The case for banning non-competes

I appreciate the gist of the article but IMO the CA/MA dichotomy (which is often mentioned--though MA significantly restricted non-competes a few years back) is facile.

It's true that a lot of the new Internet/Web companies came out of California. And Apple is of course there as well.

But the Route 128 companies mentioned in the article certainly traded employees, although in general employee tenures tended to be much longer than today. Data General, for example, was founded by a Digital engineer. Similarly there is a massive biotech/pharma cluster of companies in Kendall Square in Cambridge today.

There's so much wrong here.

> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off.

No. If companies couldn't coerce workers to stay with them against their will, then they would have to pay better and be better employers. And we would all be better off.

> But suppose instead that innovation is difficult. Lukas Walton has a net worth of $22 billion because his grandfather founded Walmart. If he decided he really only needs $5 billion in life and is going to plow the other $17 billion into a massive R&D effort, how much innovation will he really generate?

A huge amount. Plenty of people set up research institutes or new departments at universities that make giant leaps forward. See Paul Allen for example.

> To a considerable extent, this hinges on poaching. Silicon Valley was a good place to grow Facebook because fast-growing Facebook could poach from older tech companies.

I wish people would stop with this anti-labor language. Poaching? That's ridiculous. It starts by offering people a better place to work, with a better mission, better people, and more money. That's not "poaching".

> And Silicon Valley is a good place to launch a startup today because you can poach from Facebook.

That's funny. FB and other companies offer far more money than most startups can afford. That's not why the Valley is a good place to launch a startup.

> One of the big, overarching problems of our time is that productivity growth has slowed down sharply from where it was during the post-WWII decades.

The overarching problem of our time is that productivity no longer means higher salary and higher quality of life. Productivity keeps going up, but salaries stagnate. What's the incentive to be more productive?

> In the early days of the computer industry, Silicon Valley was rivaled by the Route 128 corridor (this is a road through the Boston suburbs) in Massachusetts as a hub of innovation. But California won out decisively here, and many people think the lack of non-compete agreements in the Golden State is part of the reason.

There's a lot of debate about this. And now we're running the decisive experiment! MA just basically killed off non-competes (1 year limit, narrow scope both in terms of work and geography). Let's see if the biotech industry stays.

Yeah the good old garden leave. I wish.

This would mean that you can then also work in a related but not competing industry at the same time. It's not a no-work afterwords contract, but don't compete with us. that won't affect your total compensation then, or your career trajectory usually either. The idea is that a non-compete should only be used for someone it will actually matter to the business the, and not all the low level employees that don't have any impact on anything like that. right now you have tech support and call center employees with year long non-competes that prevents the, from working in another similar role at a new company, https://www.protocol.com/policy/tech-non-compete

>> The main idea of the non-compete agreement is that employers want to stop people from walking off the job and taking trade secrets to rival companies. If companies weren’t able to secure those protections, they’d need to pay lower salaries, and we’d all be worse off.

I don't agree. I think the non-compete is more an acknowledgement that certain people have a higher degree of mastery and understanding of a subject and that the company doesn't want to lose that. Having a competitor pick that up is probably a secondary concern to losing it.

Also, it does not follow that anyone would pay lower salaries. I'd think higher compensation or better working environment would be used to retain those key people. This would lead to companies needing to have a better understanding of employee value (but that's another topic entirely) rather than just limiting their mobility.