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AMNA NAWAZ: The Federal
Trade Commission today
issued a proposal banning
noncompete clauses

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that prevent workers from
switching employers or
starting a new business.

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About one in five Americans,
approximately 30 million
people, are affected by these

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policies. The FTC will accept
public comments for 60 days
before it can finalize the rule.

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Elizabeth Wilkins, director
of the Office of Policy
Planning for the FTC,

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has worked on this
proposal, and joins me now.

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Welcome.

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ELIZABETH WILKINS,
Office of Policy Planning
Director, Federal Trade
Commission: Thank you.

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AMNA NAWAZ: Thanks
for being here.

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So, most people think of
noncompetes and associate
them with high-paying jobs,

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tech workers and so on.
But what are some of the
industries and the jobs

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that we don't typically
associate with noncompetes
that are impacted by this?

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ELIZABETH WILKINS: Absolutely.

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You're totally right. People
sort of think of folks in the
boardroom who might be impacted

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by these, but 30 million
Americans we think are
covered by noncompetes.

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So that's everybody from minimum
wage workers, security guards,
folks who are flipping burgers,

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to middle-wage workers,
journalists, nurses. All kinds
of folks are impacted by this.

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AMNA NAWAZ: And about
half of all states
already have some kind of

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rules on the books either
limiting their use or
outright banning them.

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So, I guess the question
is, why is a federal
rule necessary right now?

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ELIZABETH WILKINS: One
part is that you just said,

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there are a couple states
that fully ban noncompetes
already, but not all of them do.

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And one of the really
interesting and, frankly,

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sort of disturbing pieces of
evidence that we have is that,
in states that ban noncompetes,

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you actually see them in just
as many contracts as states that
don't. That means workers don't

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know what their rights are.
And workers may be chilled from
trying to find another job,

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getting a better-paying
job, even when those
clauses are unenforceable.

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So, a clear federal rule
would go a long way to
making sure that people

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can actually switch
jobs, find better pay and
better working conditions.

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AMNA NAWAZ: So, if this
proposal moves forward,

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what do you estimate
could be the potential
impact on worker wages?

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ELIZABETH WILKINS: Pretty big.

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Right now, this is a
proposal, but we preliminarily
find that there could

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be an increase in wages of
$250 billion to $300 billion
for workers who, again,

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can find better wages
and working conditions
and where employers would

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have to really compete for
those workers, instead of
preventing them from moving.

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AMNA NAWAZ: But you
look at workers are now,
especially over the last
two years, moving through

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the pandemic, right, we have
seen unusually high rates of
quitting and also job-switching.

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Numbers from November of
2021 suggest some 4.5 million
workers have voluntarily left

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their jobs. Those numbers seem
to suggest that noncompetes
aren't really an issue. They're

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not an impediment to
worker mobility, right?
So what kind of immediate
impact might this have?

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ELIZABETH WILKINS: We have
seen sort of an unprecedented
switching in the wake

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of the pandemic. This is
one big shock to the labor
-- to the labor market.

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But we're talking about
a long-term effect, if
we can remove noncompetes
from these clauses. We

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are hoping that this is
good long term for the
productivity of the economy,

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when workers can match
with the jobs that they're
best suited to. That's
good for employers also.

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And, again, this means that,
as we have seen in this moment,

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employers will have to
compete, based on wages and
benefits for their workers.

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AMNA NAWAZ: In this
market right now, it's a
top -- tight job market,

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right? Workers have a lot of
leverage. If you don't want
to take a job where there

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is a noncompete, can't
you just not take that
job, go find another one?

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ELIZABETH WILKINS:
That's the ideal.

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Some of the research
suggests that workers don't
even know that they're
signing a contract with a

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noncompete clause. When you
start a job, your first day, you
get a stack of H.R. paperwork.

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You may or may not know
what's in it. Some workers
are asked to sign a
noncompete after they start.

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So this is a problem even for
well-educated employees. They
don't know what they're signing,

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and they don't know what
they're signing up for,

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until they try and get
another job, and they
find out that they can't.

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AMNA NAWAZ: There are
studies that show states
that restrict noncompetes

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do see higher wages.
There's some competing
research too, though.

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Some suggest that noncompetes
actually spur job creation
in some start-ups,

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that they leave firms
to want to invest in the
people that they hire,

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so that they don't go somewhere
else. What do you say to that?

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ELIZABETH WILKINS:
That's totally right.

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We sort of acknowledge in our
proposal that there are some
good reasons that employers

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might want to use noncompetes. A
couple of things. First of all,

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employers have alternatives.
There is nondisclosure
agreements if they're

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worried about sort of
information or trade
secrets. There's also
trade secret law. There

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are thousands of lawsuits
under trade secret law that
are brought every year.

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And then the other is,
obviously, if workers
aren't restricted,

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employers can say, you know
what? I will offer you more,

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I will offer you better for
you to stay because this
investment is worth it.

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AMNA NAWAZ: It is a proposal.
There are some suggesting it's

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very vague and that it
could face legal challenges.
Do you anticipate that?

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ELIZABETH WILKINS: We
think we have really clear
authority here to promulgate
this kind of a rule.

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Congress gave us authority, and
I think actually we feel fairly
obligated to make sure that,

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if we have this authority
to prevent unfair methods of
competition like this in a place

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that's appropriate, like
when there's economy-wide
harm, that we should use it.

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AMNA NAWAZ: Elizabeth Wilkins,

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director of the Office of
Policy Planning from the FTC,
thank you for joining us.

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ELIZABETH WILKINS:
Thanks so much.