WASHINGTON (CN) — Promising that more protections for American workers will benefit consumers as well, President Joe Biden signed a sweeping executive order Friday aimed at shaking up big tech, health care, transportation and more.
“If companies want to win your business, they have to go out and up their game… competition keeps the economy moving and growing,” Biden said during a signing ceremony at the White House this afternoon. “Competitive economy means companies must do everything they do to compete for workers.”
Biden framed the move as an economic imperative, making the “heart of American capitalism work for everyone,” as the country emerges from the Covid-19 pandemic. To achieve these aspirations, the president set his sights principally on he Federal Trade Commission and Department of Justice.
For one, the commission is now “encouraged” to ban or limit noncompete agreements — contracts that the White House said Friday stifle competition over wages generally and chip away at the “greater dignity and respect” of the American labor force.
According to the Economic Policy Institute, almost half — or 49.4% to be exact — of all businesses ask employees upon hiring to sign a noncompete contract that effectively prohibits where a person can work in the future or for whom. And while it may be more standard for chief executives or corporate higher-ups with access to sensitive trade secrets, noncompete clauses have increasingly become de rigeuer in the lower ranks of the workforce as well.
One assessment by employment attorneys at Ottinger Law points out that some 45.1% of all businesses in California subject employees to noncompete agreements, even though such agreements are legally unenforceable there. The reason? According to Ottinger: “They are relying on the fact that workers rarely challenge these agreements in court.”
Taking a more generous view of that motivation, employment lawyer Michael Stevens suggested that many employers “actually believe that reasonable post-employment restrictions can be helpful to workers."
This is "because curbing unfair competition from former employees provides some level of job security to the employees who remain at the company," Stevens, a partner at Arent Fox in Washington, pointed out in an email Friday.
Biden's executive order also directs the FTC to review “unnecessary occupational licensing restrictions that impede economic mobility.” Nearly a century ago, less than 5% of American workers needed an employee to hold a license to do the work. Today, nearly 30% of jobs require it, the FTC reported.
“That locks some people out of jobs, and it makes it harder for people to move between states,” the White House said in a summary of the executive order Friday.
Additional points of the order ask the Department of Justice and FTC to review their own antitrust guidance with an eye specifically trained on how companies or employers can be stopped from collaborating to stifle wages and benefits by sharing sensitive wage data with one another.
“We’ve seen less competition, more concentration. We see it in Big Agriculture, Big Tech, Big Pharma, the list goes on. Rather than competing for consumers, they are consuming their competitors,” Biden said from the State Room. “Rather than competing for workers, they are finding ways to gain the upper hand on labor and too often, the government has made it harder for new companies to break in and compete.”
Friday’s executive order tackles a trio of issues that Biden says major technology companies abuse or undermine to reduce competition. Specifically, it states there must be greater scrutiny of tech mergers, especially dominant internet platforms. A close eye must be paid when big companies, eager to squash nascent competitors before they even get off the ground, make “killer acquisitions.”
