A Planned Biden Order Aims to Tilt the Job Market Toward Workers

[Greenbeard]

There's a lot of evidence that American's once-great capitalist engine has been sputtering due to a lack of robust, competitive markets (The Great Reversal: How America Gave Up on Free Markets is a worthwhile read on the subject).

The good news is that there are strong signs this week that the Biden administration recognizes the problem and is serious about tackling it (e.g., The Biden Federal Trade Commission Signals an Aggressive Antitrust Enforcement Agenda) including, as the NYT notes, in labor markets:

A Planned Biden Order Aims to Tilt the Job Market Toward Workers

According to an increasingly influential school of thought in left-of-center economic circles, corporate mergers and some other common business practices have made American workers worse off. The government, this theory holds, should address it.

It appears that school has a particularly powerful student: President Biden.

The order will encourage the Federal Trade Commission to ban or limit noncompete agreements, which employers have increasingly used in recent years to try to hamper workers’ ability to quit for a better job. It encourages the F.T.C. to ban “unnecessary” occupational licensing restrictions, which can make finding new work harder, especially across state lines. And it encourages the F.T.C. and Justice Department to further restrict the ability of employers to share information on worker pay in ways that might amount to collusion.

More broadly, the executive order encourages antitrust regulators to consider how mergers might contribute to so-called monopsony — conditions in which workers have few choices of where to work and therefore lack leverage to negotiate higher wages or better benefits.

Not exactly a surprise that worker-friendly economic policy would be a hallmark of a Biden administration, but a welcome change of pace.

 

[Napoleon]

Nobody flipping burgers or bagging groceries is impacted by a non-compete clause. These changes benefit people who are making plenty of money.

 

[ashurbanipal]

Nobody flipping burgers or bagging groceries is impacted by a non-compete clause. These changes benefit people who are making plenty of money.

Uh...what? Several fast food chains make their workers sign non-compete agreements. Most famous recent one was Jimmy Johns, but there have been others. Companies enforce these as well, as they often stand to win significant judgments against those former employees when they do.

 

[Napoleon]

Uh...what? Several fast food chains make their workers sign non-compete agreements. Most famous recent one was Jimmy Johns, but there have been others. Companies enforce these as well, as they often stand to win significant judgments against those former employees when they do.

Jimmy Johns dropped its non compete clause 5 years ago and it only ever existed for two years in one market.

 

[Rogue Valley]

McDonalds had a non-compete employment clause for over 30 years.

This corporate tool for keeping wages low is used in many sectors and not only in the fast-food industry.

 

[Napoleon]

McDonalds had a non-compete employment clause for over 30 years.

This corporate tool for keeping wages low is used in many sectors and not only in the fast-food industry.

The clause you’re referring to was a no-poach clause that blocked employees from bouncing around between franchises. It didn’t prevent anyone from quiting and going to work for, say, Burger King.

 

[Helix]

Get rid of red state union busting policies.

 

[ashurbanipal]

Jimmy Johns dropped its non compete clause 5 years ago and it only ever existed for two years in one market.

No, it was in at least two states (not markets), and appears to have been more:

Jimmy John's drops noncompete clauses following settlement

Jimmy John's agreed to stop including noncompete agreements in its hiring documents sent to franchisees.

www.cnbc.com

Jimmy John's settles Illinois lawsuit over non-compete agreements

Fast-food franchise Jimmy John's has agreed not to enforce a prohibition on workers at its sandwich shops from taking jobs with competitors in order to settle a lawsuit claiming the agreements were illegal, the attorney general of Illinois said on Wednesday.

www.reuters.com

More recently, my nephew refused to sign one for Subway in Oklahoma (and was not employed there due to his refusal). There were investigations in at least ten states and of eight fast food chains as recently as three years ago:

Regulators Investigate Fast-Food Chains' Limits On Whom They Hire

Ten states and the District of Columbia are asking fast-food chains about the use of what are known as "no poach" agreements that limit the ability of workers to switch jobs.

www.npr.org

So...yeah. Fast food companies are still trying this horse sh*t.

Furthermore, it's odd that you picked this issue out of several the planned executive order remedies. Of especial note is the clause against monopsonies.

 

[Lord of Planar]

There's a lot of evidence that American's once-great capitalist engine has been sputtering due to a lack of robust, competitive markets (The Great Reversal: How America Gave Up on Free Markets is a worthwhile read on the subject).

The good news is that there are strong signs this week that the Biden administration recognizes the problem and is serious about tackling it (e.g., The Biden Federal Trade Commission Signals an Aggressive Antitrust Enforcement Agenda) including, as the NYT notes, in labor markets:

A Planned Biden Order Aims to Tilt the Job Market Toward Workers



Not exactly a surprise that worker-friendly economic policy would be a hallmark of a Biden administration, but a welcome change of pace.

Its a wash.

Non-compete agreements are essential. I hope I don't need to explain why.

The problem isn't competition here, the problem is competition from overseas. We simply cannot compete with nations that don't have equivalent regulations to ours when it comes to worker wages, pollution, etc.

 

[Lord of Planar]

Uh...what? Several fast food chains make their workers sign non-compete agreements. Most famous recent one was Jimmy Johns, but there have been others. Companies enforce these as well, as they often stand to win significant judgments against those former employees when they do.

What?

This isn't where a non-compete agreement is suppose to be. What do they entail?

 

[ashurbanipal]

Its a wash.

Non-compete agreements are essential. I hope I don't need to explain why.

Yeah, I'm afraid you do. The only mechanism in market economics that is supposed to boost wages (over against the forces that drive them downward) is competition among employers for workers. Remove that (as employers largely have over the last few decades) and workers are screwed.

 

[Lord of Planar]

McDonalds had a non-compete employment clause for over 30 years.

This corporate tool for keeping wages low is used in many sectors and not only in the fast-food industry.

Biden's False Claim About McDonald's - FactCheck.org

In speaking to union workers, Joe Biden falsely said that McDonald's required its employees to sign noncompete contracts preventing them from going to work for other fast-food restaurants such as Burger King.

www.factcheck.org

 

[ashurbanipal]

What?

This isn't where a non-compete agreement is suppose to be. What do they entail?

The Jimmy Johns one required that former employees not work within ten miles of any Jimmy Johns store for any company that made more than 10% of its revenue making sandwiches. Penalties were substantial monetary liabilities.

 

[Lord of Planar]

More recently, my nephew refused to sign one for Subway in Oklahoma (and was not employed there due to his refusal). There were investigations in at least ten states and of eight fast food chains as recently as three years ago:

How did it read?

 

[ashurbanipal]

How did it read?

I explained the gist, above.

 

[Deuce]

What?

This isn't where a non-compete agreement is suppose to be. What do they entail?

Personally I think non-competes should be straight up illegal. Let the market decide where workers go.

Fortunately, I'm in an industry where union presences are strong enough that nobody gets away with such a clause.

 

[Metric Mouse]

Biden's False Claim About McDonald's - FactCheck.org

In speaking to union workers, Joe Biden falsely said that McDonald's required its employees to sign noncompete contracts preventing them from going to work for other fast-food restaurants such as Burger King.

www.factcheck.org

Wow, he just can't keep his facts straight.

 

[Lord of Planar]

The Jimmy Johns one required that former employees not work within ten miles of any Jimmy Johns store for any company that made more than 10% of its revenue making sandwiches. Penalties were substantial monetary liabilities.

I can understand a delivery service wanting to do that, as to keep a moving employee from taking customers with them. I'm on the fence with that one. I see nothing wrong with policing against illegal practices. But the general statement of non-compete clauses as I read the OP is flat out wrong.

 

[Lord of Planar]

Personally I think non-competes should be straight up illegal. Let the market decide where workers go.

Fortunately, I'm in an industry where union presences are strong enough that nobody gets away with such a clause.

Non-complete clauses are the rule rather than the exception in most places I have worked, as you deal with propitiatory information.

 

[Luce]

Non-compete agreements are essential. I hope I don't need to explain why.

Because we can trap our employees into a captive labor market?

 

[bearpoker]

Jimmy Johns dropped its non compete clause 5 years ago and it only ever existed for two years in one market.

As I remember, they dropped it because a court said they had to.

 

[Lord of Planar]

Because we can trap our employees into a captive labor market?

See post 19.

 

[ashurbanipal]

I can understand a delivery service wanting to do that, as to keep a moving employee from taking customers with them. I'm on the fence with that one. I see nothing wrong with policing against illegal practices. But the general statement of non-compete clauses as I read the OP is flat out wrong.

As far as I can see, that's just one example of how capitalism is supposed to balance out for workers (that is, to have forces working roughly in equilibrium in favor of both employers and employees, so that wages meet in the middle given overall market conditions). If a company has an employee that is so good that, if she leaves, their customer base will go with her, it's a feature of capitalism that that company had better pay her enough to keep her happy. While Adam Smith did not really envision contemporary circumstances, this notion fits in well with his view that there have to be forces that elevate wages balancing against forces that try to depress them--and anyway, that's the propaganda the right pulls out every time someone on the left says something about low wages--that the market itself determined the wage.

But with various means like non-compete agreements, companies are short-circuiting those mechanisms. Shouldn't be allowed for anyone in any job.

 

[Deuce]

Non-complete clauses are the rule rather than the exception in most places I have worked, as you deal with propitiatory information.

That's the typical excuse from employers, but I don't see it as the actual issue.

Like, if I'm a hypothetical engineer at Boeing, I have access to certain proprietary information about the design of their aircraft. I can't take those design documents and just hand them to my new employer Gulfstream. That's illegal whether or not I have signed a non-compete.

However, after spending years at Boeing I've learned things and developed skills. Things like "Hey it's a real bad idea to have an automatic flight control response that is dependent upon a single input as a potential point of failure." No reasonable person would argue I shouldn't be able to take that development to Gulfstream. This is my knowledge, it's my skill. I own it, not Boeing.

Which is exactly why a non-compete really exists. My skillset in this case is industry-specific. With that non-compete in place, it's hard for me to get ANY other job as an aircraft engineer. So even if Gulfstream wants to out-compete Boeing for my talent by offering better pay/benefits/working conditions, they might not be able to do it at all.

An artificial barrier to me taking my talents elsewhere is a hindrance to the market on the employee side of things. If Boeing doesn't want to lose people to Gulfstream, they have an option. Pay enough money so that I don't jump ship, and don't be a shitty company to work for. (studies show that bad management is the most common reason people leave a company)

 

[Lord of Planar]

That's the typical excuse from employers, but I don't see it as the actual issue.

Like, if I'm a hypothetical engineer at Boeing, I have access to certain proprietary information about the design of their aircraft. I can't take those design documents and just hand them to my new employer Gulfstream. That's illegal whether or not I have signed a non-compete.

However, after spending years at Boeing I've learned things and developed skills. Things like "Hey it's a real bad idea to have an automatic flight control response that is dependent upon a single input as a potential point of failure." No reasonable person would argue I shouldn't be able to take that development to Gulfstream. This is my knowledge, it's my skill. I own it, not Boeing.

Which is exactly why a non-compete really exists. My skillset in this case is industry-specific. With that non-compete in place, it's hard for me to get ANY other job as an aircraft engineer. So even if Gulfstream wants to out-compete Boeing for my talent by offering better pay/benefits/working conditions, they might not be able to do it at all.

An artificial barrier to me taking my talents elsewhere is a hindrance to the market on the employee side of things. If Boeing doesn't want to lose people to Gulfstream, they have an option. Pay enough money so that I don't jump ship, and don't be a shitty company to work for. (studies show that bad management is the most common reason people leave a company)

When I was in the semiconductor industry, I was privy not only to proprietary chemical of m y own company, but that of others like Intel, Motorola, etc. that we worked with. You can argue against non-compete clauses all you want, but I understand them for how they protect intellectual property.