations, without doing a “redshirt” year or so.
Did you know that? How stupid is that? What possible societal good is served when our best communicators of life-threatening weather conditions for a particular location have to sit on the sidelines if they want to switch stations in the same city?
This is [financially] moronic.
Some Benefits of the Ban
The predictions of the Federal Trade Commission — that the ban on noncompetes will stimulate new businesses, raise salaries, and boost innovation (e.g., new patents) — are entirely reasonable. See the graphic at the top of this essay for some details. More details are available at the full report (click on link under the graphic at top, or here.) Noncompetes are one major reason for salary suppression — it’s such a hassle that you aren’t going to change a job for a better salary in a lot of cases. Ditto re: better health care. In broadcast meteorology (and the TV news industry in general), after a certain amount of time it’s easier just to quit the profession and stay in the city where you’ve settled than to uproot to avoid violating the noncompete. How does forcing successful people out of their profession achieve anything we would want in a rational society?
The Evil Economic Empire Strikes Back
The business community is going nuts over this ban, because the Biden FTC has gone after one of their favorite ways to screw over their employees. Most of the professions with noncompetes don’t need them at all… hairdressers, really? Keeping Edward Scissorhands from moving from one beauty salon to another for better pay is beneficial to whom, exactly? A noncompete in most professions has no societal benefit — it just benefits the (often already engorged) employer. For those relatively few professions where trade secrets are involved, NDAs or non-disclosure agreements are what’s really needed — and those are already in effect for most people stuck in noncompetes. (I have strong feelings about the proliferation of NDAs as well as noncompetes, but that’s for another time.)
Biden’s Breath of Fresh Air
This ban from the FTC is a prime example of why I am affirmatively voting for Joe Biden in November, warts and all. (Yes, I’ve heard about Gaza. Which American President from Harry Truman forward would have done more than Biden in that situation? I am prepared to wait until hell freezes over for your response.)
Why Biden? Because he nominated Lina Khan to lead the FTC. Without Biden in the White House, the FTC is 3–2 GOP, not 3–2 Democratic. And the vote on the noncompete ban was 3–2, split down party lines. Votes matter; elections matter.
40 Years in Deep Voodoo
Biden is the first POTUS since at least Johnson, and maybe FDR, to proactively employ truly progressive policies to free up our economy. In particular, Biden is the first Democratic President to overthrow the core evil values of GOP “trickle-down” “supply-side” voodoo economics. Clinton bought into it. Obama nibbled around its edges. But Biden’s launching a frontal attack on the strictures that have been built into the American economy from about 1980 forward that have, I claim, been the real reason that productivity and wages decoupled during the past four decades. Without Biden, we’d still be adding new, even more outrageous rigging to the system.
The Washington Monthly Blueprint
I’ve been reading the Washington Monthly for about 35 years now, every issue. Its founder, the late Charlie Peters, dedicated the magazine to finding practical solutions to make government work better. And for most of those 35 years, I’ve read one very reasonable, detailed how-to article after another in the Monthly about how to improve our increasingly dysfunctional government at all different levels, from the bottom to the top.
I have long wanted someone, anyone to get their hands on the controls to our country and actually implement just one, or two, of the many cogent suggestions published in the Monthly. After 30+ years, I’d basically given up on that ever happening. Especially with some retread also-ran politician from business-buddy Delaware who promised the bigwigs that nothing would change much if he were President. I expected Obama 2.0, at best. That’s why I preferred Bernie Sanders to either Hillary Clinton or Joe Biden, at least until Bernie showed he had no clue in the South and had no clue about foreign affairs. Bernie clearly understood the magnitude of the problem in our domestic economy, at least.
And so I am basically thunderstruck that the Biden Administration seems to be filled with people who have been reading the Monthly for years and are working from its practical playbook. I never thought I’d live to see it. This is how we could actually reverse the evils of the past 40 years of stagnating wages and silence that giant sucking sound of all the money zooming to the top.
But, But…
I believe that Biden is going to be able to achieve serious improvements just by whacking back the strangling vines of out-of-control capitalism, e.g. noncompetes, and letting capitalism-of-the-littler-people run its course without the chokehold of monopolies and their close cousins. This is not a popular position, especially with certain segments of the progressive population that should otherwise be thrilled with developments like these.
With apologies to the socialists who will inevitably claim that only a complete abolition of capitalism (and much else) can achieve good: if we unclogged the arteries of our economy by reining in the 40-year-plus overreach of big business, that would trigger a rising tide that would lift a whole lot of smaller boats. We’ve been drowning in Reaganomic lunacy for so long, it’s hard for a lot of people to imagine that capitalism-within-limits could actually exist and be an improvement upon the status quo. But it was, from about 1946 to the late 1960s. We’re just too young to remember that. And nobody’s reminding us, either. Trump, Trump, Trump, goes the media.
And So?
The FTC ban on noncompetes is a giant BFD. Anything that relieves 30 million Americans of artificial restrictions on where they work (and thus how much they are paid) is a big deal.
This is how Reaganomics and its assault on America can be reversed. Wasn’t that what we wanted? Remember? Even before January 6, before 2016, before Bush v. Gore. Any number of statistics indicate that our nation went in an ultimately bad direction around the time that Carter left the White House and Reagan arrived. To fix that, you don’t nibble around the edges; you go back to where things went wrong and you focus on the essential missteps. That’s what the FTC is doing. It will be a steep uphill fight against the U.S. Chamber of Commerce, and the FTC ban needs public support to win that fight.
But nobody seems to notice or care.
Attention must be paid. If you are in favor of a return to some measure of rationality and humanity in our national politics, attention must be paid. Otherwise, we risk being well and truly [fooled] again.
