Jobs

“Non-Compete” Clauses Lock Workers into Low-Wage Jobs

Eighteen years old, already a father, and having passed his high school equivalency test, Timothy Gonzalez took a $10-an-hour job “shoveling dirt” as a construction laborer in Pensacola, Florida.

After being promoted to a drilling rig operator, he accepted a better-paying position with a competing company. His former employer then proceeded to sue him for violating its “non-compete” clause, which prohibited him from working for a similar construction contractor.

  • From C-Suites to Construction Sites. The case was eventually settled out of court. But Gonzalez’s ordeal exemplifies how non-compete clauses—originally designed to prevent executives and high-paid professionals from giving away company secrets—are being used to lock workers into low-paying jobs with their current companies.
  • Locking in a Quarter of the Workforce. A recent study for the Brookings Institution found that a quarter of all workers—including one in five high school graduates—are covered by non-compete agreements. As the authors, economists Alan B. Krueger and Eric Posner, write, “Wages are suppressed, jobs are left unfilled, and economic growth suffers.”
  • There Ought to Be a Law. That’s why Democratic Senators Elizabeth Warren of Massachusetts and Cory Booker of New Jersey have introduced a bill to outlaw these monopolistic practices, which they rightly call “anti-competitive.” In an effort to give workers a fair chance for new and better jobs, this legislation grants employees the right to sue and collect damages from employers who have tried to lock them into their jobs.

Categories: Jobs