Stoller is extolling a new decision by the Federal Trade Commission to ban non-compete agreements. FTC claims this will raise wages by $2000 for an average worker.
This doesn’t make sense. Non-compete agreements have been around for a long time. They were always used for executives and salesmen, and apparently they’re now used in other job types. Breaking an agreement never had a serious penalty. You’d be a pariah to the company you left, but you were already on their blacklist. The new company would be glad to have you on board.
The first time I heard of NCAs was in the 70s when a salesman for Cromwells moved to their competitor Vaters. Cromwells was pissed, but there wasn’t much they could do. If they sued, they’d just cause bad publicity. If the salesman tried to contact his old Cromwells customers, it wouldn’t matter because they were already tied in with standing orders** for business forms, which made the relationship ‘sticky’. If they were unhappy with Cromwells, they might try Vaters without any effort from a salesman. New customers wouldn’t care.
I can’t see any actual EFFECT from the NCA in either direction. The prediction of vastly increased wages seems to be based on dubious assumptions that all jobs are controlled by NCAs, and that all job changes are moves to a direct competitor with an increase in pay.
Contracts of this type (NCA, NDA, copyrights, patents) are not criminal laws. They don’t guarantee arrest. They only permit an opportunity for punishment, which requires considerable expense and trouble to exercise. Large companies can always find ways to win, with or without the agreement or IP. Small companies and individual workers will always lose, with or without the agreement or IP.
** Setting up an invoice or an oilwell logging form, and etching a letterhead logo, are costly. After the setup, the company could simply order 1000 imprints per month with minimal cost. Amortizing is sticky.
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