What's the actual steel man argument for why noncompetes are good? I've never really encountered one, just seen the corporate advocacy that they don't want to deal with high employee turnover.
Best I can do: Non-competes are (possibly) unenforceable anyway, so signing one maybe acts as a value signal for the employee? "I'd have to violate my non-compete, so in order to do that and permanently burn the bridge with my current company, you need to pay me $X + $Y."
Frankly I don't buy it, though, because it assumes too much about the rationality of all actors involved and the savviness of the employee during negotiations.
> What's the actual steel man argument for why noncompetes are good?
It probably depends on the kind of job.
If say Walmart tried to use a noncompete to stop cashiers from going to Target there probably is no reasonable argument in favor of that.
On the other when the employee is a top level executive who knows all the company's trade secrets and all their plans for the next year or so and they want to go to a direct competitor it is hard to see how they won't use that information at the competitor. Even if they scrupulously try to uphold any NDAs they are under and so don't consciously do it stuff will leak.
If the first company sues accusing the second company and/or ex-employee of using such information it can get pretty messy, and consumer judicial resources better used for other things.
A policy then of allowing noncompetes in this situation might overall be beneficial. Top level executives are generally well compensated and should be sufficiently sophisticated financially to understand the consequences of a noncompete and take that into account when deciding on taking the job so having to sit out 6-12 months before taking a directly competing job should not be a serious issue.
> On the other when the employee is a top level executive who knows all the company's trade secrets and all their plans for the next year or so and they want to go to a direct competitor it is hard to see how they won't use that information at the competitor.
Since this is a steelman, what is the rationale for this dynamic needing to be protected? If this employee wants to go to a competitor because they they are getting a better employment deal, why not just try to keep them with your own better employment deal?
Why does it need some forced restriction? I know people aren't perfectly rational market participants, but what besides financial compensation or an enjoyable work environment would compel someone to go to a competitor?
I am glad most places are getting rid of non-competes. But here is the best argument I've heard for them:
For many companies, a lot of their value is in their intellectual property. Non-competes exist not because the company will enforce it against employees (they might, but they usually don't), but more as a fig-leaf to potential investors down the line asking about the value of the intellectual property. The argument goes, if someone could easily leave the company with the knowledge earned and go to a competitor, then the investment wouldn't be as valuable.
In theory, something like a technical job that requires extensive training. I always see reports about a lack of training for high tech trade / manufacturing jobs, as they require up to 2 years of training, but training slots are limited. You might get companies to pay the training if they could be assured the person would not run to a competitor. But even that should be agreed up front, with a limited term (eg we will train your two years, then pay you $X, and you will be subject to a noncompete for four years)
I was thinking of specialized welding, CNC operator, etc. Like, 12-18 months of hands-on training. I guess it could still be a scam, but I don't think transferability is an issue.
Some CNC machine manufacturers have on campus training workshops that would teach something transferable. If it's at a machine shop some will be and a lot won't be. Letting them sell it as training that needs to be paid back would be an absolute scam.
Some community colleges offer technical training, usually in partnership with a certificating body. But in this case the valuation is determined by a mostly independent body.
> What's the actual steel man argument for why noncompetes are good?
It makes it possible to confidently buy a business that's mostly or all goodwill. Otherwise the previous owner can simply poach all the clients.
Also lots of jurisdictions allow non-competes as long as the employee is paid for the duration of the non-compete clause. Obvious win there: paid vacation or double up your salary by working for a non-competing firm.
Non-competes on employees without compensation are obviously bad.
Best I can do: Non-competes are (possibly) unenforceable anyway, so signing one maybe acts as a value signal for the employee? "I'd have to violate my non-compete, so in order to do that and permanently burn the bridge with my current company, you need to pay me $X + $Y."
Frankly I don't buy it, though, because it assumes too much about the rationality of all actors involved and the savviness of the employee during negotiations.