Washington, UNITED STATES: The US Federal Trade Commission (FTC) building is seen 19 September 2006 in Washington, DC. (PAUL J. RICHARDS/AFP via Getty Images) The Federal Trade Commission’s proposed ban on noncompetes should be welcome news to the business community. Noncompete agreements stifle economic development, limit firms’ ability to hire and depress innovation and growth. A nationwide ban will fuel economic expansion and support competitive markets. Noncompetes are contracts that limit workers’ ability to work for a competitor after leaving their employer. They are extremely common . Research shows that 1 in 5 workers in the United States is currently subject to a noncompete — approximately 30 million workers. Noncompetes are especially prevalent among high-level employees, like executives, and in certain industry sectors, like technology. But they are also found in contracts with low-wage workers and those without a college degree. Surprisingly, such agreements are permissible under most states’ laws. This is because companies and lawmakers once thought noncompete contracts were good for business. The reasoning was that companies would invest in their workforce only if they could feel confident that their workers would not take their knowledge and skill to a competitor. But a decade of empirical research […]
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