Non-Competes Can be Non-Starters, According to New Kauffman Policy Digest

Digest offers insights into negative effects of non-competes and strategies to improve labor mobility and liberate entrepreneurs

(KANSAS CITY, Mo.) July 21, 2014 – The formation of new companies accounts for nearly all net new job creation, but state non-compete agreements — if strictly enforced — can make it harder for people to start those companies.

According to a new Entrepreneurship Policy Digest released today by the Kauffman Foundation, state enforcement of non-compete agreements is restricting highly skilled workers from moving in and out of new jobs and/or from starting their own businesses, thus hindering job creation and economic growth.

The Policy Digest highlights the impacts of non-competes on individuals, firms and the economy and offers adjustments to current laws to improve mobility.

"The degree to which states enforce non-compete agreements can impact the economic growth of that state," said Jason Wiens, policy director at the Kauffman Foundation. "Not only do non-competes limit entrepreneurship, they also restrict the movement of highly skilled workers. Minor changes to current laws could relieve restrictions on these entrepreneurs."

Read the Entrepreneurship Policy Digest.