Want a Raise? Quit Your Job

The FTC just banned noncompete agreements

Last week, some big news went largely (and unsurprisingly) ignored by mainstream media. That’s because it involved something that people on both sides of the aisle agree with. 

And these days, it seems that if the media can’t spin it in a way that further divides Americans … it’s not worthy of the news cycle. 

But the FTC has banned nearly all noncompete agreements between employers and employees. 

Why’s this such a big deal? 

The average American raise is 3%, and in the event that you haven’t seen a headline since 2020, that’s being far outpaced by inflation … meaning the typical annual merit increase (if you’re lucky enough to receive one) is incapable of keeping pace with cost-of-living increases. 

And while noncompetes were often put in place to protect workplace secrets, the reality is that they stripped Americans of their economic liberty. 

In short, workers who signed noncompetes — which date back to 1414 and English common law — have been precluded from exploring better opportunities within the industries they work.  

That’s about to change, though, thanks to the FTC, which claims that the policy adjustment could lead to increased wages totaling nearly $300 billion per year by encouraging people to change jobs. 

Workplace Loyalty Is Dead

Ever hear a manager compare your company to “family?” Red flag. It’s an insincerely deployed phrase to curry favor with workers and seed loyalty they’re no longer worthy of. 

They’re not family. And if they were, they’d be the ones you hesitate to invite to the reunion. 

While some people establish lasting relationships with coworkers, the implicit employment contract is black and white: You sell your labor to an employer for compensation.

Period.

And with diminishing perks over the last few decades, the basis of the employer-employee relationship is clearer than ever. 

As we discussed in a retirement-focused issue last year, companies began moving away from pensions and toward defined contribution plans in the late ‘70s and early ‘80s. 

Simultaneously, productivity gains began to significantly outpace earnings, which — when adjusted for inflation — have remained mostly flat for the past 40 years. 

So, employers are:

·       Paying stagnated wages.

·       Enjoying productivity gains.

·       And savings millions by contributing a fraction of what they once did toward retirement plans. 

The result? For workers aged 35–54, average workplace tenure has fallen by 9.5% since 2012. However, those numbers would likely be exacerbated if not for the power of noncompete agreements many employees are forced to sign.   

Employers no longer deserve your loyalty. And that figure will continue falling as workers — now unencumbered by noncompete clauses — are free to explore better jobs with better pay. 

Job-Hoppers Make More $

That aforementioned 3% average pay raise pales in comparison to the compensation gains enjoyed by job-hoppers. A 2023 study cited by LinkedIn found that last year, job-hoppers averaged a 9% raise. 

Meanwhile, data from the U.S. Bureau of Labor Statistics shows that those who changed jobs were only paid less than those who stayed one year since 2000 amid the Great Recession: 

For clarification, we aren’t advocating for you to leave your current position. Job security is hard to come by in 2024, and despite the current administration’s noteworthy track record for job creation, workers need to evaluate the benefits of staying vs. going on an individual basis. But with unemployment remaining near 50-year lows, and increased competition likely to result from the FTC’s ban on noncompetes, now is as good of a time as any to explore how you can increase your take-home and better your financial wellbeing.