The Corporate Fear Campaign to Keep Workers Locked Into Their Jobs
PLUS: Colorado's governor does the bidding of corporate landlords.
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Last edition, I wrote about why you should beware corporate leaders who are whining about a “patchwork of state laws,” and pointed out that corporate lobbyists are fighting against a national standard on non-compete agreements, while working state by state to implement a slew of weaker rules.
Well, I was a bit prescient about that particular effort, as the campaign to impose more non-competes came to forefront in recent weeks in two states: Minnesota and New York. In both places, corporate leaders are going to great lengths to muddy the waters about what non-compete agreements are and are used for in order to justify their baseline desire to keep workers tied to their jobs, thus preventing open labor competition that would likely result in higher wages or more new market entrants. It’s a smear campaign against the very idea of worker freedom.
As a quick reminder, non-compete agreements are what they sound like: Contracts that prevent employees from working for a competitor to their current employer, usually within a certain geographic range and for a certain amount of time. They bind an estimated one in five workers in the U.S., and are found across a host of industries, from nursing to retail to fast food to janitorial services. The proliferation of non-competes across the income scale in recent years had led to an increased recognition that they harm workers and the wider economy by reducing pay and benefits and quashing small business creation.
Most states regulate non-competes in some way, by preventing their use in certain industries or below a certain income threshold. But four states ban their use entirely: California, Oklahoma, North Dakota, and finally Minnesota, which adopted its ban in 2023. (The other three bans all date to the 1800s.)
And it’s Minnesota where corporate interests have focused their attention this year. There, Republicans control the state House of Representatives and have included in a must-pass jobs and economic development bill a provision that would roll back the non-compete ban to exempt both those employees who make more than $500,000, as well as those who make more than $200,000 and have access to “trade secrets.”
I’ve heard from several folks that corporate interests are in the ear of Gov. Tim Walz, the 2024 Democratic vice-presidential candidate, who is pushing for the rollback, and that several of the state’s big firms are threatening to leave for Wisconsin or some other state if they don’t get what they want.
But this push for a rollback is based on a big lie, one Walz and anyone else in the state should know better than to believe: According to an extensive review by the Federal Trade Commission when it was crafting its own non-compete ban (which has since been tied up in the courts), there is no evidence that non-compete agreements protect against the loss of trade secrets or other sensitive information. There is equally no evidence that they hurt business innovation; to the contrary, by encouraging new business formation, banning non-competes is pro-innovation.
What these corporate interests really want is both the ability to suppress wages by preventing open competition for jobs, as well as to prevent industry competition by blocking their own workers from leaving to open new, local businesses. But they can’t come out and say that — even though “non-compete” is quite literally the name of the thing they want to impose — so they make up some mumbo jumbo about trade secrets.
Corporate interests in New York are using similar language to attempt to block a ban on non-competes in that state, after successfully pushing Democratic Gov. Kathy Hochul to veto a ban that passed the legislature two years ago. Despite the fact that the Senate sponsor of the measure, Democratic Sen. Sean Ryan, has addressed some complaints by adding an income cap, large New York corporations, through an entity called New York Jobs Now that is affiliated with another corporate front group known as the Business Council, are claiming the bill would “shatter the economy” in New York.
“When this bill passed in 2023, it was met with a dark money fear-mongering campaign and significant lobbying efforts from the large corporations that stood to lose a competitive advantage they had long enjoyed over small businesses in New York,” Ryan said. “The version of the bill that I introduced this year addresses the concerns employers raised back in 2023, and yet this new attack ad features the same fear-mongering tactics as if it’s the same bill.”
He’s not kidding. They’re literally using the exact same language: This year’s campaign claims a non-compete ban “could shatter our economy, crippling businesses’ ability to innovate and retain talent, and sending our jobs fleeing to other states.” Two years ago, the claim was the bill would “shatter our economy,” “crippling business’ ability to fuel innovation,” and “risk seeing our jobs flee to other states,” as I reported at the time.
Again, these claims are the exact opposite of empirical reality. California hasn’t allowed the enforcement of non-competes for more than 100 years, and yet somehow not only still has an economy that’s larger than New York’s, but is home to many of America’s pre-eminent corporations (for good and ill). Minnesota’s economy didn’t evaporate after the non-compete ban became law there in 2023. In fact, the 50 largest Minnesota corporations in 2024 saw both their revenue and profits rise.
Big corporations simply want to be able to control their workers and block competition, so they’re engaging in substance-free scaremongering that at least some lawmakers seem to be buying. But that’s all it is: Truly bonkers blather about how having to compete for workers will somehow be an economic catastrophe, as opposed to what it will actually be, which is a boon to those states and the people who live there.
UPDATE: Last month, Colorado legislators were the first in the country to pass a statewide ban on the use of algorithmic software that enables landlords to collude on rental prices. Unfortunately, Democratic Gov. Jared Polis vetoed it. You can read my thoughts on the veto in this piece.
In much better news, D.C. Attorney General Brian Schwalb reached a $1 million settlement with one of the landlords that his office has alleged used algorithms to fix rental housing prices. And the California Senate approved a bill similar to Colorado’s, while the California Assembly approved a broader bill that would enact an economy-wide ban on algorithms that facilitate price collusion.
SIMPLY STATED: Here are links to a few stories that caught my eye this week.
A bipartisan group of 260 state legislators sent a letter to Congress opposing a budget provision that would block states from regulating artificial intelligence or automated decision-making for 10 years. (Background on this issue here.)
Missouri Gov. Mike Kehoe called a special state legislative session, and a main item on the docket is approving a massive taxpayer handout to the owners of the Kansas City Chiefs and Royals.
Nevada Republicans, at the request of Gov. Joe Lombardo, blocked a bill that would have prevented institutional investors from rolling up large swathes of single-family housing.
In better news, the Nevada legislature also failed to advance a massive film tax credit expansion.
Bass Pro Shops, Cabelas, and Dick’s Sporting Goods have been accused in a class action lawsuit of illegally fixing the price of bowhunting equipment.
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— Pat Garofalo