Journal / Essay · Labor

The Math of the Non-Compete

Non-competes are pitched as protection for trade secrets and executive-level know-how. Most of the people signing them make less than $13 an hour and have no trade secrets to protect.

And Then You're Dead · August 2026 · 3 min read

A non-compete sounds like something a departing executive negotiates on the way out the door with a golden parachute. For most of the people who actually sign one, it looks nothing like that.

Far More Common Than the Stereotype

The image of the non-compete is a senior employee walking away with trade secrets. The reality is a much broader slice of the workforce, signed at hiring, often without much explanation.

Some research puts the real number even higher — up to 60 million workers once broader survey methods are used. Either way, this isn't a niche executive-suite practice. It's a standard piece of paperwork handed to a meaningful share of everyone who takes a new job in America.

Who's Actually Signing These

The stated justification for a non-compete is protecting confidential information a departing employee could hand to a competitor. That justification gets harder to take at face value once you see who's actually bound by one.

Almost 30% of workers covered by a non-compete earn less than $13 an hour.

A worker making close to minimum wage is rarely the one walking out the door with proprietary formulas or a client list worth stealing. Employers surveyed on the practice reported using non-competes across the board — executives and hourly workers alike — regardless of whether the job in question involved anything resembling a trade secret.

The Wage Effect Is Measurable

This isn't just a restriction on where someone can work next. Economists have found it actually holds pay down, even for the workers who never try to leave.

When Hawaii banned non-competes for tech workers in 2015, new-hire wages in that sector rose 4% and job mobility increased, relative to industries where the ban didn't apply — a real before-and-after test, not a modeled estimate. The FTC's own 2024 analysis, built to justify a nationwide ban, projected that eliminating non-competes entirely would raise worker earnings by close to $300 billion a year.

The Ban That Never Happened

The federal government tried to end the practice outright. The attempt didn't survive contact with the courts.

The FTC finalized a rule in 2024 banning non-competes nationwide. A federal court in Texas struck it down months later, ruling the agency lacked the authority to issue a rule that broad. By September 2025, under new leadership, the FTC dropped its appeal entirely — the rule never took effect, anywhere, for anyone. Non-competes remain legal and enforceable in most states today, on the same terms they always were.

And Then You're Dead

The story of the non-compete ban isn't that regulators found the practice justified after all. It's that a federal agency's authority to act on it got contested in court, and the agency backed down before the underlying question — is this actually good for workers — ever got a real answer. Thirty million people are still bound by contracts built for a problem most of them never had, holding down wages a study already measured the size of.

That's it. That's the whole thing.

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