Paper Trail

The Non-Compete Paradox: Why Being Trapped Pays Off (For Some)

April 03, 202622:40Paper Trail

This episode explores the complex and often paradoxical impact of non-compete agreements, challenging the traditional binary view of their effects. Listeners will learn about new research revealing that non-competes can suppress wages for low-education workers but accelerate wage growth for high-education workers, and how this nuance shapes policy discussions following the FTC's abandoned nationwide ban and its new targeted enforcement strategy.

Key Takeaways

Detailed Report

The Non-Compete Paradox: A Nuanced View

For years, the debate around non-compete agreements has been largely binary: either they are universally exploitative tools or absolutely essential for businesses. However, new research from the Federal Reserve Bank of Chicago fundamentally challenges this simplistic narrative, revealing a complex paradox where the same legal document can have diametrically opposed effects depending on the worker's education level.

The FTC's Failed Nationwide Ban and Strategic Pivot

In April 2024, the Federal Trade Commission (FTC) issued a sweeping final rule intended to ban almost all employer-employee non-compete agreements nationwide. This was initially hailed as a significant victory for labor advocates, aiming to standardize regulations across the country.

However, this landmark federal intervention was short-lived. By August 2024, a federal district court in Texas barred the FTC from enforcing the rule, citing that the agency had overstepped its authority. After keeping the possibility of an appeal alive for about a year, the FTC officially voted to abandon its appeal on September 5, 2025, effectively killing the nationwide blanket ban.

This doesn't mean the FTC has given up on the issue entirely. Instead, it has pivoted its strategy from broad rulemaking to a more targeted, case-by-case enforcement approach under a different section of the FTC Act. For example, the day before dropping its appeal, the FTC sued a pet cremation company to invalidate its non-competes, signaling its continued commitment to fighting what it deems anti-competitive practices, albeit with different tools.

This shift means the regulation of non-competes has largely reverted to a fractured, state-by-state approach, which was the messy reality before the FTC's attempted federal intervention.

Overcoming Research Blind Spots: The Power of Direct Data

Historically, understanding the impact of non-competes has been hampered by a significant methodological flaw. Researchers often relied on a geographic proxy, comparing states with strict enforcement (like Florida) to states where non-competes are statutorily void (like California). The assumption was that state law dictated incidence.

However, as the new paper by Potter, Kurmann, and Hobijn highlights, "enforceability does not equal incidence." Just because a non-compete isn't legally enforceable doesn't mean employers don't still make workers sign them. This creates a "chilling effect": workers, especially those with lower wages and less legal literacy, often comply out of fear of litigation or uncertainty, even if the contract is technically void. Previous studies, therefore, suffered from a massive data blind spot, failing to account for millions of workers whose career decisions were shaped by these unenforceable agreements.

To overcome this, the researchers turned to the National Longitudinal Survey of Youth 1997 (NLSY97). This incredible dataset tracks a nationally representative sample of nearly 9,000 individuals, born between 1980 and 1984, for decades. Crucially, starting in the 2017-2018 survey wave, the NLSY97 began explicitly asking respondents if they were currently bound by a non-compete agreement. This direct questioning solved the incidence problem, revealing that roughly 18% of the workforce – nearly one in five workers – is bound by a non-compete, regardless of state laws.

Isolating the Causal Impact: A Rigorous Methodology

Directly asking workers about non-competes solved one problem, but introduced another: selection bias. Workers who sign non-competes might be inherently different (e.g., more ambitious, in higher-paying industries) than those who don't. To isolate the *causal* effect of the contract itself, the researchers employed a rigorous econometric technique: a "clean-controls local projections difference-in-difference design."

  • Difference-in-difference: Instead of comparing different workers, they tracked the *same worker* over time, analyzing their wage trajectory *before* signing a non-compete and then how that trajectory changed *after* transitioning into a job requiring one. This controls for individual characteristics like talent or work ethic.
  • Clean control group: This transition was then compared against a very specific control group: workers with similar profiles who transitioned to *new jobs* during the *exact same time period* but *did not* sign a non-compete. This acts like a controlled experiment, contrasting the effect of the non-compete against a similar career move without one.
  • Local projections: This allowed them to map out the dynamic wage effect over a four-year horizon, showing how the impact evolved over time.

By combining these elements, the researchers effectively filtered out confounding factors, providing a robust measure of the non-compete's causal impact.

The Low-Education Trap: Suppressed Wage Growth

With this ironclad methodology, the data revealed a stark reality for low-education workers. Non-competes are surprisingly pervasive among individuals without college degrees, often in sectors like retail, fast food, and logistics. For these workers, who typically do not possess proprietary algorithms or client lists, these contracts are used purely as an anti-competitive retention tool, designed to restrict labor supply and prevent them from seeking better pay elsewhere.

The paper's most damning finding is that low-education workers who sign a non-compete experience significantly *slower* wage growth over the subsequent four years compared to their peers who didn't. It's not necessarily an immediate pay cut, but a stifling of their long-term earning potential. This finding is corroborated by a 2026 paper by Bhargav Gopal, Xing Liu, and Luke Rawling, which noted that any initial pay bump for these workers quickly decays, leading to depressed long-term wage growth.

The economic mechanism at play is a "mobility tax." For low-wage workers, the primary driver of career advancement and wage increases is often the ability to move between jobs. A non-compete removes this leverage, allowing employers to avoid offering competitive annual raises because the worker is legally, or psychologically, trapped. Since these jobs often require minimal specialized training, the employer isn't compensating the worker for this loss of mobility by investing in their skills, making it a one-sided extraction of value.

The High-Education Benefit: Accelerated Wage Growth

In stark contrast, the research unveils the "Non-Compete Paradox" for high-education workers: signing a non-compete is associated with *faster* wage growth over the same four-year period. To understand this, one must consider the "hold-up problem" in economic theory.

In high-skill environments, employers often need to invest heavily in specialized training, proprietary systems, or access to trade secrets for their employees. If a highly skilled worker could immediately leave and take that valuable, firm-specific knowledge to a competitor, the employer would be "held up," losing their investment. Rationally, firms would then hesitate to make such investments, limiting worker development and innovation.

For high-skill, high-education workers, a non-compete solves this hold-up problem. By legally binding the worker for a set period, the employer feels secure enough to invest heavily in their human capital. This investment often comes in the form of informal training, such as access to top-tier projects, mentorship from senior colleagues, and exposure to proprietary information, rather than formal education. As the worker becomes more specialized and integrated, their value to that specific firm skyrockets. To retain such valuable talent and prevent them from leaving when the non-compete expires, firms pay a premium, leading to a steeper, upward-sloping wage profile for these workers.

Policy Implications in a Post-FTC World

The findings from this Chicago Fed working paper present a significant challenge to the FTC's original one-size-fits-all strategy. A blanket, nationwide ban on non-competes, while aiming to protect vulnerable workers, could have resulted in substantial collateral damage to the high-skill labor market. Outlawing non-competes for executives, engineers, and scientists would re-introduce the hold-up problem, potentially leading firms to hoard trade secrets, reduce informal training, and ultimately stunt the wage growth and innovation of high-education workers.

Instead, the empirical evidence strongly supports a more targeted approach. With the federal ban off the table, the battle for regulation has returned to the states. This research provides heavy ammunition for state-level legislation that bans non-competes *exclusively* for workers below a certain income or education threshold. Several states, including Oregon, Washington, and Maryland, had already moved in this direction, banning non-competes for workers earning under specific salary caps (often around $100,000). Earlier theoretical work by Hobijn, Kurmann, and Potter (2022) even showed that Oregon's 2008 ban for low-wage workers definitively increased overall welfare.

This targeted approach allows for the best of both worlds: it surgically removes the exploitative "mobility tax" on low-wage workers while preserving what appears to be a beneficial "human capital investment" mechanism for high-wage workers.

Unanswered Questions and Future Challenges

While this research provides a clear diagnosis, the treatment plan remains complex and open to debate. Several critical questions emerge:

  • Regulatory Whack-a-Mole: If non-competes are banned for low-wage workers, will corporations simply pivot to other restrictive agreements like overly broad Non-Disclosure Agreements (NDAs) or Training Repayment Agreement Provisions (TRAPs)? These could achieve a similar chilling effect through different legal mechanisms.
  • FTC's Targeted Strategy: How will the FTC's new case-by-case enforcement strategy apply to higher-skill professions where non-competes might still be exploitative, such as hospital networks trapping nurses? The research highlights that even in higher-skill contexts, nuance and specific circumstances matter.
  • Enforcement Burden: Even if states ban low-wage non-competes, who enforces these laws? If the incidence of non-competes is driven by fear and lack of legal literacy, a law on the books doesn't automatically stop a manager from presenting a legally void contract. Will state Attorneys General truly step up to protect these vulnerable workers, or will the burden of enforcement fall on the exploited individuals themselves?

This research underscores that economics isn't just about abstract forces but how those forces interact with individual circumstances, revealing that a single contractual clause can be both a tool of exploitation and a mechanism for mutual wealth generation, depending on the leverage and bargaining power of the person holding the pen.

Show Notes

Works Referenced

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Sources / References

Full Transcript

HostSo, we're diving into a topic today that most people have a pretty strong opinion about: non-compete agreements. And I think for a long time, the narrative has been fairly straightforward, right? They're either these universally exploitative tools, or they're absolutely essential for businesses.
ExpertAnd that binary thinking, I think, is exactly what this new research completely upends. Prepare to have your assumptions challenged, because this paper from the Federal Reserve Bank of Chicago really flips the script, particularly when we talk about who actually *benefits* from these agreements.
HostWait, benefits? I mean, the whole conversation around non-competes, especially recently, has been about how detrimental they are to workers, how they suppress wages and stifle mobility. Are you telling me that's not always the case?
ExpertThat's precisely what the researchers found, and it's quite a paradox. For low-education workers, yes, they absolutely act as a financial trap, suppressing wage growth. But for high-education workers, the data tells a completely different, almost counter-intuitive story: signing a non-compete can actually *accelerate* their wage growth over a four-year horizon.
HostThat's wild. So the same legal document can have diametrically opposed effects depending on who signs it. That immediately raises so many questions about how we even approach policy around these things.
ExpertIt does, and it really forces us to move beyond the simplistic narratives that have dominated the debate for years.
HostWell, before we unravel that paradox, let's ground ourselves in the current landscape because, as you mentioned, there's been some significant movement on this issue recently. A lot of our listeners probably remember the big headlines about the FTC's attempt to ban non-competes nationwide.
ExpertExactly. In April of 2024, the Federal Trade Commission, under Chair Lina Khan, issued a pretty sweeping final rule that would have banned almost all employer-employee non-compete agreements across the country. It was seen as a massive victory for labor advocates.
HostAnd a massive headache for corporate lawyers, I imagine. It really felt like a landmark moment at the time, this federal intervention to standardize things.
ExpertIt certainly did. But the key phrase there is "would have." Almost immediately, that rule got tied up in litigation. And by August 2024, a federal district court in Texas actually barred the FTC from enforcing it, essentially saying the agency had overstepped its authority.
HostSo, it was dead on arrival, or at least in a deep legal coma.
ExpertPretty much. The FTC kept the threat of an appeal alive for about a year, but then, very quietly, on September 5, 2025, they officially voted to abandon that appeal. They effectively "acceded to the vacatur," which is a fancy legal way of saying they gave up. The nationwide blanket ban was officially dead.
HostSo, no federal blanket ban anymore. That's a huge shift from the narrative we heard for a while. Does that mean the FTC is just throwing in the towel on the issue entirely?
ExpertNot at all, and this is an important nuance for our listeners. The FTC hasn't given up on the *issue*; they've just pivoted their *strategy*. Instead of trying for a sweeping rulemaking approach, they're now pursuing a case-by-case enforcement strategy under a different section of the FTC Act.
HostSo, more like targeted strikes rather than carpet bombing.
ExpertExactly. In fact, the day before they officially dropped that nationwide appeal, the FTC sued a pet cremation company to invalidate *its* non-competes. It was a very clear signal that they're still very much in the fight, just using different weapons now.
HostThat's a fascinating strategic pivot. But it also means we're back to a more fractured, state-by-state approach, which was the messy reality before the FTC's attempted ban. And that brings us to a major methodological hurdle that this new paper tackles. Historically, how have researchers tried to understand the impact of non-competes?
ExpertTraditionally, economists and researchers have relied on a geographic proxy. They'd compare states where non-competes are pretty strictly enforced, like Florida, to states where they're statutorily void, like California or North Dakota. The idea was to look at what happens to wages or mobility in states where these contracts are legally binding versus where they're not.
HostThat sounds logical on the surface. You'd think that would give you a pretty clear picture.
ExpertIt does, but it suffers from a fatal flaw that Potter, Kurmann, and Hobijn highlight in their work: "enforceability does not equal incidence." What that means is, just because a non-compete isn't legally enforceable in a state, doesn't mean employers aren't still making workers sign them.
HostWait, why would an employer bother having someone sign something that's legally meaningless? That seems like a waste of paper.
ExpertBecause the contract itself creates what's called a "chilling effect." Workers, especially low-wage workers, often lack the legal literacy to know if a contract is enforceable or not. And even if they suspect it might not be, they almost certainly don't have the financial resources to risk a lawsuit to find out. So, they comply out of fear and uncertainty. They're trapped, not by law, but by psychology and economic reality.
HostThat's a huge blind spot. So, previous studies might have been categorizing, say, a worker in California as "unaffected by a non-compete" because the state bans them, but that worker might have actually signed one and changed their career decisions – like staying in a job longer, or not applying to a competitor – because of it.
ExpertPrecisely. Those studies suffered from a massive data blindspot. Millions of workers were altering their behavior due to these documents, even when they were technically void, and the researchers couldn't see it. This is where the methodology of this new paper becomes so critical. It sidesteps that entire problem.
HostOkay, so if you can't rely on state laws to tell you who's truly impacted, how *do* you get at the actual incidence? How do you know who's really signing these things and having their careers shaped by them?
ExpertThis is where their cleverness comes in. Potter, Kurmann, and Hobijn turned to an incredible dataset called the National Longitudinal Survey of Youth 1997, or NLSY97. Now, this isn't some new, ad-hoc survey. It's a nationally representative sample of nearly 9,000 individuals, born between 1980 and 1984, who have been tracked by the government since 1997.
HostSo, they've been following these *exact same people* for literally decades, collecting data on their education, family life, and their entire work histories? That's an absolute goldmine for longitudinal research.
ExpertIt truly is. And the crucial piece for this study is that starting in the 2017-2018 survey wave, when these individuals were in their prime working years – roughly ages 32 to 38 – the survey began explicitly asking respondents if they were currently bound by a non-compete agreement.
HostAh, so instead of inferring from state law, they just asked the worker directly. "Are you under a non-compete?" That completely solves the incidence problem.
ExpertExactly. And the data revealed something pretty striking: non-competes are pervasive. Roughly 18% of the workforce is bound by one. That's nearly one in five workers, regardless of where they live or what the state laws say about enforceability.
HostOne in five! That's a huge number, and it probably means a lot of people are impacted in states where they might not even be legally binding. But now you have a new problem, right? If you just compare people who signed non-competes to people who didn't, you're going to run into selection bias. The kind of person who signs a non-compete, or the kind of job that requires one, might be inherently different in ways that affect wages.
ExpertAbsolutely, that's the classic challenge in this kind of research. People who sign non-competes might be in higher-paying, more specialized industries, or they might be more ambitious. If you just do a simple comparison, it might look like non-competes cause higher wages, but it's just correlation. That's not what the researchers want to show.
HostSo, how did they get around that? How do you isolate the *causal* effect of that contract?
ExpertThis is where their methodology really shines. They used a highly rigorous econometric technique called a "clean-controls local projections difference-in-difference design." And I know that's a mouthful, but let's break it down.
HostPlease do, my inner research nerd is ready.
ExpertFirst, "difference-in-difference." Instead of comparing Worker A who has a non-compete to Worker B who doesn't, they tracked the *same worker* over time. They looked at a worker's wage trajectory *before* they signed a non-compete, and then they looked at how that *exact same worker's* trajectory changed *after* transitioning into a job that required one. So you're comparing an individual to themselves.
HostThat's a powerful way to control for individual characteristics, isn't it? Things like inherent talent, work ethic, educational background – those are constant for that individual.
ExpertPrecisely. But that's not enough on its own. You also need a "clean control group." So they compared this transition – a worker signing a non-compete – against a very specific group: workers with similar profiles who transitioned to *new jobs* during the *exact same time period* but *did not* sign a non-compete.
HostAh, so you have the same worker's "before and after" contrasted with a similar worker's "before and after" who *didn't* get the non-compete. That's essentially like having a control experiment in a lab, but with real people.
ExpertExactly. And then, "local projections" allowed them to map out the dynamic effect over a four-year horizon, rather than just a static snapshot. This means they could see how the wage effect evolved over time. By combining all these elements, they could filter out individual personality quirks, cognitive ability, and even industry fixed effects. They truly isolated the causal impact of signing that document.
HostThat's incredibly elegant. It’s hard enough to isolate the causal effect of anything in economics, let alone something as granular as a contract clause on a human being's career trajectory. So, with this rigorous methodology in place, what did they find for the lower end of the labor market?
ExpertWell, once they had this ironclad methodology, the data revealed a pretty stark and, frankly, dark reality for low-education workers. One of the most baffling aspects of the modern labor market is just how pervasive non-competes are among workers without college degrees, often in sectors like retail, fast food, and basic logistics.
HostI've always found that baffling. Why does a sandwich maker, or a warehouse packer, or a hair stylist, need to sign a non-compete? They're not walking away with proprietary algorithms or client lists that would cripple a business.
ExpertYou hit on exactly why it's so problematic. The reality is that for these workers, these contracts are used purely as an anti-competitive retention tool. They're designed to restrict labor supply and prevent workers from simply leaving for an extra dollar an hour across the street.
HostAnd the impact? The paper's most damning finding, I imagine.
ExpertAbsolutely. For low-education workers, the researchers found a clear wage penalty. When a low-education worker signs a non-compete, they experience significantly *slower* wage growth over the subsequent four years compared to their peers who didn't sign one. It's not just a flat wage; it's the *growth* that gets stifled.
HostSo it's not necessarily that their pay immediately drops, but their potential to earn more over time is severely hampered.
ExpertPrecisely. And this finding is corroborated by another 2026 paper by Bhargav Gopal, Xing Liu, and Luke Rawling, also using NLSY97 data. They noted that while there might be a slight initial bump in pay to get these workers in the door, that premium quickly decays, leading to depressed long-term wage growth.
HostWhy does this happen? What's the economic mechanism at play here for low-wage workers?
ExpertIt comes down to job mobility. For a low-wage worker, the primary engine for career advancement and wage growth is often the ability to move between jobs. If you're working at a fast-food chain, your best leverage to get a raise is the threat of quitting and going to work for a rival chain. That's what puts pressure on your current employer to offer competitive wages.
HostIt's the classic market mechanism, right? If employers have to compete for your labor, wages go up.
ExpertExactly. But by signing a non-compete, the worker surrenders that leverage. They can't credibly threaten to leave for a competitor. This creates what the researchers effectively call a "mobility tax." The employer no longer has to offer competitive annual raises to retain the worker, because the worker is legally – or, more often, psychologically – trapped.
HostAnd because these jobs often require minimal specialized training, the employer isn't compensating the worker for this loss of mobility by investing in their skills or human capital. It really is a one-sided extraction of value.
ExpertIt's a perfect storm of factors that suppress wages for those who can least afford it. This part of the paper strongly confirms what many labor advocates have argued for years.
HostOkay, so that's the low-wage trap, and it seems pretty clear-cut. But you started by saying this research fundamentally disrupts the prevailing narratives. So, where does that disruption come in? What did they find for those high-education workers?
ExpertThis is the pivot point, the true "Non-Compete Paradox." In stark contrast to the low-wage sector, Potter, Kurmann, and Hobijn found that for high-education workers, signing a non-compete is actually associated with *faster* wage growth over that same four-year period.
HostThat is genuinely shocking. So, the exact same legal mechanism that exploits a low-wage worker somehow *benefits* a high-wage worker? How can that possibly be?
ExpertTo understand it, we need to dive into some classic economic theory, specifically something called the "hold-up problem."
HostThe hold-up problem. Tell me more.
ExpertImagine a tech firm. They want to train a software engineer in a highly proprietary, cutting-edge AI system. This training isn't just a seminar; it costs the firm, let's say, $100,000 in time, resources, and access to internal R&D. Now, if that engineer is completely free to quit the day after the training is complete and take those brand-new, valuable skills and knowledge directly to a rival firm, the original employer gets "held up." They've made a massive investment with no guarantee of return.
HostAnd in that scenario, the employer would rationally be hesitant to make that investment in the first place, right? Why spend $100,000 just for a competitor to reap the benefits?
ExpertExactly. So, because the employer fears losing their investment, they rationally choose *not* to train the worker, or they keep their most valuable trade secrets hidden away, limiting the worker's access. The worker never gets that advanced training or exposure.
HostAnd that's where the non-compete comes in.
ExpertA non-compete agreement, for these high-skill, high-education workers, solves that hold-up problem. By legally locking the worker in for a set period – perhaps a year or two – the employer feels secure enough to invest heavily in that worker's specialized human capital and grant them access to valuable trade secrets. They know they'll get a return on their investment.
HostSo, it's a mutual commitment, in a way. The worker gives up some immediate mobility, but in exchange, they receive this deep, firm-sponsored investment in their skills and knowledge.
ExpertPrecisely. And as the worker becomes highly specialized and deeply integrated into the firm's proprietary operations, their marginal productivity skyrockets. They become incredibly valuable to that specific firm. And to keep that highly valuable worker happy – and to prevent them from eventually leaving when the non-compete expires or testing the legal boundaries – the firm pays them a premium.
HostSo, it creates a steeper, upward-sloping wage profile for these workers. They might be constrained in their mobility for a bit, but that constraint is enabling them to get more valuable, faster, within that specific firm.
ExpertThat's exactly right. The NLSY97 data confirms this: higher-skilled workers who sign non-competes end up performing more sophisticated tasks and see higher returns on their experience over time. It's not necessarily "formal" training, like paying for an MBA. The Gopal, Liu, and Rawling paper actually notes that this investment is often "informal"—things like access to top-tier projects, mentorship from senior people, and exposure to proprietary information that truly makes the worker better at their job.
HostThis completely changes the conversation. It's not just about good or bad, but about the *context* and the *type* of worker. Which brings us back to policy. If the FTC's blanket ban is off the table, and we have this nuanced data, what does it tell us about the best way forward in this post-FTC world?
ExpertThe findings from this Chicago Fed working paper present a massive complication for the FTC's original one-size-fits-all strategy. A blanket, nationwide ban would have been a blunt instrument that, according to this research, could have resulted in significant collateral damage to the high-skill labor market.
HostBecause if you outlaw non-competes for executives, engineers, scientists, you re-introduce that hold-up problem we just discussed.
ExpertExactly. Firms might respond by hoarding trade secrets, reducing that informal training, and ultimately stunting the wage growth and innovation of high-education workers. As Gopal et al. explicitly state in their 2026 paper, "Our findings caution against blanket bans on NC usage, favoring a more targeted approach focusing on lower-wage workers."
HostSo the empirical evidence actually argues *against* a blanket ban. That's a pretty strong statement coming from rigorous economic research.
ExpertIt is. What the data instead provides is incredibly heavy ammunition for targeted, state-level legislation. Since the federal ban is dead, the battle for regulation has returned to the states. And this research perfectly supports laws that ban non-competes *exclusively* for workers below a certain income or education threshold.
HostThat makes a lot of sense. So, instead of saying "no non-competes for anyone," it's "no non-competes for anyone who earns under X amount" or "anyone without a college degree."
ExpertExactly. And some states were already moving in this direction even before the FTC got involved. States like Oregon, Washington, and Maryland had already passed laws banning non-competes for workers making under a certain salary, often around $100,000. And what's interesting is that Hobijn, Kurmann, and Potter's earlier theoretical work, going back to 2022, actually showed that Oregon's 2008 ban of NCAs for low-wage workers definitively *increased* overall welfare.
HostSo, this "messy patchwork" of state laws that we seem to be returning to might actually be the most economically sound outcome?
ExpertIt's certainly what the data suggests. A targeted approach surgically removes the exploitative "mobility tax" on low-wage workers while preserving what appears to be a beneficial "human capital investment" mechanism for high-wage workers. It allows for the best of both worlds, rather than a compromise that hurts everyone.
HostIt's truly fascinating that a single contractual clause can be both a tool of exploitation and a mechanism for mutual wealth generation. It really highlights that the difference isn't in the legal text itself, but in the leverage, the education, and the bargaining power of the human being holding the pen.
ExpertAbsolutely. It underscores that economics isn't just about abstract forces; it's about how those forces interact with individual circumstances.
HostSo, as we wrap up, what are some of the big questions or implications that this research leaves us with? What should our listeners be thinking about?
ExpertWell, one immediate question is, if states successfully ban non-competes for low-wage workers, will corporations simply pivot to using other restrictive agreements? We're talking about things like overly broad Non-Disclosure Agreements, or NDAs, or Training Repayment Agreement Provisions, often called TRAPs. These could achieve the exact same chilling effect, just through a different legal mechanism. The NLSY97 data, as good as it is, struggles to perfectly isolate NDAs from NCAs, because they're often bundled together.
HostThat's a classic regulatory whack-a-mole problem, isn't it? Solve one issue, and another pops up.
ExpertExactly. Another question is about the FTC's new, targeted strategy. They've issued a Request for Information with a November 2025 deadline to gather data on how non-competes impact specific industries, especially healthcare. Will the FTC use Section 5 of the FTC Act to go after, say, hospital networks that trap nurses, even if those nurses are technically "highly educated"? This research complicates that decision, showing that even in higher-skill professions, context matters.
HostAnd finally, even if a state bans low-wage non-competes, who actually enforces it? If the incidence is driven by fear, a law on the books doesn't stop a manager from handing a legally void contract to a 19-year-old barista. Does the burden of enforcement fall on the exploited worker, or will state Attorneys General truly step up and protect them?
ExpertThese are critical questions. The research gives us the diagnosis, but the treatment plan is still very much up for debate, and will largely depend on how policymakers choose to interpret and act on this incredibly nuanced evidence.