This is huge: yesterday, the FTC finalized a rule banning noncompete agreements for every American worker. That means that the person working the register at a Wendy's can switch to the fry-trap at McD's for an extra $0.25/hour, without their boss suing them:
If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
@pluralistic No discussion of non-competes would be complete without mentioning Garden Leave.
Most Formula 1 teams are based in the UK, which isn't friendly to non-compete clauses. But, some engineers on the racing teams truly have secret information about their race cars. So, how do the teams handle that? Garden Leave (a.k.a. Gardening Leave).
If Red Bull Racing thinks the information in your head is so critical that you can't be allowed to go join McLaren's F1 team right away, they use Garden Leave. Instead of coming to work every day, Red Bull pays you your full salary and benefits to stay home and so nothing (or do some gardening) for a few months. Then, you're free to switch teams.
This puts the onus on the employer, not the employee. If McDonalds fry cooks have such critical information in their heads, let McDonalds pay for a Garden Leave for employees who want to switch to Wendy's instead of using a non-compete.
@pluralistic It is not just the apples-to-apples limitation in non-competes, but how widely they are written.
Years ago, I was asked to sign a non-compete as a software engineer. The language was so broad that I technically couldn’t have gone to work at McD’s because they used cash registers, which were computers, so obviously competing!
Fortunately, I was in a position to decline signing, although the CEO accused me of being disloyal.
The median worker laboring under a noncompete is a fast-food worker making close to minimum wage. You know who doesn't have to worry about noncompetes? High tech workers in Silicon Valley, because California already banned noncompetes, as did Colorado, Illinois, Maine, Maryland, New Hampshire, North Dakota, Oklahoma, Oregon, Rhode Island, Virginia and Washington.
The fact that the country's largest economies, encompassing the most "knowledge-intensive" industries, could operate without shitty bosses being able to shackle their best workers to their stupid workplaces for years after those workers told them to shove it shows you what a goddamned lie noncompetes are based on.
The idea that companies can't raise capital or thrive if their know-how can walk out the door, secreted away in the skulls of their ungrateful workers, is bullshit:
If "noncompetes block investments" was true, you'd think they'd have a hard time raising money, but no, they're still pulling in billions in investor capital (primarily from Microsoft itself!). This is likewise true of Anthropic, the company's major rival, which was founded by (wait for it), two former OpenAI employees.
Indeed, Silicon Valley couldn't have come into existence without California's ban on noncompetes - the first silicon company, Shockley Semiconductors, was founded by a malignant, delusional eugenicist who also couldn't manage a lemonade stand.
His eight most senior employees (the "Traitorous Eight") quit his shitty company to found Fairchild Semiconductor, a rather successful chip shop - but not nearly so successful as the company that two of Fairchild's top employees founded after they quit: Intel:
Likewise a lie: the tale that noncompetes lower wages. This theory - beloved of people whose skulls are so filled with Efficient Market Hypothesis Brain-Worms that they've got worms dangling out of their nostrils and eye-sockets - holds that the right to sign a noncompete is an asset that workers can trade to their employers in exchange for better pay. This is absolutely true, provided you ignore reality.
Remember: the median noncompete-bound worker is a fast food employee making near minimum wage. The major application of noncompetes is preventing that worker from getting a raise from a rival fast-food franchisee. Those workers are losing wages due to noncompetes. Meanwhile, the highest paid workers in the country are all clustered in a a couple of cities in northern California, pulling down sky-high salaries in a state where noncompetes have been illegal since the gold rush.
That's how capitalism's alchemy is supposed to work: competition transmogrifies the base metal of a capitalist's greed into the noble gold of public benefit by making success contingent on offering better products to your customers than your rivals - and better jobs to your workers than those rivals are willing to pay. However, capitalists hate capitalism:
Capitalists hate capitalism so much that they're suing the FTC, in MAGA's beloved Fifth Circuit, before a Trump-appointed judge. The case was brought by Trump's financial advisors, Ryan LLC, who are using it to drum up business from corporations that hate Biden's new taxes on the wealthy and stepped up IRS enforcement on rich tax-cheats.
The FTC's statutory authority to block noncompetes comes from Section 5 of the FTC Act, which bans "unfair methods of competition" (hard to imagine a less fair method than indenturing your workers).
Section 6(g) of the Act lets the FTC make rules to enforce Section 5's ban on unfairness. Both are good law - 6(g) has been used many times (26 times in the five years from 1968-73 alone!).
The DC Circuit court upheld the FTC's right to "promulgate rules defining the meaning of the statutory standards of the illegality the Commission is empowered to prevent" in 1973, and in 1974, Congress changed the FTC Act, but left this rulemaking power intact.
The lawyer suing the FTC - Anton Scalia's larvum, a pismire named Eugene Scalia - has some wild theories as to why none of this matters. He says that because the law hasn't been enforced since the ancient days of the (checks notes) 1970s, it no longer applies. He says that the mountain of precedent supporting the FTC's authority "hasn't aged well." He says that other antitrust statutes don't work the same as the FTC Act.
Finally, he says that this rule is a big economic move and that it should be up to Congress to make it.
Stoller makes short work of these arguments. The thing that tells you whether a law is good is its text and precedent, "not whether a lawyer thinks a precedent is old and bad." Likewise, the fact that other antitrust laws is irrelevant "because, well, they are other antitrust laws, not this antitrust law."
And as to whether this is Congress's job because it's economically significant, "so what?" Congress gave the FTC this power.
Now, none of this matters if the Supreme Court strikes down the rule, and what's more, if they do, they might also neuter the FTC's rulemaking power in the bargain.
Again: so what? How is it better for the FTC to do nothing to preserve a power it never uses, than it is for the FCC to free the 35-40 million US workers whose bosses get to use the US court system to force them to do a job they hate?
The FTC's rule doesn't just ban noncompetes - it also bans TRAPs ("training repayment agreement provisions"), which require employees to pay their bosses thousands of dollars if they quit, get laid off, or are fired:
The FTC's job is to protect Americans from businesses that cheat. This is them, doing their job. If the Supreme Court strikes this down, it further delegitimizes the court, and spells out exactly who the GOP works for.
This is part of the long history of antitrust and labor. From its earliest days, antitrust law was "aimed at dollars, not men" - in other words, antitrust law was always designed to smash corporate power in order to protect workers.
But over and over again, the courts refused to believe that Congress truly wanted American workers to get legal protection from the wealthy predators who had fastened their mouth-parts on those workers' throats. So over and over - and over and over - Congress passed new antitrust laws that clarified the purpose of antitrust, using words so small that even federal judges could understand them:
After decades of comatose inaction, Biden's FTC has restored its role as a protector of labor, explicitly tackling competition through a worker protection lens. This week, the Commission blocked the merger of Capri Holdings and Tapestry Inc, a pair of giant conglomerates that have, between them, bought up nearly every "affordable luxury" brand (Versace, Jimmy Choo, Michael Kors, Kate Spade, Coach, Stuart Weitzman, etc).
You may not care about "affordable luxury" handbags, but you should care about the basis on which the FTC blocked this merger. As @ddayen explains for The American Prospect: 33,000 workers employed by these two companies would lose the wage-competition that drives them to pay skilled sales-clerks more to cross the mall floor and switch stores:
In other words, the FTC is blocking a $8.5b merger that would turn an oligopoly into a monopoly explicitly to protect workers from the power of bosses to suppress their wages. What's more, the vote was unanimous, include the Commission's freshly appointed (and frankly, pretty terrible) Republican commissioners:
A lot of people are (understandably) worried that if Biden doesn't survive the coming election that the raft of excellent rules enacted by his agencies will die along with his presidency. Here we have evidence that the Biden administration's anti-corporate agenda has become institutionalized, acquiring a bipartisan durability.
And while there hasn't been a lot of press about that anti-corporate agenda, it's pretty goddamned huge.
Back in 2020, Tim Wu (then working in the White wrote an executive order on competition that identified 72 actions the agencies could take to blunt the power of corporations to harm everyday Americans:
Biden's agency heads took that plan and ran with it, demonstrating the revolutionary power of technical administrative competence and proving that being good at your job is praxis:
Why the rush? As Gerard Edic writes for The American Prospect, finalizing these rules now protects them from the Congressional Review Act, a gimmick created by Newt Gingrich in 1996 that lets the next Senate wipe out administrative rules created in the months before a federal election:
In other words, this is more dazzling administrative competence from the technically brilliant agencies that have labored quietly and effectively since 2020. Even laggards like Pete Buttigieg have gotten in on the act, despite a very poor showing in the early years of the Biden administration:
Despite those unpromising beginnings, the DOT has gotten onboard the trains it regulates, and passed a great rule that forces airlines to refund your money if they charge you for services they don't deliver:
The rule also bans junk fees and forces airlines to compensate you for late flights, finally giving American travelers the same rights their European cousins have enjoyed for two decades.
It's the latest in a string of muscular actions taken by the DOT, a period that coincides with the transfer of Jen Howard from her role as chief of staff to FTC chair Lina Khan to a new gig as the DOT's chief of competition enforcement:
Under Howard's stewardship, the DOT blocked the merger of Spirit and Jetblue, and presided over the lowest flight cancellation rate in more than decade:
All that, along with a suite of protections for fliers, mark a huge turning point in the US aviation industry's long and worsening abusive relationship with the American public. There's more in the offing, too including a ban on charging families extra for adjacent seats, rules to make flying with wheelchairs easier, and a ban on airlines selling passenger's private information to data brokers.
There's plenty going on in the world - and in the Biden administration - that you have every right to be furious and/or depressed about. But these expert agencies, staffed by experts, have brought on a tsunami of rules that will make every working American better off in a myriad of ways. Those material improvements in our lives will, in turn, free us up to fight the bigger, existential fights for a livable planet, free from genocide.
I'm touring my new, nationally bestselling novel The Bezzle! Catch me in THIS SATURDAY (Apr 27) in MARIN COUNTY, Winnipeg (May 2), Calgary (May 3), Vancouver (May 4), and beyond!
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