Marketplace - American Public Media
Roughly a third of college students transfer within six years, but their credits don't always follow them, according to a report by the Department of Education.Among students who started college in 2003, how many transferred no credits?
Come January, Republicans will control both houses of Congress. Still, the new Congress and the White House might find common ground in a key area that could affect businesses and the labor market.
These cover everything from intellectual property to tariffs, and much, much more.
A GOP controlled Senate could help those deals. Remember, trade deals have proved tricky for Democrats, especially when labor issues are involved.
“The Republican Party, for most of its history, was the protectionist party,” says professor Allan Lichtman of American University. “But for the last 30 or 40 years it switched and become a strongly free trade party. So I think the winds of free trade will be blowing from a Republican Senate.”
Now, Republicans aren’t homogenous on trade issues.
There is, however, an important way a Republican controlled Senate can help Obama with his trade goals.
It’s something called TPA, or Trade Promotion Authority. It’s also known as “fast-track” authority. It’s something Congress has to vote on.
TPA would help the Administration both negotiate and pass trade deals. That’s because, with fast-track in place, lawmakers can only take an up or down vote on a trade pact, without amendments.
Senate Majority Leader Harry Reid did not support such a bill. However, the new expected Senate Majority leader, Republican Mitch McConnell, has said he wants it.
How the outcome of the elections plays into the current state of the economy. Plus, a preview of the jobs number for October, and which statistics are looking better than others.
It was a little more than a year ago, in October 2013, that a showdown between the President and Congress led to a government shutdown, after missing the deadline to pass a new bill to fund the government.
Now, even though Congress is in a lame-duck session, there is still work to do, including another government funding bill.
“The single most important, must-pass bill for the lame-duck Congress to finish is a spending bill for the federal government,” says Sarah Binder, a senior fellow at the Brookings Institution.
That bill could either be a continuing resolution that funds government for a while longer—the current C.R., as it's known, expires at the end of the day on December 11—or it could fund the government through September 2015.
Binder thinks it will be the latter.
“My sense is that Republican leaders in particular, and I think Democratic leaders, really want to put the omnibus bill—wrapping up all these spending bills—they really want to put it to rest in December, so that they can start from a clean slate come January,” says Binder.
But, James A. Thurber, director of the Center for Congressional and Presidential Studies at American University, isn’t so sure. He says a shorter-term funding bill is more likely.
“They have very little time, so I suspect that they’ll just move it into the next year,” says Thurber. “And within that bill there will be discussion of whether we should support the war effort against ISIS.”
In addition to the government funding bill, Thurber and Binder agree Congress will have to address defense spending issues before the end of the year. The House has passed a bill to fund the defense department in 2015, but the Senate hasn’t yet, and is likely to work toward that goal.
With only a few weeks left, lawmakers will also face the end-of-year expiration of 128 tax incentives, such as the mortgage interest tax deduction and the R&D tax credit for business.
We’re thinking about how money is spent on runoffs, but we should be looking at a different part of the fundraising process. So says Lawrence Norden, Deputy Director for the Brennan Center for Justice at NYU Law School.
"Whether or not money is spent differently, it’s going to be raised differently," he says.
Because of Supreme Court decisions like Citizens United, there’s been a dramatic increase in what Norden calls 'outside money.'
“[Money] that’s not coming from the candidates, that’s not coming from the parties, that’s coming from outside groups," he says. "That means Super PACs, that means these new dark money groups, 501(C)(4)s. They’re spending an extraordinary amount, often times more than the candidates themselves are spending."
But, while everyone wants to get voters out, doing it an additional time, "that’s going to take additional resources,” says Tracy Sturdivant, co-founder of the Make it Work Campaign, a non profit that works to creates economic security for women.
At least, notes Sturdivant, runoffs have one bright side. For organizations, trying to get voters to the polls also means a chance to recalibrate.
"They’re going to take what they learned and put more resources towards the activities that actually did encourage voters to turn out the first time,” she says.
But even so, voter fatigue can make runoffs tough — for all parties involved.
One of the first steps in the fight against Ebola is to increase communication throughout the region. The Ebola phone does just that.
The phone, which looks much like your typical office device, has been distributed across threatened regions in an effort to get first line responders connected to epidemiologists and isolation centers.
The point of this communication is to share information and data, but one of the problems that comes up when storing data in clinics treating Ebola patients is that everything that goes into the clinic is destroyed, which makes keeping a diary or a hard drive to share with others is impossible.
For this reason, among many others, the CDC has launched an online platform called Epi Info which allows clinics to log all the information they're getting about Ebola in the field to this central software. Clinics treating Ebola patients have iPad's where the information is logged and shared with others to continue fighting this vicious disease.
Colin Baker is a journalist based in Bamako, Mali's capital city. He joined us to talk about the other high tech solutions being used to share important medical data.
Click the media player above to hear Colin Baker in conversation with Marketplace Tech host Ben Johnson.
Deadmau5 makes dance music. But he also sells hats, pint glasses, t-shirts—all featuring the eerie, circles-for-ears cartoon "mau5head" that is his symbol.
"He's in gaming and mobile apps and music and producing and imaging and movies," says his attorney, Dina LaPolt. "He's in every space imaginable."
Under U.S. law, the use of his "mau5head" on all this merchandise has trademark protection, just by existing. But last summer Deadmau5—real name Joel Zimmerman—applied for something stronger: trademark registration.
The implications of registration are significant but limited. "It's a little bit easier and cheaper to sue others," says Jeremy Sheff, law professor at St. John's.
“There are various side tweaks in the process that a registration is helpful for,” says Rebecca Tushnet, law professor at Georgetown.
The legal costs, on the other hand, were clear.
"We always knew Disney would oppose it because that’s what Disney does," says LaPolt.
Disney is notoriously protective of its intellectual property, especially when it comes to Mickey Mouse. To pick a trivial example, in 1981, Disney successfully got a bar in Colonie, NY called "Mickey's Mousetrap" to change its name, even though it was owned by two men named Mickey.
"We're giving in,'' Mickey Colarusso told the New York Times, ''because we don't have the time or money to battle an organization as big as Disney."
In part, this may be because you need to exercise trademark rights in order to retain them. "Trademark owners often feel they need to take symbolic actions," says Tushnet.
But despite the certainty that it would bring about a battle with Disney, LaPolt strategized to apply for registration. "I like to change things and battle people," she says. "That’s why I’m a lawyer."
Disney did file to block Deadmau5's registration, arguing that despite the creepy grin and vacant eyes, the "mau5head," with its round head and round ears, "so resembles Disney's prior use and registered Disney's Mouse Ears Marks" as to be likely "to cause confusion, or to cause mistake, or to deceive."
"There are a number of thing that’ll confuse people," says Jack Jacoby, professor of marketing at NYU's Stern School of Business who says he is involved in 30 or 40 trademark disputes per year.
In the case of Disney vs. Deadmau5, Jacoby says the confusion case boils down to what’s in the mind of the person who picks a mau5head t-shirt off the rack-and whether they'll think the Deadmau5 item was made by, affiliated with or allowed by Disney.
"Disney’s saying 'Wait, people may think that this comes from us,'" says Jacoby.
Outside a mall in Queens, New York, I put this to the test by showing a picture of a Deadmau5 shirt to various fans of electronic music.
Among his fans, everyone knew the symbol immediately, and had no confusion about Disney's involvement.
Jacoby wrote, or at least edited, the book on doing more scientific versions of these surveys for the American Bar Association, and says such a survey could help Deadmau5 if Disney sued for infringement. But although the current battle over registration rights at the Patent and Trademark Office concerns the same questions—Does the use of the Deadmau5 mark cause "confusion" of Disney's mouse ears mark—it won't admit this kind of survey.
"Most of the action is in the federal courts. And the federal courts, they want you to simulate reality as closely as possible," says Jacoby. "But the PTO only wants to look at the mark in isolation. So the silhouette, in this case, of the ears."
This lack of real-world context could hurt Deadmau5's chances. The choice to take on Disney anyways could be to seek a settlement or for PR—Deadmau5 has been known for publicity stunts in the past. Or it could be sheer stubbornness.
"Sometimes people get very committed to their symbols, almost like their children," says Tushnet.
The Patent and Trademark Office wouldn’t comment on timing, but observers say a decision from the PTO on these warring parents could take years.
On Tuesday, voters in four states decided whether to raise the minimum wage starting in 2015.
Voters in Alaska, Arkansas, Nebraska and South Dakota all decided to approve the increases. Illinois voters approved a non-binding ballot initiative to raise the state's minimum wage.
The measure in Illinois was placed on the ballot by that state's legislature, while the measures in the other states were added by citizen initiatives. A number of other states, including New York, Massachusetts and West Virginia, are also set to increase their minimum wages in 2015, in accordance with previous legislation.
When states put minimum wage increases on the ballot, voters tend to be supportive. But voters this week also flipped the balance of Congress in favor of Republicans, many of whom say they don’t want to raise the minimum wage.
“Don’t ever make assumption that voters are consistent in the way they think,” says Jeffrey Berry, a professor of political science of Tufts University. “When you go into the ballot booth, and cast your vote, there’s here’s no sign that says, ‘You’re required to be consistent in the way you vote. Please proceed.’”
He says voters who supported the increase in minimum wage may still have wanted to convey a desire for change in Washington – the two messages don’t have to be mutually exclusive.
But the popular support for these increases likely won’t push Republicans to embrace raising the federal minimum wage, says Berry, because that’d be too big a win for President Obama.
“That’s the last thing this new Congress wants to do,” he says.
While the state-by-state approach feels chaotic, it also kind of works.
“You might say that it makes more sense to have a $10 minimum in California and a $7.25 minimum in Mississippi than to have a $9 minimum in both,” says David Neumark, a professor of economics and the director of the Center for Economics & Public Policy at the University of California, Irvine. He notes that outliers like Seattle and San Francisco which have voted for $15 per hour minimum wage are the exception.
Even before these elections, nearly two dozen states – plus District of Columbia – had set their minimum wages above the federal level.
Oil prices are down a whopping 28 percent since mid-June. That’s great if you’re a consumer, not so much if you’re a driller.
During the boom, drillers that fracked for what’s called shale oil spent more money than they brought in. And they made up the gap by borrowing. Which was fine when oil sold for a high price.
Now, crude is down. Earnings are down. And lenders are fidgety.
“Many of the bankers, they’re very, very concerned about their loans to companies that are exclusively into shale formations,” says Ed Hirs of oil and gas firm Hillhouse Resources. He also teaches economics at the University of Houston. “These companies may not have the management expertise or the technical expertise to continue production and pay off these loans.”
And oil companies can be credit risks. Standard & Poor’s rates three out of four energy firms below investment grade.
The big question for lenders and investors is: how long will low prices persist?
“If oil were $80 for the next year or go even lower, cash flow is lower,” says James Burkhard, head of oil market research at IHS CERA. “And external finance would be probably lower as well, or more expensive.”
Of course, all oil companies are not the same. Those mostly in fracking in the more expensive formations are most at risk. More diversified companies and those invested in lower-cost conventional wells are less exposed. And if prices surprise analysts and rise quickly, the debt issue becomes less crucial.
For now, though, analysts and credit analysts are revising their expectations in a hurry, and fortunes are changing quickly in the oil patch. It’s nothing new.
“Look, having grown up here and seen what’s happened in this Oklahoma, Texas area, I’ve seen the booms and busts,” says Jake Dollarhide, co-founder and CEO of Longbow Asset Management in Tulsa. “I’ve seen companies go underneath overnight. Most of the time it was a two-headed monster: lower commodity prices, high debt. That’s a dangerous and scary scenario. And oftentimes it’s a recipe for insolvency."
Falling gas prices have given American consumers some extra pocket money. So, how are we celebrating? According to one economist, we tend to blow some of it at Starbucks— which - bonus! - means more jobs for baristas.
And it appears that some of us run out and buy trucks and SUVs. New automobile sales reports are out, and Chrysler’s Jeep line and Ram pickup trucks had a great month.
We wondered: Doesn't that seem like kind of a big spend for an impulse buy? Do people really just decide to go for it when gas prices drop?
"Yeah, that's definitely the case," says Jessica Caldwell, an analyst with the car-shopping site Edmunds.com. She thinks some of today's SUV buyers may be people who ditched their gas guzzlers in 2008, when the economy tanked and gas prices spiked.
"They traded into something smaller, they didn’t like it, and they want to go back," she says. "And now that gas prices are low, it gives them that push — or even that excuse — to say, ‘I’m going to have something bigger.’"
So, yes: Car buyers are sensitive to gas prices, and they've got a hair trigger.
And: People often do not do the math on fuel economy. Tom Turrentine, from the University of California at Davis Energy Efficiency Center, interviewed people from 60 households about this very question. He and his colleagues picked bankers, college professors — people he thought would be good at math.
"Nobody knew how much they spent on fuel in a year," he says. "People don't keep track of it." When he asked, they looked confused.
There was one exception: A guy who built a spreadsheet to figure out the best car for him. The spreadsheet told him to buy a used Honda Civic.
But he wanted a new Ford Escape, and that's what he bought. "Despite making all the rational calculations, he went with his heart," says Turrentine.
So — whether we never look at the data, or maybe just ignore it — are we making dumb financial decisions?
Remember, this could work in either direction. When gas prices go up, people don’t just buy more fuel-efficient cars, they pay more for them. MIT energy economist Christopher Knittel wondered: Are they overpaying?
Answer: Nope. "What we find is that consumers more or less get it right," he says.
Even without a spreadsheet, the average consumer didn’t pay so much for a Prius that the price increase was more than they could expect to save on gas.
So: Yes, we’re a little impulsive. But we’re not dumb.
The Internet browsing history of more than 100 million Verizon and AT&T smartphone customers has been made trackable.
That's the upshot of the recent revelation that both companies have been running advertising programs that use "supercookies" that can't be evaded by any of the means available for ordinary cookies.
But to understand these "supercookies," it's helpful to start with the old-fashioned kind.
"For nearly twenty years now, the cookie has become the standard way to track people online, for better or worse" says Jacob Hoffman-Andrews, the senior staff technologist at the Electronic Frontier Foundation who first brought attention to the Verizon program.
"The metaphor I use when I teach is I say a cookie is like a name tag," he says.
Browsing a website is like entering a room and being handed a name tag. It might have a fake name or a series of digits written on it, but it's an identifying label that everyone in the room--each of the many entities that serve content on a given webpage--can see. If you leave it on, anyone watching--and there are many companies watching--can see where you go.
"But you also have the option to take off that name tag," says Hoffman-Andrews. "When you clear cookies in your browser that's like ripping off all your name tags."
"On mobile we don’t have the cookie," says Jenny Wise, mobile marketing analyst at Forrester. "And so the industry is sort of cobbling together all these different solutions."
Advertisers want to track users and target ads on the mobile Internet, and across multiple devices.
"That’s sort of the holy grail for advertisers," says Wise. "And ad tech is on the case."
Those solutions range from GPS data to Facebook log-ins to device ID numbers--but it's much more fragmented than following a single cookie. And Wise says most of them are opt-out. "That's one of the key things that Verizon and AT&T are running into," says Wise.
"Supercookie" is a generic term, which can refer to any of a number of ways of getting around the limitations of cookies. But Verizon and AT&T's version aren't easily evaded--in fact it's very difficult to tell that the tracking code is being applied in the first place.
Referring to Verizon's program, Hoffman-Andrews says: "The [supercookie] is inserted after it leaves your phone, so there’s nothing you could do on the phone to detect that it’s going on."
In Verizon's case, while users can opt out of the advertising program that makes use of the data Verizon collects, the company has said that there is no opting out of the supercookie itself, which security researchers say can be easily used by third parties.
"One possible analogy that comes to mind here is a license plate," says security researcher Jonathan Mayer. "It's a lot like throwing a license plate on your web browser. And Verizon's position is 'Hey we're the DMV, if anyone wants information about someone with that website they have to come to us.'"
"But that doesn't mean you can't follow a license plate around," he says.
"That’s a very good metaphor, but so much of our intellectual and political life takes place on the Internet now, it would amount to a license plate for your brain," says the EFF's Hoffman-Andrews. "Every question you have, every news article you read would be attached to this one identity."
Verizon says those "license plates" are changed "frequently," and that that their supercookies don't "provide any information beyond what [ad tech entities that have a presence on many websites] have by virtue of [other permanent and longer-term identifiers... already widely available] and other already existing IDs."
"What Verizon and AT&T are doing--and why they might have the leg up here, if there's no backlash from privacy concerns-- is that their network goes across devices," says Forrester's Wise. "So not only do you know what I'm doing when I use my mobile phone, I'm also using that same network when I'm on my tablet, or when I'm on my TV."
"That opens up the door."
For more "targeting" or more "tracking," depending on your perspective.
Let's take a moment to put the midterm elections in context:$3.67 billion
That's how much we spent on the House and Senate midterm elections, according to the Center for Responsive Politics.$59.9 billion
That's how much we spent on beer last year according to the Bureau of Economic Analysis.
At least we know where our priorities stand. Now would someone pass me a beer?
Polls show Americans are still worried about the economy, but it hasn't really been present in this year's midterm campaigns. As with any time economic matters comes up in a race, there's the economic reason and the political one.
"Democrats have been reluctant to tie themselves to President Obama and his policies," says David Gura, Marketplace reporter based in Washington, D.C.
But the real, that is, economic reason? The U.S. economy is doing better, with lower unemployment, steady growth, lower gas prices, and other metrics that show overall improvement. Voters for whom the economy trumped all last election, can now focus on foreign policy or social issues, and candidates who excel in those areas are playing to their strengths.
And yet, as we've been reporting through our series, Your Economy, many Americans don't feel overall economic improvement in their daily lives.
"While unemployment has gone down, real income hasn't gone up," Gura says.
That's why for many voters, it feels like the economy is stuck in place.
It's Election Day in the U.S., and the biggest influence on midterm elections might not be the last-minute surge of super PAC money or robo-calls, but how voters think the economy is doing.
In tight, state-level races, we've seen candidates on both sides trying to steer the narrative of economic recovery. The New York Times' Upshot took a deep dive, showing that while there's decent evidence to suggest that the state of the economy influences presidential elections, midterms are all about perspective. And that perspective is historically very, very partisan.
FiveThirtyEight gives the Republicans a 76 percent chance of winning the senate Tuesday.
Here's a Google Maps-powered tool for finding your polling place. And as we wait for final results, here are some other numbers we're watching:$40-50 billion
Xiaomi's valuation in an upcoming round of fundraising, according to Bloomberg. The world's third-largest smartphone maker was valued at $10 billion in its last round of financing in August 2013. Xiaomi has seen huge growth in the past year, and just announced it will invest $1 billion in developing online video for its smart TVs.$9.2 billion
That's last year's estimated market for cloud computing. It's expected to grow to $42 billion by 2018. This huge emerging market is the latest battleground in the growing rivalry between Amazon and Google. The former leads in the space, the Wall Street Journal reported, but Google is expected to re-up its cloud offerings soon to try and slow Amazon's rapid growth.50,000
The number of new drivers Uber claims to hire every month, and the number of veterans the car service seeks to hire under its UberMILITARY initiative. The plan has support from the Department of Defense and former military officials, but an investigation by the Verge found that the initiative might be a raw deal for veterans.
Several UberMILITARY "partners" have said they don't make nearly as much as they were promised thanks to expenses and inconsistent pricing structures. Others have noted Uber's propensity to fire low-rated drivers at the drop of a hat: One Navy vet and single mother of seven said she's put up with sexual harassment from passengers in order to keep her driver rating high.
The price of crude oil, which had been sinking this fall, took another downward turn today.
Oil producers can choose to pump more or less oil, of course. They can also adjust prices. That’s what the world’s largest oil exporter did yesterday when Saudi Arabia cut prices for crude sold to U.S. customers.
Saudi Arabia is facing heavy competition from producers in the U.S. and nearby Latin America, according to oil strategist Julian Lee with Bloomberg First Word.
“I think the Saudis have cut crude prices to the U.S. in order to keep their oil competitive,” he says.
Lee says Saudi Arabia wants to retain a stable market share in the U.S.
Energy market analyst Sarah Emerson with ESAI warns against reading too much into yesterday’s price adjustment. Still, she thinks Saudi Arabia is trying to settle on a price per barrel that other members of the Organization of the Petroleum Exporting Countries can support when OPEC meets later this month.
“Saudi Arabia does not necessarily want to defend the price at $100 or $110,” she says. “But defending a price at $85 or $80 makes much more sense.”
Julian Lee says OPEC countries will review their production policy at the forthcoming meeting. There, he says, they could decide whether to cut production to shore up prices, or let prices fall further to choke off growth in North American production.
The share of Americans with bachelor’s degrees is on the rise, according to the Census Bureau.How many American adults have earned a bachelor’s degree or higher?
As you were brushing your teeth this morning, crude oil prices were falling nearly 2 percent. Some of this is an announcement that Saudi Arabia, that huge producer of oil, is cutting prices to U.S. customers. More on that. And a year ago, tech CEO Michael Dell paid almost $25 billion for a computer maker … called Dell. He bought enough shares to take the company private, meaning no quarterly earnings reports. Today, at the Dell World conference in Austin, he'll show off his renovations in progress. Plus, America's funeral parlors bring in an estimated $20 billion a year in the U.S. But the industry is changing.
Living life for a week without using a credit card or cash may seem impossible, but with a number of mobile payment options now available, Lisa Selin Davis decided to give it a shot.
In the process, she discovered how feasible (or not) paying exclusively with mobile payments has become, and which stores are most equipped to handle mobile payments. Spoiler alert: Selin Davis found herself mostly at retail giants.
To hear how Selin Davis' week of mobile payments went down, click on the media player above.
The funeral, or “death-care” industry, brings in an estimated $20 billion a year in the U.S., but the industry is changing. There’s been a shift towards chain funeral homes, and more people are choosing cremation. In some U.S. cities, that has black-owned funeral homes particularly worried about staying above ground.
Bowman and Young Funeral Home on the west side of Dayton is straight out of the year it was built, 1963: low ceilings, retro colors. Dwayne Bickham has been working here since he was 17 years old in 1979. He says the area was thriving when he was a kid.
“People in this community had jobs, we had Frigidaire, we had Inland,” he says. Now those factories are long-gone, and a lot of people have left the neighborhood, too.
“The children and grandchildren don’t live in Dayton,” says funeral director Keith Young.Lewis Wallace/WYSO
These days, the people shopping for a funeral service could live hundreds of miles away; they’re literally phoning it in from California or Florida or just the suburbs. Or, they’re going online instead of calling the local funeral home they grew up with.
Enter the competition: funeral home chains, which went through a big boom and a spate of buy-outs in the 1990's, and now seem to be resurgent. They’ve got the internet on lock, and TV ads in prime spots. One chain runs ads in Ohio depicting it as family-owned despite the fact that the owners live in Kansas and have chains across Ohio, including several in Dayton.
Meanwhile, black undertakers are in decline: in one survey of mortician schools, the percentage of black students went from 27 percent seven years ago to just 15 percent in 2014. As the demographics and populations of black neighborhoods have changed, funeral directors have been struggling to adapt.
“They have had to either relocate their business to where some of their clientele has moved, or re-market their business to immigrant families,” says Suzanne Smith, a professor at George Mason University and author of “To Serve the Living: Funeral Directors and the African American Way of Death.”
Young says he’s cut prices and tried to have more of a web presence in response to the competition. And he and some local ministers are trying to convince people to stick with the neighborhood undertaker on principle. He says some of his clients have been surprised by the final price tag at the chains across town.
“People get over there and find out that it’s not what they said it was gonna be. And they come back to the west side of Dayton,” he says. “They come back home.”
African-American funerals are often called homegoings, and Young says he hopes the next generation will keep coming back home for their funerals.
If you’re a CEO or a senior manager, you may have signed a non-compete agreement, which would limit or restrict your ability to work at a competing company for a pre-determined period of time after leaving your job.
But in the last couple of decades, an increasing number of American workers are being asked to sign such deals, including service-sector and low-wage employees.
“We’ve seen them expand to jobs like yoga instructors and camp counselors,” says Orly Lobel, a professor at the University of San Diego School of Law and author of the book “Talent Wants To Be Free,” which addresses the subject.
Take the case of Danny Davies, who worked at a Jimmy John’s sandwich shop. He says when he got hired, he was required to sign a non-compete agreement that limited his ability to work at any other sandwich restaurant.
“They ask everyone to sign it when you get hired,” says Davies, who hasn’t worked at Jimmy Johns since February 2014. And while neither Davies nor his colleagues initially took the agreements seriously, Davies says their views changed once they considered leaving the sandwich shop and finding a job elsewhere.
"I’ve known people that have done this: they start working somewhere…And keep this job secret, just in case,” says Davies, alluding to the concern that the franchise owner of the sandwich shop might pursue legal action against them.
There have been several stories of employees who have been restricted from taking other jobs because of non-compete agreements—from a children’s camp counselor to a physicist. Jimmy John’s is currently facing a class-action lawsuit over its non-compete agreements.
One of the rationales for requiring the non-competes from lower-wage workers is that they may have received a lot of training in their jobs, and if they leave to work at a competing company, that may be an unfair advantage. But Lobel says non-compete agreements have spread beyond even that thinking.
"I teach cases about welders who receive so little training, but they still can’t move to a competitor,” says Lobel.
Lobel says part of the reason for the expansion of these agreements is a shift in business culture. “Today, it’s really human capital that is what creates value," Lobel says. "And companies have this impulse that the way they’re going to keep people is by cutting off their outside opportunities.”
“Non-compete law is essentially state law, and it varies somewhat significantly among states,” says Michael Rosen, a partner at the Boston law firm Foley Hoag LLP.
Rosen specializes in non-compete agreements in Massachusetts, which has a relatively permissive non-compete law. Meanwhile, California is one of the most restrictive states. It does not recognize the agreements except for owners of businesses. In the summer of 2014, Massachusetts’ state legislature considered amending non-compete rules, but the initiative failed.
Rosen says there is a place for non-compete agreements in business even for low-level workers, such as those at a high-tech firm with access to confidential code.
“Generally, the legitimate interests that would justify enforcement are…protection of trade secrets or confidential information, and protection of good will,” Rosen says. “But in terms of low-skill areas where confidential information and good will are really not in jeopardy, I think it’s difficult to justify asking folks to sign a non-compete."