Do you have any evidence to support the idea that non-compete clauses actually lead to greater training? It strikes me that this is a convenient post-hoc rationalisation, but I'm not convinced it is actually true. If the worker requires the skills to do the job, then the company really has no choice but to put them through training. They may prefer the worker did not leave, but this does not imply that they would not pay for the training.
On a separate note, non-compete clauses are an overly exploitative way to achieve the effect you're talking about. Workers are not always very mobile - they may have family in the area or be restricted by visa requirements etc. Why not just have a contract that allows for a worker to 'work off' the value of the training. That way if they leave, the company is reimbursed.
"Why not just have a contract that allows for a worker to 'work off' the value of the training. That way if they leave, the company is reimbursed."
I'm a manager, and all my staff have non-competes. My immediate reaction to your suggestion is that this is just not good vibes. If someone is leaving, they leave, and they go sit out their non-compete away from our view. I do not think I would want someone to be hanging around with one foot out the door working to earn their release. Once someone truly wants to be out, we also prefer them out.
This doesn't look like post-hoc rationalisation to me, since it's explicitly part of the point of non-competes! The issue with training is how the firm's on the hook for the costs but (if the employee freely leaves for a rival immediately after) may not receive the benefits. From an economic perspective, incentives are clearly set up against training, even though under-training may prove less than optimal for the employees (particularly ones who would be willing to commit to the firm in return for subsidised training but have no mechanism allowing them to do so) and ultimately for society in general. This isn't the only reasoning for non-competes, and non-competes aren't the only way to address it (eg industry training levies) but incentives matter and mismatched benefits and costs will always ring economists' alarm bells.
It is rarely true that "the company really has no choice but to put them through training" - if the cost/benefit of the activity has been so skewed by the fact the firm won't recoup its training costs, then one option is just to stop doing that activity, obviating the need to either hire or train anyone for it altogether. Another option is to hire, at an acceptable premium, someone with extensive on-the-job training and experience already - if all firms do this and no new trainees are taken on, then the skillset may ultimately die out. An alternative is that job candidates have to spend their own money doing the training privately, even though there's no guarantee of getting the oat the end. Think of wannabe airline pilots training at private flight schools. Training can also be a matter of degree - firms may offer a less extensive training scheme than they otherwise would, or require employees to shoulder more of the financial burden, eg offering partial but not complete subsidy of postgraduate management courses. The above isn't empirical evidence but I hope it shows why it's wrong to wave away the incentives problem by claiming firms simply *have* to train their employees.
While writing such articles, please at least make a good faith effort to indicate that you give an ounce about workers. You completely failed to mention that employees can get fired by the company, and still have the non-compete enforced on them. How about making bonded slavery legal, maybe that will also possibly increase production of goods and services? Would you like to have entered a marriage contract if the wife was allowed to cheat on you, while you were not?
I see your argument about training. It is a legitimate problem. I do not believe that non-competes are fundamentally against fairness of work. However, non-competes with one side able to walk away with no cost is just plain ridiculous.
In general, both people and firms can benefit from being able to make a promise that they can be held to, or alternatively, they can be "punished" for breaking. The economic term is "commitment". Without a mechanism by which their promise can be upheld (e.g. certain classes of promise are recognised as not legally binding) then it may be impossible for parties to agree a contract which would otherwise have benefitted both sides. "If you spend tens of thousands of dollars training me, I pinky promise not to leave you and go and work for your competitor instead just as soon as the training's over" isn't a great pitch for someone to give you expensive training. Replace "pinky promise" with "sign a legal contract" and you're giving yourself a better chance.
Do you have any evidence to support the idea that non-compete clauses actually lead to greater training? It strikes me that this is a convenient post-hoc rationalisation, but I'm not convinced it is actually true. If the worker requires the skills to do the job, then the company really has no choice but to put them through training. They may prefer the worker did not leave, but this does not imply that they would not pay for the training.
On a separate note, non-compete clauses are an overly exploitative way to achieve the effect you're talking about. Workers are not always very mobile - they may have family in the area or be restricted by visa requirements etc. Why not just have a contract that allows for a worker to 'work off' the value of the training. That way if they leave, the company is reimbursed.
"Why not just have a contract that allows for a worker to 'work off' the value of the training. That way if they leave, the company is reimbursed."
I'm a manager, and all my staff have non-competes. My immediate reaction to your suggestion is that this is just not good vibes. If someone is leaving, they leave, and they go sit out their non-compete away from our view. I do not think I would want someone to be hanging around with one foot out the door working to earn their release. Once someone truly wants to be out, we also prefer them out.
This doesn't look like post-hoc rationalisation to me, since it's explicitly part of the point of non-competes! The issue with training is how the firm's on the hook for the costs but (if the employee freely leaves for a rival immediately after) may not receive the benefits. From an economic perspective, incentives are clearly set up against training, even though under-training may prove less than optimal for the employees (particularly ones who would be willing to commit to the firm in return for subsidised training but have no mechanism allowing them to do so) and ultimately for society in general. This isn't the only reasoning for non-competes, and non-competes aren't the only way to address it (eg industry training levies) but incentives matter and mismatched benefits and costs will always ring economists' alarm bells.
It is rarely true that "the company really has no choice but to put them through training" - if the cost/benefit of the activity has been so skewed by the fact the firm won't recoup its training costs, then one option is just to stop doing that activity, obviating the need to either hire or train anyone for it altogether. Another option is to hire, at an acceptable premium, someone with extensive on-the-job training and experience already - if all firms do this and no new trainees are taken on, then the skillset may ultimately die out. An alternative is that job candidates have to spend their own money doing the training privately, even though there's no guarantee of getting the oat the end. Think of wannabe airline pilots training at private flight schools. Training can also be a matter of degree - firms may offer a less extensive training scheme than they otherwise would, or require employees to shoulder more of the financial burden, eg offering partial but not complete subsidy of postgraduate management courses. The above isn't empirical evidence but I hope it shows why it's wrong to wave away the incentives problem by claiming firms simply *have* to train their employees.
While writing such articles, please at least make a good faith effort to indicate that you give an ounce about workers. You completely failed to mention that employees can get fired by the company, and still have the non-compete enforced on them. How about making bonded slavery legal, maybe that will also possibly increase production of goods and services? Would you like to have entered a marriage contract if the wife was allowed to cheat on you, while you were not?
I see your argument about training. It is a legitimate problem. I do not believe that non-competes are fundamentally against fairness of work. However, non-competes with one side able to walk away with no cost is just plain ridiculous.
This articles only states the obvious benefits non-competes have for the companies, but it doesn't show any benefit for the workers.
In general, both people and firms can benefit from being able to make a promise that they can be held to, or alternatively, they can be "punished" for breaking. The economic term is "commitment". Without a mechanism by which their promise can be upheld (e.g. certain classes of promise are recognised as not legally binding) then it may be impossible for parties to agree a contract which would otherwise have benefitted both sides. "If you spend tens of thousands of dollars training me, I pinky promise not to leave you and go and work for your competitor instead just as soon as the training's over" isn't a great pitch for someone to give you expensive training. Replace "pinky promise" with "sign a legal contract" and you're giving yourself a better chance.