Tone Deaf White House Attacks Non-Compete Agreements for Lack of Economic Growth

The Obama administration recently called on state governments to ban non-compete agreements between employers and their workers in an effort to encourage competition, worker mobility, and wage growth.

Vice-President Joe Biden said in a statement last week: “No one should have to sit on the sidelines because of an unnecessary non-compete agreement. We have the most dynamic, productive workers in the world, but they can’t reach their true potential with freedom to negotiate for a higher wage with a new company, or to find another job after they’ve been laid off.”

While non-compete agreements may be reducing competitiveness for some workers (20 percent of U.S. workers are bound by these agreements), they are necessary for many companies to protect business secrets. Even if some of these agreements are not vital to the company, does the federal government possess enough local knowledge to make accurate determinations in each individual case?

In the National Federation of Independent Business (NFIB)’s 2016 Small Business Problems and Priorities survey, employers cite the “cost of health insurance,” “unreasonable government regulations,” and “federal taxes on business income” as the three most severe problems facing small-business owners.

But over the past 8 years, President Obama has remained tone deaf to the business community, doing his best to discourage economic growth and hurt workers. Under the President’s watch, federal agencies implemented 229 new major rules costing over $107 billion. Obamacare increases the cost of health care insurance and raises taxes. The Dodd-Frank Act of 2010 raises lending costs and reduces access to capital – the lifeblood of any business. And let’s not forget about federal minimum wage proposals that destroy millions of low-income jobs or the President’s new overtime rule that reduces workplace flexibility and career growth.

If the President truly desires more competition, higher wages, and economic growth, he should consider addressing the issues that matter to small-businesses and their employees who create the majority of new U.S. jobs. Banning non-compete agreements is no solution for long-term economic growth and job creation.

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