Do only high-income employees sign non-compete agreements?
No
Non-compete clauses in employment contracts restrict a person’s ability to work for or to start rival firms. In 2014, 12% of those with less than $20,000 in annual earnings and 15% of those with $20,000-$40,000 in earnings reported having a non-compete. More recently, in 2018, The Hamilton Project estimated that between 16% and 18% of all U.S. workers were currently covered by a non-compete agreement.
In principle, non-compete contracts could be attractive to both workers and firms, for example, by incentivizing firms to invest more in their workers. But evidence suggests there is little negotiation of these non-compete contracts, which is inconsistent with well-informed workers bargaining for compensation in exchange for costly limitations on their career flexibility.
This fact brief is responsive to conversations such as this one.
Sources:
Econofact is partnering with Gigafact–an initiative focused on countering misinformation and spreading facts.