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“The central issue is we’re developing into a plutocracy. We’ve got an enormous number of enormously rich people that have convinced themselves that they’re rich because they’re smart and constructive.” - See who said it and why it matters at the bottom.
Illustration: Sarah Grillo/Axios
Nearly half of U.S. companies have required at least some of their employees to sign noncompete agreements, a study released today from the Economic Policy Institute finds.
Why it matters: The agreements force workers to sign away their right to take jobs in similar fields, often for months after leaving a job. These are increasing income inequality and helping hold down Americans' wages, EPI analysts say.
What they're saying: “Noncompetes limit competition among businesses and stifle workers’ wage growth — given that changing jobs is where workers often get a raise," says study co-author Alexander J.S. Colvin, a Cornell University professor.
By the numbers: The study estimates that somewhere between 36 million and 60 million private sector workers in the U.S. have signed noncompete agreements, with 49.4% of businesses surveyed saying that at least some workers were forced to sign them.
Between the lines: The clauses were first introduced as a way to prevent upper-level employees from taking trade secrets to rival businesses, but have since proliferated to low-wage and low-skill workers.
The intrigue: A similar study in 2014 found that just 18% of workers had noncompete agreements, compared to roughly 28%–47% of private-sector workers in 2017, a two-to-threefold increase.
Of note: Data was collected March to July 2017 from 1,530 establishments with 634 complete answers, yielding a 95% confidence interval for top-line estimates of ±3.9 percentage points. More details here.
Noncompete agreements are widely used nationwide, EPI notes in its study, with more than 40% of businesses in each of the 12 largest states having at least some employees covered under the agreements.
What they're saying: "As employers increasingly use restrictive contracts like noncompetes and mandatory arbitration to undermine workers’ rights, there is an urgent need for stronger worker protections, including prohibiting noncompete agreements," says study co-author Heidi Shierholz, a senior economist and EPI's director of policy.
Top trade officials from the U.S., Mexico and Canada are expected to meet in Mexico City today to sign the U.S.-Mexico-Canada free trade agreement that will replace NAFTA. (Politico)
Tiger Global, one of the earliest investors in Juul, has cut its valuation of the e-cigarette maker to $19 billion — half of what it valued the company at in December. (WSJ)
Amazon has filed a complaint in federal court against President Trump, saying he “launched repeated public and behind-the-scenes attacks" to steer a $10 billion contract away from "his perceived political enemy" Jeff Bezos and toward Microsoft. (Axios)
Paul Volcker. Photo: Monica Schipper/Getty Images
Former Fed chair Paul Volcker died Sunday at 92 years old, it was announced yesterday. It reminded me of comments current Fed chair Jerome Powell made about him at the National Association for Business Economics conference in October.
The big picture: Volcker is best known for having the will to drive the U.S. into a recession in order to battle inflation, which he called "the cruelest tax" because of the pernicious way it could hurt the nation's poor and elderly.
Background: Powell said he first met Volcker when he was an assistant at the Treasury Department in the early 1990s and that Volcker, despite Powell's then-minimal profile, "couldn’t have been nicer and more interested in helping me and supporting me. He was a great person to know."
Where it stands: After being named Fed chair, Powell was seen numerous times with Volcker's memoir, “Keeping at It: The Quest for Sound Money and Good Government.”
Since falling to its weakest level in more than three decades against the dollar on Sept. 3, the British pound has been on a tear. It has risen by nearly 10% to its strongest level against the dollar since May and its highest against the euro since May 2017.
What's happening: Currency traders are shaking off fears of a no-deal Brexit.
Yes, but: As the election draws near, traders have lost their nerve and the currency has been little moved since closing above $1.31 on Dec. 4.
It has been a particularly good year for American banks. Despite historically low interest rates, which theoretically eat into their profits, the sector has enjoyed significant share appreciation.
By the numbers: 75 of the world’s largest 100 banks by market cap have seen an increase in their stock price in 2019, according to a new report from GlobalData.
Between the lines: When it comes to assets held, American banks have ceded global leadership to China, which is home to the four largest banks by assets — Industrial & Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China.
It's been a rough year for active managers. In fact, it's been the worst year since 2016.
Where it stands: "With just a month left in 2019, only 31% of large cap active funds are ahead of their Russell 1000 benchmarks, even after a solid November when 47% of managers outperformed," according to Bank of America Merrill Lynch's latest active manager holdings report.