Maloney Asks JEC Chairman Paulsen to Hold a Hearing on Labor Mobility

Jun 12, 2018
Press Release

WASHINGTON, DC – Today, Congresswoman Carolyn B. Maloney (D-NY) requested that the chairman of the Joint Economic Committee hold a hearing on labor mobility, an issue that affects wages and economic growth. Rep. Maloney, the Senior House Democrat on the committee, has repeatedly expressed concern with the fact that wages for many Americans have stagnated in recent decades. She also has sought to investigate the reasons for the relatively slow percentage growth in the Gross National Product.

“When Americans cannot easily move to a better paying job because of fear of reprisal or other consequences, for example losing their health benefits, they have less power to negotiate for higher pay. These hardworking Americans also are increasingly constrained by non-compete clauses and non-disclosure agreements they are forced to sign, limiting their ability to take a better-paying job with a competitor. This is unacceptable and clearly hurts Americans who are trying to make a living and provide for their families. The JEC needs to have a hearing to investigate these important issues,” said Rep. Maloney.

The full text of Rep. Maloney’s letter can be found below and a PDF here.

Dear Chairman Paulsen,

I am writing to request a hearing of the U.S. Congress Joint Economic Committee on the issue of labor mobility and its effect on wages, productivity, innovation and economic growth.

The efficient use of resources is one of the keys to a productive economy. This is as true for labor as for capital. When American workers have the freedom to move from one job to another in which their skills are more highly valued, they can increase their earnings. And if millions of Americans are prevented from using their skills effectively the economy suffers.

Most research on labor mobility has focused on the transportability of health care and retirement benefits. When Americans fear losing these benefits, they remain in jobs that pay them less than they are worth – they experience “job lock.”  They are also less likely to start new businesses.

But restrictions on labor mobility can also be the result of deliberate efforts by employers. Many companies try to protect their intellectual property and their workforce through non-compete clauses, non-disclosure agreements and non-poaching agreements. This limits the ability of employees to negotiate for better salaries.  In the high-tech sector, some workers who leave their jobs are forced to temporarily leave their fields. This may hurt their future earning power and it wastes their productive potential.

Anti-competitive contracts also inhibit the free mixing of ideas and talent, so-called “knowledge spillovers,” that have been a driving force of technical innovation. Research suggests that the fact that California does not enforce non-compete contracts is partly responsible for its vibrant tech sector.  Parts of the country that enforce non-compete contracts have suffered from “brain drain” and lost productivity.

Until recently, it was assumed that anti-competitive measures are used almost exclusively by high-tech firms However, recent reporting reveals that they affect a much wider range of employees, including fund managers, journalists, janitors and fast food workers.  It is estimated that approximately one in five Americans are bound by anti-competitive labor agreements.

The issue of labor mobility is a nonpartisan one. Members of both parties agree on the need to support the conditions necessary for American workers to maximize their earning potential, for the United States to remain a world leader in innovation and for boosting productivity. The issue of labor mobility also provides a lens through which to study healthcare, retirement security and other issues.

Labor mobility lies at the intersection of freedom and efficiency. Just as companies should be free to seek the highest price for their products, American workers should be free to seek the highest wages for their talents and hard work. The question of how to best safeguard that freedom deserves the attention of Members of the Joint Economic Committee.

Thank you for your consideration of my request.