Roughly one in five American workers is bound by a non-compete agreement, including a remarkable number of hourly employees, hairstylists, and warehouse workers. The original justification — protecting trade secrets in highly technical roles — long ago stopped describing how these contracts are actually used. Today they function mostly as a tool for suppressing wages and trapping workers in jobs they want to leave.
States that have already banned them, most notably California, are not noticeably worse off for it. If anything, the opposite.
The economic evidence is one-sided
Studies of non-compete bans repeatedly find the same pattern: when states restrict or ban them, worker mobility increases, wages rise — particularly for workers in adjacent industries — and entrepreneurship goes up. The Federal Trade Commission, in proposing a federal ban in 2023, cited estimates that eliminating non-competes would raise worker earnings by nearly $300 billion annually. That’s not a rounding error.
The counterargument is that firms will invest less in training or innovation if they can’t lock in employees. Empirical work hasn’t found this effect at any meaningful scale. Silicon Valley, the most innovative regional economy in modern history, operates entirely under California’s non-compete ban, and innovation hasn’t fled. The “we need them to invest in workers” argument keeps getting made, but the data doesn’t show up.
They’re being used on people who don’t need them
The most damning fact is the breadth of who’s covered. Sandwich shop workers at Jimmy John’s were famously bound by non-competes that prohibited working at any nearby restaurant for two years. Warehouse staff at Amazon, summer camp counselors, and dog groomers have all been targets. None of these workers possess trade secrets in any meaningful sense.
The honest read is that employers use non-competes opportunistically because workers rarely have the legal resources to challenge them. Even unenforceable agreements deter job-switching because the threat of litigation alone is enough. The contract becomes a tool of intimidation that costs the employer nothing and costs the worker their bargaining power. It’s hard to argue that’s the bargain a free labor market is supposed to produce.
Trade secrets already have laws protecting them
Defenders sometimes argue that without non-competes, companies have no recourse against departing employees who steal IP. This is wrong. Trade secret law, non-disclosure agreements, and non-solicitation clauses all exist and are routinely enforced. They protect the actual interest — the secret — without restricting the worker’s ability to earn a living elsewhere.
A non-compete, by contrast, doesn’t protect the secret. It prevents the worker from competing at all, even with knowledge they developed independently. That’s a remedy disproportionate to the harm and unnecessary given the existing legal toolkit. The categories of harm employers cite are all addressable through narrower instruments.
Bottom line
The case for non-competes rests on theoretical harms that haven’t materialized in places that banned them, and obscures real, measurable harms to workers. Other tools cover the legitimate concerns. There’s no good reason to keep them on the books, and a long, evidence-backed list of reasons to scrap them entirely.
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