Biden's latest executive order empowers workers in 3 key ways
President Joe Biden is expected to sign an executive order to promote economic competition on Friday, which contains three provisions designed to improve opportunities for workers.
The President's order calls on the Federal Trade Commission to restrict or prohibit non-compete agreements, address unnecessary professional license requirements, and revise guidelines for the exchange of wage information between HR professionals.
"Barriers to competition also depress workers' wages," the White House said in a statement on Friday. "When there are few employers in the city, workers have fewer opportunities to negotiate higher wages and demand dignity and respect in the workplace."
US President Joe Biden speaks about the situation in Afghanistan from the East Room of the White House in Washington, DC, July 8, 2021. (Photo by SAUL LOEB / AFP)
Non-compete obligations prevent employees from going to a competitor or starting a competing business within a certain period of time after leaving their previous job. According to estimates by the Economic Policy Institute, between 36 and 60 million private sector workers were affected by non-compete obligations in 2019.
"The only economic influence that non-union workers have is the implicit threat that they might quit and go elsewhere," Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, told Yahoo Money. “Non-compete obligations reduce wages. Your employer doesn't have to pay you a higher wage if he knows that you don't have any external options. "
Restricting non-compete obligations or making them unenforceable - as Biden's order provides - may not be enough, according to Shierholz. Banning them instead would give workers more leverage, she said.
For example, non-compete clauses are unenforceable in California, but some research has found that they still suppress wages because workers are often unaware that they cannot be sued by their employers, according to a paper in the Journal of Law, Economics, published in the year 2020. and organization.
Biden's order also calls on the FTC to ban “unnecessary” restrictions on professional admission. The Federal Trade Commission estimates that approximately 30% of US jobs require this type of licensing. But those restrictions stifle access to these professions, limit employment growth and make it difficult to move between states, according to Alexander Colvin, professor of industrial relations at Cornell University.
"Research has shown that professional licenses are quite widespread and actually prevent many workers from getting into jobs and business opportunities that they might otherwise take advantage of," Colvin told Yahoo Money. "This is very important to these potential rules that would really affect the workforce."
Such licensing puts a particular burden on military spouses, one in three of whom works in a licensed field and moves every few years, according to the Department of Defense.
(Photo: Getty Creative)
The executive order also calls on the FTC and the Department of Justice to strengthen the guidelines to prevent employers from sharing wage and performance information with one another in order to lower wages.
The current guidelines enable third parties to provide employers with wage data without being subject to an antitrust review. However, workers are not entitled to know how their pay compares to other workers with similar experience and skills, important information that could help them negotiate better wages.
"As a package, it is clearly a coordinated effort to try to shift the functions of the labor market to give workers more power," said Colvin. "It is clearly a wage-based growth agenda that the government is trying to drive forward here."
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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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