There’s a simple solution to this problem:
It takes the form of non-compete clauses in job contracts.
One might expect these to be used for chief executives, client relationship managers or top researchers – the clauses restrict their ability to jump straight over to a competitor, taking crucial business knowledge and contacts with them.
But the contracts have spread throughout the economy to a terrifying extent.
This chart shows it may be becoming more regular – almost one-quarter of young workers may be barred from competing, compared to just over one-in-six for older staff.
American job contracts all too often contain a non-compete clause. This does indeed reduce labour mobility at cost to the economy as a whole.
OK, what’s the solution?
Courts typically only enforce non-compete clauses in the UK when a “genuine business interest” is under threat, and common law rejects restraints on workers’ rights to practice their trade.
American common law is very similar to UK – no, that’s not the reason it’s called common – so that underlying principle is still there. All that needs to happen is that courts enforce that idea.
As, in fact, they largely do.
That is, sure, the clauses shouldn’t be there in the contracts in the first place but as they’re, at those lower levels, entirely unenforceable they don’t matter all that much.