WASHINGTON–U.S. Senator Chris Murphy (D-Conn.), a member of the U.S. Senate Health, Education, Labor, and Pensions Committee, on Friday hosted a listening session with Chair of the Federal Trade Commission (FTC) Lina Khan to hear from Connecticut workers impacted by non-compete clauses. Joined by workers across industries, labor leaders, state officials, and other stakeholders, they discussed how the FTC’s rule to ban non-competes will help raise wages, foster innovation, and give workers in Connecticut more economic freedom.

“In this country today we suffer from a handful of problems that continue to plague our economy,” Murphy said. “One is stagnant wages. People need to make more – the amount of money coming in is not meeting the amount of money that is necessary to go out in order to live in this country – and we have to have an aggressive strategy of continuing to raise wages and raise income levels for American families. Second, we need more innovation in this country. We are going to thrive as an economy if we have more businesses that are starting up, if we are the place where innovation happens. And the proliferation of non-compete clauses frustrates both our effort to raise wages and our effort to be an innovation economy.”

In his opening statement, Murphy emphasized the role of non-competes in stifling prosperity for American workers and impeding innovation: “The majority of workers that are subjected to non-competes are low-income workers and middle-income workers, workers that have no real access to any proprietary information. What we see here in Connecticut is that it's homecare workers that have non-competes, that it's nurses that have non-competes applied to them. In some cases, it's sandwich shop clerks that have non-competes. And in those cases, it is simply being used as an effort to restrain the fluidity of the labor market. The only reason that you apply a non-compete to a low-wage entry-level worker is so that you can bind them to that job and stifle the ability of the market to work properly, whereby workers get to bargain for higher wages because if you don't pay them what they deserve, they're going to go someplace else… And what we know is that because people at the higher income levels and the executive level can't leave their jobs, we are stifling the growth of innovation and other new businesses. Because when you lock in executives, when you lock in higher level talent, they are not able to go pursue their dreams, take their ideas to the next level through the creation of their own company.”

Khan echoed Murphy’s sentiments, highlighting key lessons from her work with the FTC to ban the use of non-competes: “As Senator Murphy mentioned, these non-compete clauses started off in the boardroom, but they've really proliferated. And so as we started looking at this issue, we realized that we're talking fast food workers, security guards, janitors, gardeners, journalists, health care workers. After we proposed our rule to ban non-competes, we actually heard from 26,000 people across the country, from every state, from every walk of life. 25,000 of those comments supported our ban. We also, as we undertook this work, learned a few interesting things. One is that non-competes depress wages, not just for the workers that are directly covered by the non-compete, but actually for workers as a whole. Because what happens when you have a non-compete is that the workers that are directly covered can't leave their jobs as easily, and that means there's less fluidity and less dynamism in the labor market as a whole. And so workers as a whole suffer here. We also saw that small businesses, and actually businesses across the spectrum, were also quite supportive of a ban, in part because we've heard from businesses that when they're looking to scale up or when they're looking to enter a market and grow, sometimes they see that they hit a ceiling very quickly, not because customers don't like their services, but because the relevant talent pool is all locked up through these non-competes. And so we got a lot of supportive comments not just from workers, but actually from small businesses, from medium-sized businesses, from entrepreneurs, people who are well positioned to go start their own businesses, but are not able to because of these non-competes.”

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