1. One in five US workers is bound by a noncompete clause, which restricts them from freely switching jobs, lowering wages and undermining fair competition.
Today @FTC proposed a rule to prohibit firms from imposing noncompete clauses on their workers.
ftc.gov/news-events/news/pre…
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2. Noncompetes undermine core economic liberties. Evidence suggests noncompetes also suppress earnings and opportunity even for workers who are *not* subject to a noncompete. FTC economists estimate that noncompetes lower US workers’ collective income by $250-$296 billion.
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3. Evidence shows that noncompetes also reduce innovation, entrepreneurship, and new business formation. Locking workers in place can enable incumbents to close off markets to new rivals, undermining dynamism and healthy competition.
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4. @FTC economists estimate that the proposed ban on noncompetes would increase workers’ total earnings by close to $300 billion per year. Evidence also suggests that it could lower decrease consumer prices in the healthcare sector, potentially to the tune of $150 billion a year.
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5. To address these harms, @FTC's proposed rule would (1) prohibit employers from using noncompete clauses in their contracts with workers, and (2) require them to rescind existing noncompetes and actively inform workers that they are no longer in effect.
ftc.gov/legal-library/browse…
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6. @FTC is seeking public comment on the proposed rule. Hearing from entrepreneurs, workers, and employers will help ensure that the final rule reflects market realities. The proposal identifies potential alternative rules & key questions we are exploring:
ftc.gov/system/files/ftc_gov…
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7. The proposed rule draws on years of expertise that @FTC has been building through pursuing enforcement actions, studying empirical evidence, and reviewing hundreds of public comments. I'm grateful to staff across our agency for their thorough & careful work on this initiative.
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8. In recent years scholars have studied the concrete real-world effects of noncompetes, including on factors like wages, labor mobility, innovation, and new business formation. The proposed rule closely surveys and reflects this available evidence: ftc.gov/system/files/ftc_gov…
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9. As my statement with @RKSlaughterFTC & @BedoyaFTC explains, addressing noncompetes through a rule rather than case-by-case adjudication can promote greater legal clarity, more efficient enforcement, and broader public participation.
ftc.gov/legal-library/browse…
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10. Lastly, as @RKSlaughterFTC notes, this effort follows years of vital work by academics, reporters, and advocates to highlight the proliferation of noncompetes & their effects. As we seek comment on the proposal, hearing from the public will be key.
ftc.gov/legal-library/browse…
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Very excellent. Thank you.
Jan 6, 2023 · 8:44 AM UTC
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