How An FTC Ban On Non-Compete Agreements Could Keep Pizza Delivery Guys Shuttling Pies For Life

My first non-compete agreement got me a job that paid well and trained me to be a skilled technician. Thanks to the Federal Trade Commission’s new plan to ban non-compete agreements, low-skilled workers trying to break into the trades won’t have the opportunity I did.

Last week the FTC stated It stated that it would ban the United States from non-compete agreements, and claimed that this would be detrimental to American workers. “increase American workers’ earnings between $250 billion and $296 billion per year,” “expand career opportunities for about 30 million Americans.” Although the ban may create some opportunities for workers, it doesn’t guarantee higher salaries in the trades or limit future opportunities. Legislators must consider long-term effects of this ban if they want to increase opportunities for workers.

I was 20 years old, delivering pizzas for $12 an hour, when an acquaintance of mine — a local businessman — approached me with an offer to work as an information technology technician, subcontracting for his company. He offered me a decent wage, and provided the training and the tools to do the job. But here’s the catch. The catch? 18 percent of Americans. The agreement stipulated that I wasn’t allowed to pilfer his clients, underbid him on jobs, or work in the local tech industry within two years of leaving my employment with him, or I would face a $10,000 fine — pennies compared to many non-compete penalties.

However, that was a lot for me back then. After about eight months on the job, one of my boss’s clients, impressed by the quality of my work, offered to double my current wage if I would work for him directly. Although I was tempting, the fine was too much. I was frustrated and turned down the offer. I would have loved it if the FTC had said that it would ban non-compete agreements. But at 21, I didn’t know how to think like an economist: Without that non-compete agreement, I would never have been trained as a technician in the first place.

Ban on Training Would Limit Opportunities

Banning non-competes would have been a mistake back then, and it’s a mistake for the FTC to ban them now. It will not only make it harder for low-skilled people to get into the trades but also reduce transparency within companies.

Look at it from my employer’s perspective: I had no real knowledge of tech work when I started, so he trained me from scratch and provided me with a job, the tools I needed, and mentorship. It was already a risk to hire someone who didn’t have any knowledge. What if he paid for my training and I quit to go work for his competitor? He would pay the cost of training me and receive almost no benefits.

No employer