This is Mary Walden with economist MW welcoming you to the economic perspective. Today’s program looks at non-compete contracts. Mike, most workers like to be able to quit their job and take another job they like better or with better pay. But I understand this isn’t always possible. Please explain.
- 20% of jobs today have a non-compete contract
- Means a worker can’t quit and take a similar job with a rival firm for a certain number of years
- Two reasons given – firm would have given worker specialized training, and worker may have company specific knowledge that don’t want rivals to know
- But studies show there are firms with non-compete clause where these concerns wouldn’t be evident – for example, one sandwich shop chain use to have them
- Studies also show workers operating under non-compete clauses have lower earnings – perhaps because can’t take a higher paying alternative
- One upside – firms with non-compete clauses appear to invest more
- Still, many states are considering curtailing the use of non-compete clauses