Why gen Z can't find jobs, study finds noncompetes very harmful

The speaker discusses an article about why Gen Z finds it difficult to secure jobs, linking it to a study on job mobility and wage stagnation. The study identified two primary factors: a decrease in the number of companies, leading to fewer job opportunities, and the prevalence of non-compete agreements. The speaker, drawing from both employer and employee perspectives, focuses on the latter, arguing that non-competes hinder upward job mobility and contribute to wage stagnation. The study found that in areas with more non-compete agreements, workers had greater difficulty finding better-paying jobs. It concluded that non-competes directly restrict employee mobility, and their increased use, alongside rising employer concentration, has curtailed opportunities for "job shopping." This suggests a significant decline in workers successfully finding improved employment. A "back of the envelope calculation" in the study implied that these factors might account for roughly 60% of the national decline in the efficiency of on-the-job search between the 1980s and 2010s. The speaker has previously discussed this issue, including the FTC's attempt to ban non-compete agreements, and believes that they fundamentally undermine capitalism. The core principle of capitalism, as the speaker sees it, is competition, where companies strive to offer better services or prices. This competition drives innovation. The speaker questions why this principle doesn't extend to employees. He argues that capitalism should allow employees to seek better opportunities if their current employer is underperforming, thus increasing wages. He recounts experiences from his past supply company, where he encountered skilled technicians earning surprisingly low wages, sometimes as little as $9 or $10 an hour, for complex repairs. He would often offer these individuals significantly higher pay, better benefits, and a more appealing work environment, successfully recruiting them. This practice, he explains, was a key method for acquiring early employees. He addresses the common argument that employers have no incentive to train staff if they can simply leave. He finds this view incorrect, both ethically and from his own experience. Firstly, employees are more likely to stay if their workplace is not "garbage." Secondly, significant pay gaps (e.g., $50,000 to $200,000) indicate either that the current employer is operating inefficiently, making less money than competitors, or is pocketing profits that a competitor might invest in their staff. He sees no issue with an employee moving to a business that values them more. The speaker emphasizes that he is not a "great employer," acknowledging that his business operations can be chaotic and demanding. However, he believes in fundamental principles: ensuring the work environment isn't terrible and providing opportunities for growth. He mentions investing $30,000 in an employee's data recovery education. His strategy for retention is to make the workplace appealing, rather than "handcuffing" employees. He views non-competes as the antithesis of capitalism, akin to forcing consumers to buy a subpar product from a specific company by preventing competitors from offering alternatives. He also highlights that factors beyond salary, such as reputation and brand, influence people's choices. Consumers often pay more for branded products identical to cheaper store-brand versions due to familiarity. Similarly, a company that treats its employees well, even if not offering the absolute highest pay, can retain staff by simply "not being a complete utter piece of sh*t." The speaker states he does not use non-compete agreements and has even hired individuals who had signed them, daring their former employers to sue. His experience over 15-17 years has shown that hiring underpaid individuals leads to increased productivity, happier employees, and, crucially, forces the former company to improve its practices. This, he argues, is the essence of free-market capitalism: companies that "suck" will lose employees and money, creating a corrective mechanism. He draws a parallel to criticisms of government inefficiency, where taxes are collected regardless of performance, and applies this logic to employers who use non-competes to avoid accountability for poor treatment. He believes that a slight fear of losing key employees encourages employers to create better workplaces, benefiting everyone. From a capitalist standpoint, if he can afford to pay someone significantly more, it implies that the employee is more productive in his company, leading to more services for society—a positive outcome that non-competes restrict. He recounts a time he considered hiring someone as a "janitor" to circumvent a non-compete, although it never became necessary. He has never made an employee sign a non-compete. He acknowledges that some opportunities, like government forensic data recovery roles, can offer salaries he could never match. In such cases, he congratulates employees on their advancement, recognizing their contributions and allowing them to move on, then seeks new talent at the entry level. He urges listeners to advocate for banning non-compete agreements, asserting they are detrimental to the economy, workers, and capitalism itself. He concludes by stating that his approach is simply to be a capitalist "that's not a total piece of sh*t," an incredibly low bar that he feels shouldn't warrant praise.