The FTC’s proposed ban on noncompete agreements matches what voters want
The Federal Trade Commission (FTC) proposed on Jan. 5 to ban noncompete clauses, “which hurt workers and harm competition.” If adopted after a 60-day public comment period, this would provide a much-needed boost to entrepreneurship and innovation in America. It also would address a concern on which there is unity among U.S. voters at a time of deep political polarization.
Noncompete agreements may seem like a niche topic, but they have a major impact on the U.S. economy and jobs. About one in five Americans is held back by noncompete agreements or restrictions imposed by employers. As the FTC stated in proposing the ban, “The new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans.” This issue matters to the public because young businesses create nearly all new job growth in America.
A recent bipartisan survey conducted for Right to Start, the national nonprofit organization I lead, reveals voters’ unity on this. The online survey in August of 1,000 registered voters was conducted jointly by North Star Opinion Research, a Republican-oriented polling firm, and Hart Research, a Democratic-oriented polling firm.
The survey found these Americans overwhelmingly want a level playing field for new businesses and entrepreneurs. Respondents almost unanimously agree (94 percent) that “it is important to America’s future that citizens have a fair opportunity to start and grow their own business.” Regarding the noncompete issue, 80 percent of voters, nearly evenly across party lines, support policies that allow people who want to start new businesses more freedom by reducing restrictions that prevent them from competing with their old employers.
Similarly, voters have an overwhelmingly favorable view of small business owners (90 percent) and entrepreneurs (73 percent). Fewer voters have a favorable view of large businesses — 46 percent favorable and 40 percent unfavorable, with 14 percent having no opinion.
Many voters see themselves as entrepreneurs, either now or in the future. According to the survey, 43 percent of respondents have thought about starting a business, and half of those (21 percent) have already tried. Voters of color are especially entrepreneurial. Fifty-four percent of Black voters have thought about starting a business, as have 50 percent of Hispanic voters, compared to 40 percent of white voters.
Of still more relevance to the FTC’s proposed ban, 92 percent of the survey’s respondents think it is difficult to start and grow a new business today. That assessment of difficulty again crosses party lines: 94 percent of Republicans think it is difficult to start and grow a new business, as do 93 percent of independents and 92 percent of Democrats.
Not only that, but 47 percent of voters think the federal government is doing more to get in the way of people who want to start businesses than it is to help them. Only 17 percent think the government is helping people who want to start businesses, and 36 percent are not sure. That skepticism also crosses party lines: Only 27 percent of Democrats think the federal government is helping people who want to start businesses, as do 13 percent of independents and 7 percent of Republicans.
Support for making it easier to start businesses even suggests new political alignments, as voters of color and those living in small towns and rural areas showed interest in certain pro-entrepreneur policies. For instance, in response to the sentence “every child in school should be taught the skills to potentially build their own business someday,” 64 percent of Black voters, 63 percent of Hispanic voters, 58 percent of rural voters, and 52 percent of small-town voters said they found it “very persuasive,” compared to 46 percent of overall voters.
Concern about the economic impact of noncompete agreements is not new. Research documents their impact: In 2014, the Kauffman Foundation published “Rethinking Non-Competes: Unlock Talent to Seed Growth,” a landmark report in the longstanding effort to rein in noncompete clauses and unfair bans. (Additional research can be found in Right to Start’s Field Guides for Policymakers.)
As Sarah Miller, executive director of the American Economic Liberties Project, states, “For too long, coercive noncompete agreements have unfairly denied millions of working people the freedom to change jobs, negotiate for better pay, and start new businesses.” American voters understand that. The FTC’s proposed rule reflects this shared understanding among the electorate and could help unleash entrepreneurial activity across America.
Victor Hwang is the founder and CEO of Right to Start, a campaign to expand entrepreneurial opportunity. Follow on Twitter @RighttoStart.
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