Since 2010, labor market have
steadily improved. Today unemployment is at historic lows—about 3.5%. But wage
growth is a tad over 3%, and inflation is 1.8%.
Don’t
spend your 1.2% pay raise in one purchase, please.
There is
no single explanation—but check out this story from the Cincinnati Enquirer:
“A young woman who
works as a home health care aide called me about a threatening letter she
received from a law firm. The letter said she violated a non-compete agreement
when she left her $11-per-hour job to take a similar job with another company
for $13.50 per hour. She didn’t remember signing such an agreement, but she was
scared by the letter and its threat of legal action. Sure enough, among the
many documents she signed after being hired was a page saying that she would
not go to work for a competing company in the surrounding area for a year after
leaving her job.”
Late last week, a
progressive think tank issued a report. Based on survey data, the group estimates
that 36 million workers (out of about 146 million) have signed no-compete
agreements, similar to the low-wage worker above.
An antitrust
lawyer shared the following memo with me. In sum:
“We, the Attorneys General of Minnesota, California, Delaware,
District of Columbia, Illinois, Iowa, Maine, Massachusetts, Maryland, Michigan,
New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont,
Virginia, Washington and Wisconsin write to the Federal Trade Commission (FTC)
to urge it to use its rulemaking authority to bring an end to the abusive use
of non-compete clauses in employment contracts
Non-compete clauses also burden businesses seeking to hire workers
or enter a market. Restricting worker movement benefits only the employer
seeking to prevent employees from leaving without that employer offering
incentives to stay besides potential legal action to enforce a non-compete. In
this way, non-compete clauses inhibit innovation and may actually drive
consumer costs up by suppressing competition from rival businesses.”
If you
are an employer who has forced low-wage, low-skill employees to sign a
no-compete clause, stop this.
If you go
to court to enforce your agreement, you will lose. Don’t bully your workers: If
you cannot match a pay raise, let your people go.
Credit
and thanks to Zak. 😊
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