EIG Media Contact: Amelia Sandhovel | [email protected]
Washington, DC – The Economic Innovation Group (EIG) welcomes the Federal Trade Commission’s (FTC) proposed rule announced today to ban the use of non-compete agreements, which stifle job mobility, wage growth, and entrepreneurship for millions of American workers. The proposed rule would prohibit the use of new non-compete agreements and require the recission of existing covenants, thereby closely reflecting EIG’s longstanding call for far-reaching national reform that would boost economic dynamism and deliver significant benefits to workers and employers alike.
“Restricting the use of non-compete agreements is fundamentally good policy that will boost wages, improve workforce mobility, and encourage entrepreneurship and innovation throughout the economy,” said John Lettieri, President and CEO of the Economic Innovation Group. “As one of the leading voices on behalf of non-compete reform, EIG welcomes FTC action to curtail the use of non-competes. However, workers and businesses deserve certainty on this issue that only a legislative solution can provide. That is why we are again calling on Congress and the Biden administration to enact the bipartisan, bicameral Workforce Mobility Act, which would prohibit the use of non-competes except in a narrow set of circumstances.”
The FTC’s proposed rule closely resembles the scope of the bipartisan, bicameral Workforce Mobility Act, authored by Senators Chris Murphy (D-CT) and Todd Young (R-IN), and Representatives Scott Peters (D-CA) and Mike Gallagher (R-WI). EIG strongly supports this legislation and believes congressional action remains necessary as a long-term solution.
Approximately 18 percent of American workers are covered by a non-compete agreement and 38 percent have been covered by one at some point in their careers. Empirical research consistently finds that non-compete agreements lower wages and disincentivize changing jobs in pursuit of higher pay. Strict enforcement of non-compete agreements has been found to stifle entrepreneurship and startup growth. Recent analysis of Oregon’s state level ban on non-competes concluded it immediately boosted the pay and job mobility of low-wage workers.
About the Economic Innovation Group (EIG)
The Economic Innovation Group (EIG) is a bipartisan public policy organization dedicated to forging a more dynamic and inclusive American economy. Headquartered in Washington, DC, EIG produces nationally-recognized research and works with policymakers to develop ideas that empower workers, entrepreneurs, and communities.