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Should the FTC Ban Non-compete Clauses?

Open to Debate

Open to Debate

News, Education, Society & Culture

4.6 • 2.2K Ratings

🗓️ 24 March 2023

⏱️ 50 minutes

🧾️ Download transcript

Summary

This year, the Federal Trade Commission decided shake up the labor market, proposing to ban non-compete clauses for the tens of millions of workers they affect. The clauses are essentially contracts between employers and employees that prohibit the former from competing with the business after the employment has ended. As many as 30% of all U.S. private sector workers have signed such agreements, which actually find their roots all the way back in 15th century England. Those who defend such clauses say employers need these contracts to protect their investments in training workers, not to mention safeguarding their trade secrets. The contracts, they say, represent not only a fair exchange, but also serve as an important fortification for businesses within the broader economy. The FTC, they say, is overextending. But opponents argue that such contracts prevent workers from starting their own businesses, locking them into undercompensated positions, and depress labor mobility and wage growth, while contributing to race and gender gaps. It is in this context that we debate the following question: Should the FTC Ban Non-compete Clauses?  Arguing Yes: Arguing “YES”: Heidi Shierholz, Economic Policy Institute President and former Chief Economist to the U.S. Secretary of Labor.  Arguing No: Neil Bradley, Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy, U.S. Chamber of Commerce  Emmy award-winning journalist John Donvan moderates  Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0

Hi everybody, I'm John Donbass.

0:05.1

Welcome to Intelligent Squared.

0:10.0

And in this debate, we are going to discuss something that may well be now or someday

0:15.3

part of your work life.

0:17.3

The non-compete.

0:19.1

What is a non-compete?

0:20.3

Well, a reported one out of five American workers are required by their employers to

0:25.5

sign non-compete agreements when they start a new job.

0:29.2

And that agreement then bars that employee, if he or she leaves the job, from going to

0:34.4

work for the competition.

0:36.3

As many as 30% of all US private sector workers have signed such agreements, which actually

0:42.1

find their roots all the way back in 15th century England.

0:46.5

These clauses generally are active just for a limited period of time, say a number of

0:49.8

years, and very often apply to a specific geographic area.

0:54.7

For the employers, it's protection.

0:56.4

They have invested in an employee, they have trained that employee, they have shared business

1:00.0

secrets with that employee, and the non-compete removes the risk the employee will take all

1:04.6

of that to the competition.

1:06.5

The Biden administration, through the Federal Trade Commission, has made it clear it wants

1:10.2

to get rid of non-compete clauses by outlawing them everywhere across the board, asserting

1:15.7

that they are just not fair to workers.

1:18.1

Much of the business world calls that a mistake, saying that non-compete may common sense,

...

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