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EDITORIAL

Noncompete agreements are costing workers billions in wages. Time to get rid of them.

The Federal Trade Commission wants to make it easier for people to hop to new jobs with better pay.

A surprisingly large number of low-wage workers — including baristas, hairstylists, and landscapers — have been required to sign noncompete agreements in recent decades.Tim Boyle/Photographer: Tim Boyle/Bloomber

Camp counselors trained in spooky ghost stories or catchy campfire songs may not strike you as the keepers of vital corporate secrets.

But they are among a surprisingly large number of low-wage workers — including baristas, hairstylists, and landscapers — who have been required to sign noncompete agreements in recent decades.

In all, an estimated quarter to a half of American workers are now subject to noncompetes which bar them from taking jobs with competitors for six months or a year after quitting their jobs. That sharply limits the employment prospects of tens of millions of people. And because one of the best ways to get a raise is switching jobs, it suppresses wages, too.

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The Federal Trade Commission estimates that worker pay would increase by almost $300 billion if noncompetes were eliminated. And elimination is just what the agency is after.

This month, the FTC opened public comment on a proposed rule that would revoke existing noncompetes and bar new ones.

Business groups have objected, arguing that the agreements protect their investments in employee training and provide a vital shield for company secrets. And their arguments aren’t completely without merit; a noncompete is probably the most effective way to prevent workers from taking what they’ve learned to a rival company.

There may be a good case, then, for continuing to allow noncompetes for the highest-paid workers with access to the most sensitive proprietary information — think senior technologists and biotech executives. FTC commissioners should consider that kind of exception when they approve a final rule.

But banning noncompetes for the rest of us won’t spell the end of American business.

There are other ways to safeguard company information, including nondisclosure agreements, trade secret laws, and nonsolicitation agreements that block former employees from snatching clients or employees from their old employers.

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Corporate America should also consider how getting rid of most noncompetes could help them. By making it harder for employees to change jobs, the agreements also make it harder for employers to bring new talent on board.

At the moment, noncompetes are regulated at the state level and California has declared most of them unenforceable. That’s allowed for a free flow of labor in Silicon Valley that has yielded obvious dividends. An employee with an idea the boss isn’t particularly interested in can take it to another company or start a firm of his own.

Indeed, research shows that easing up on noncompetes leads to greater innovation and employment growth.

About half the states have already seen the wisdom in curbing noncompetes; here in Massachusetts, a 2018 law prohibited these kinds of agreements with lower-paid workers.

But employers in many of these states continue to include them in employment contracts anyway, in a bid to discourage employees from hopping to competitors. And many workers don’t realize the agreements are unenforceable.

That’s good reason for the creation of a single national rule with teeth. And the FTC’s proposal has some teeth, making it illegal for an employer to enter into a noncompete with a worker — or even attempt the move.

If the agency approves the new rule after the 60-day comment period, it could face legal challenges from business interests. And those challenges may very well succeed.

There is some question about how much authority the agency has to bar noncompetes on its own. And the Supreme Court’s conservative majority has not looked kindly on what it considers bureaucratic overreach.

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But the FTC should move forward anyhow. Even if its rule is struck down in the court, new attention to the issue may prompt congressional action — unlocking more opportunities and higher wages in an economy that has failed too many.


Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.