Source: United States Senator Ron Wyden (D-Ore)
Washington, D.C. – U.S. Senator Ron Wyden said today that he and Senate colleagues have released a new report by the U.S. Government Accountability Office that found the use of non-compete agreements is widespread throughout the U.S. labor market and serves to unfairly protect large employers while restricting job mobility, lowering wages for workers, and discouraging innovation.
“I’ve been sounding the alarm that non-compete agreements hurt workers’ wages, stifle innovation and economic growth, and only serve the selfish interests of big corporations,” Wyden said. “The new GAO report released today highlights the problems of non-compete agreements – particularly their impact on limiting workers’ fundamental freedom to change jobs. I’ll fight tooth and nail for fair labor laws that protect workers and promote the creation of new businesses in Oregon and nationwide.”
In 2019, Wyden and Senate colleagues requested a nonpartisan GAO investigation into the prevalence and effects of non-compete agreements on workers and the economy as a whole. Their letter cited concerns about the spread of these agreements from highly technical fields into lower wage work, and the impact they could have on entrepreneurship and innovation, economic and wage growth, and productivity and competition in labor markets.
In a new report, GAO estimated that 18% of workers were subject to non-compete agreements when the study was conducted, and 38% of workers have been subject to a non-compete agreement at some point in their career. Over half of the 446 private sector employers responding to GAO’s survey reported that at least some of their workers had non-compete agreements. While many employers report using non-compete agreements to protect their business interests, including trade secrets and client lists, GAO found that the use of non-compete agreements is not limited to executives, but rather extends to hourly and low-wage workers who are unlikely to have access to the types of confidential information employers seek to protect.
GAO found that workers’ job mobility is reduced in states that are more likely to enforce non-compete agreements, while state bans on non-compete agreements for certain workers increased workers’ wages, on average. The studies reviewed by GAO also showed that enforcement of non-compete agreements may restrain the creation of new businesses, especially in the tech and science industries, because of increased probability of litigation and greater costs of recruiting and hiring staff.
The release of the new GAO report was led by U.S. Senator Chris Murphy, D-Conn. Alongside Wyden, U.S. Senators Todd Young, R-Ind., Elizabeth Warren, D-Mass., Marco Rubio, R-Fla., and Tim Kaine, D-Va., joined the release of the report.
A one-pager on GAO’s findings is here.
The full GAO report is here.