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Trump's Bogus 'Unitary Executive' Theory and the Dismantling of Democracy
We are a nation of laws, and we cannot be ruled by executive fiat.
Feb 20, 2025
President Donald Trump on Tuesday signed an executive order that purports to place independent regulatory agencies, such as the Federal Communications Commission and the Federal Trade Commission, under his direct control. Based on the so-called “unitary executive” theory, which claims that any congressional limits on presidential control of every lever of government power are unconstitutional, this action poses a grave threat to the rule of law and the separation of powers—cornerstones of our constitutional system.
This executive order states that the president is charged with ‘faithfully executing the laws.’ This is true. However, the laws of our nation include the existence of independent regulatory agencies, the power of Congress to appropriate funds and direct how they are spent, and protection for certain government employees and officers from arbitrary dismissal.
Executive orders are not the law—they are statements of policy, and memos from the president about how the Executive Branch conducts its internal affairs. By attempting to use executive orders to override actual laws—the kinds that are passed by Congress, not issued on a whim from the Resolute Desk—the Trump administration is effectively asserting that it stands above the law. Indeed, that it is the law. But the role of the executive branch is not to decide what the law is, or to pick and choose which ones it likes, but to carry out and enforce the law, as written. Donald Trump is a high-ranking government employee—not a king. If there are laws he does not like, he can work with Congress to change them.
Donald Trump is a high-ranking government employee—not a king.
A nebulous and broad understanding of the phrase ‘executive power’ cannot prevail over duly enacted statutes passed by Congress and signed into law by presidents of both parties, over the course of decades. The U.S. Constitution did not change its meaning when President Trump took office. That this ‘unitary executive’ theory has made its way from the fringes of academia to the halls of power, and that it has even been accepted by some credulous judges, does not mean that it is right. Many legal observers have pointed out the shoddy scholarship and selective history that underpins it. We are a nation of laws, and we cannot be ruled by executive fiat.
In the order, the Trump administration purports to seize for itself the power Congress delegated to independent regulatory agencies, and as written, declares the White House’s interpretation of the law as ‘authoritative,’ with no mention of the courts. Of course, the president is not, and never has been, the final arbiter of what is lawful. Lawyers working for the government owe their allegiance to the American people, not to President Donald J. Trump. The many government lawyers who have already resigned rather than follow illegal or unethical directives from Trump's appointed political operatives are an inspiration, despite how frightening a hollowed-out Department of Justice might seem.
As for independent regulatory agencies, in addition to being the law of the land, they are often good policy. While I have sometimes disagreed with decisions taken by the FCC or FTC, under both Republican and Democratic control, I understand the importance of expert agencies that are free from day-to-day political interference. The FCC’s control over broadcast licenses, and its unenviable role of coordinating spectrum use between different industries and other government agencies, among other things, means it should be free to try to come to the best answer – not the one with the loudest political support. This applies to enforcement activities as well. Under the Biden administration, for instance, the FTC frequently investigated politically powerful companies, to the ire of many prominent Democrats and Democratic donors.
While I have sometimes disagreed with decisions taken by the FCC or FTC, under both Republican and Democratic control, I understand the importance of expert agencies that are free from day-to-day political interference.
President Trump, like other presidents have done, is free to express his views as to what the agencies should prioritize, and to nominate like-minded commissioners as vacancies arise. But, as directed by Congress, and reflected in commissioners' protection from being fired due to policy or political differences with the president, such agencies must make the final call on policy decisions.
The notion that independent agencies are ‘unaccountable’ is, on its face, absurd. The president nominates all agency commissioners, including ones of the opposite party, and names the Chair from among them. Agencies regularly answer to Congress, which controls their budget, and enacts the statutes that spell out the limited scope of their authority. Independent agencies cannot issue regulations without following the strict guidelines of the Administrative Procedure Act, and their rules and enforcement actions are regularly challenged in the courts, and occasionally reversed by Congress.
The wisdom of having independent agencies and tenure protections for certain government officials has been confirmed in recent weeks by the disastrous and irresponsible actions of the lawless Trump administration. One president should not be able to nullify statutes passed into law by past presidents and past Congresses with the stroke of a sharpie. Congress must re-assert its central constitutional role. Further, one hopes that federal judges and Supreme Court justices who, in the past, have lent their support to an imperial vision of the presidency, can see where this is going and act to limit the ability of the president to subvert our democracy and constitutional order.
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This FTC Was the Most Effective in Decades Thanks to Lina Khan
Under her leadership, the Federal Trade Commission consistently delivered for consumers, lowering costs and creating a fairer, more honest, and more competitive economy.
Feb 04, 2025
The first few days of the Trump administration have made it abundantly clear that lowering costs for the American people is taking a back seat to empowering billionaires and weaponizing the government to wage right-wing culture wars.
As Chair Lina Khan leaves the Federal Trade Commission (FTC), I’d like to highlight what service to the American people looks like by highlighting the FTC’s accomplishments over the past four years under her leadership.
Over the last four years, the FTC has consistently delivered for consumers, lowering costs and creating a fairer, more honest, and more competitive economy. Under Chair Khan’s leadership, the FTC took strong actions to make prescription drugs and other health care more affordable, improve access to housing, protect workers, help small businesses, keep kids and teens safer online, protect childrens’ and all Americans’ data privacy, and tackle threats to consumers created by artificial intelligence.
I praise and applaud the spectacular work of the FTC under Chair Khan’s leadership and thank the dedicated staff of the agency for their exemplary service to the American people.
Under Chair Khan, the FTC banned hotels and sellers of sports and concert tickets from charging American consumers junk fees, saving consumers $11 billion over the next decade. They finalized a rule making it simple to "click to cancel," ensuring that consumers don’t get trapped into paying for subscriptions they can’t escape. The FTC also obtained $1.5 billion in consumer refunds over the past four years, ranging from tax preparation companies to corporate landlords. And they banned noncompete clauses to increase the average American worker’s wages by $524 a year.
Chair Khan and the rest of the FTC fervently protected the personal data of millions of Americans by aggressively policing the illegal collection, use, and sale of consumers’ sensitive data. They banned data brokers from selling consumers’ location data, stopped health apps from sharing consumer health data for advertising purposes, and limited companies’ ability to profit from kids’ personal data.
The FTC stood up to pharma’s attempts to unlawfully inflate the price of lifesaving medications including EpiPens and inhalers. Their work reduced out-of-pocket costs for inhalers from $500 to $35 and held three of the largest pharmacy benefit managers (PBMs) accountable for engaging in anticompetitive practices that inflated the cost of insulin.
I praise and applaud the spectacular work of the FTC under Chair Khan’s leadership and thank the dedicated staff of the agency for their exemplary service to the American people. Their commitment to battling corporate greed and protecting consumers should serve as an inspiring example to the new administration.
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Lina Khan Is Big Tech's Worst Nightmare—Here's Why She Should Stick Around
You know you’re making an impact when you’re challenging the status quo and ruffling feathers on both sides of the aisle. Regardless of Trump's arrival, she should stay at the FTC as long as she possibly can.
Dec 18, 2024
This month, the FTC opened an investigation into tech giant Microsoft, which some have called Federal Trade Commission Chair Lina Khan’s “last swing” at Big Tech before her term concludes. But if you think Khan is slowing down, think again. Pencils-down orders be damned, Khan is sprinting through the tape, continuing her fearless crusade to rein in Silicon Valley’s excesses.
But who says her term is over? There are no laws requiring an agency Chair to resign from her post—it’s tradition. While her term expired this fall, she can remain on the Commission until her replacement is confirmed. After President-elect Trump’s norm-shattering run for president, followed by an array of questionable cabinet appointments, why are Democrats so obsessed with tradition? During this transition, it feels like we’re playing checkers when we should be playing chess. Here’s where we start.
We need a warrior like her to continue this fight, and we hope she does.
Given the uncertainty about what’s ahead, we strongly encourage FTC Chair Lina Khan to remain on the Commission. By staying, she could prevent Republicans from gaining a majority for months and help ensure she remains a bulwark against any rollbacks to the FTC’s tough-on Big Tech approach. And if you listen to the rhetoric from Republicans and the president-elect himself, they would be lucky to have her.
Most consider it wildly out of the realm of possibility. They’ll say that the president-elect has already named FTC Commissioner Andrew Ferguson as Chair and nominated Mark Meador to fill Khan’s seat. Both have expressed concerns about market power, but will they be as aggressive?
They’ll point to Trump confidant and billionaire Elon Musk’s tweet that Khan “will be fired soon.” But that’s the beauty of an independent agency. Khan can’t be fired or forced to resign without cause. Does that matter to the incoming president-elect? Probably not, but the courts could be an important backstop. In the meantime, she can continue to serve until Mr. Meador is confirmed.
My question to the American public is this: why change the driver in the middle of the proverbial antitrust highway? During Khan’s tenure, the FTC has faced down tech giants like Amazon, Facebook, and Microsoft, banned almost all noncompetes, sued to prevent grocery heavyweight Kroger from acquiring Albertsons, and stopped Nvidia from attempting a bloated merger. Under her leadership, the FTC has investigated and sued more than three dozen merger proposals and racked up a long list of accomplishments.
This isn’t to suggest that Khan’s achievements are only popular on one side of the aisle.
Vice President-elect JD Vance has not been shy about his approval of Khan’s leadership, previously saying, “I look at Lina Khan as one of the few people in the Biden administration that I think is doing a pretty good job.” While pro-business conservatives have accused her of “overstepping,” those Republicans are out of touch with the voters who put the president-elect back in power. Even some liberals have called her a “dope.” But as the saying goes, you know you’re making an impact when you’re challenging the status quo and ruffling feathers on both sides of the aisle.
There’s a real threat that the new administration’s anti-Big Tech rhetoric from the campaign trail will fizzle out, and CEOs will work quickly to rebuild bridges with the president-elect. It’s rare for a new administration to alter the course of ongoing antitrust cases significantly. However, what could change significantly are the remedies the government seeks for companies found guilty. If you agree that the only remedy for companies like Apple and Google is to be broken up, we need Lina Khan to stay.
She deserves to finish the job she started. Her work has benefited consumers, competition, and the country at large. We need a warrior like her to continue this fight, and we hope she does.
Chair Khan, your move.
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Kamala Harris Should Embrace—and Build Upon—Biden’s Antitrust Legacy
Harris should reject the smear campaign against Khan’s FTC and commit to reappointing her as chair of the commission, signalling that under her administration, corporate lawbreakers would face the full force of the law.
Sep 06, 2024
U.S. Vice President Kamala Harris’ ascension to the top of the Democratic ticket hasn’t just shifted the 2024 electoral calculus—it’s also reignited the battle for the party’s ideological soul. Just as progressives have outlined their hopes for a Harris administration, so too have bad faith actors looking to turn back the clock on the most significant progressive achievement of the Biden era: the reinvigoration of antitrust enforcement.
The revival of anti-monopoly politics has been met with predictable ire from corporate interests that have got off scot-free for decades. This has been largely directed at Lina Khan, the Federal Trade Commission (FTC) chair who has taken on some of America’s most entrenched monopolies. Rather than accede to the demands of Silicon Valley and Wall Street billionaires, Harris should embrace—and entrench—the Biden administration’s antitrust efforts.
It goes without saying that progressives have the right to be disappointed with the legacy of the Biden administration in many respects. Whether one lays the blame on the White House or congressional math, many of the most promising initiatives pushed in 2021 never made it to law. However, the early Biden administration’s focus on reinvigorating antitrust enforcement is one that has paid dividends in the years that followed. The Reagan-era defanging of antitrust helped pave the way for the present-day monopoly crisis, which has left its mark on everything from the tech sector to the rental market to grocery shopping.
The FTC under Khan has taken aim at price gouging in, among others, the energy industry and grocery sector, which compliments Harris’ stated plan to crack down on price gouging if elected.
The Biden administration deserves credit for breaking with his predecessors’ hands-off approach to taking on corporate monopolies. Both Khan at the FTC and Jonathan Kanter, the assistant attorney general for the Antitrust Division at the Department of Justice (DOJ), have taken a tough line against anti-competitive behavior. Khan and Kanter’s efforts to block illegal mergers have been met with rage from corporate America’s worst offenders. This has resulted in frivolous demands for their recusals from key antitrust cases, as well as broader efforts to kneecap antitrust regulation itself. With a “changing of the guard” on the Democratic ticket, these same actors have taken to demanding Harris abandon Biden-era antitrust efforts, complete with a change in personnel.
Harris should reject these demands, and instead look to Khan and Kanter’s successes as a road map for enacting change in Washington. Time and time again, Khan and Kanter have delivered victories for consumers in the face of a hostile press and a right-wing judicial landscape. In August, the DOJ emerged victorious in its historic U.S. v. Google antitrust lawsuit, one that Kanter fittingly says belongs on the “Mount Rushmore of antitrust cases.” In the years following House Democrats’ 2020 report on monopoly power in the tech sector, Biden administration enforcers have filed antitrust suits against Amazon and Apple, along with a separate Google suit set to go to trial this month.
If successful, these lawsuits stand to rein in some of the tech sector’s worst abuses. But make no mistake: The FTC and DOJ’s antitrust efforts target far more than just the abuses of the “Big Tech” giants. This year, the DOJ launched a blockbuster antitrust suit against Ticketmaster, which was largely given a pass for its abuses in previous administrations. The DOJ Antitrust Division has stood with tenants by filing an antitrust lawsuit against RealPage over the company’s role in enabling rental price gouging. The FTC under Khan has taken aim at price gouging in, among others, the energy industry and grocery sector, which compliments Harris’ stated plan to crack down on price gouging if elected.
Antitrust enforcement is both crucial to building a fairer economy and broadly popular with the general public. For this reason, Harris should firmly reject the smear campaign against Khan’s FTC and commit to reappointing her as chair of the commission. Doing so would send a strong signal that under a Harris administration, corporate lawbreakers would face the full force of the law.
Instead of turning back the clock on antitrust, a Harris administration should build upon the progress of the last three years by launching other needed antitrust initiatives. This could include, among others, taking on YouTube-related competition issues, which advocates have sounded the alarm on. More broadly, the DOJ and FTC under a Harris administration should continue to probe would-be monopolists in the artificial intelligence (AI) sector. Given the scope of monopolistic behavior in today’s economy, regulators under a Harris Administration must take a vigilant approach to anti-competitive practices across sectors.Keep ReadingShow Less
'Woah!': FTC Applauded for Launching Inquiry Into Surveillance Pricing
"Firms that harvest Americans' personal data can put people's privacy at risk," FTC Chair Lina Khan said. "Now firms could be exploiting this vast trove of personal information to charge people higher prices."
Jul 23, 2024
The U.S. Federal Trade Commission on Tuesday launched an investigation into surveillance pricing and requested information from eight companies on the practice.
The FTC inquiry will look at the effect of surveillance pricing—using data on consumers' behavior or characteristics to manipulate the price for them as individuals—on privacy, competition, and consumer protection.
The agency asked Mastercard, JPMorgan Chase, Accenture, and McKinsey for information on the practice, as well as four less well-known companies that service major corporations.
"Firms that harvest Americans' personal data can put people's privacy at risk," FTC Chair Lina Khan said in a statement. "Now firms could be exploiting this vast trove of personal information to charge people higher prices."
"Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC's inquiry will shed light on this shadowy ecosystem of pricing middlemen," she added.
1. Firms harvest a trove of Americans’ personal data, from your browsing history to your biometrics. Now firms could be using this data to target you with an individualized price.
Today @FTC launched an inquiry into these surveillance pricing tactics. https://t.co/G4uc8lHWOV
— Lina Khan (@linakhanFTC) July 23, 2024
Progressive advocacy groups, which have long considered Khan to be one of their strongest allies in the Biden administration, and which argue that discriminatory pricing is unfair, celebrated the FTC's announcement.
"We're thrilled to see the FTC crack down on the dystopian practice of surveillance pricing," Lee Hepner, legal counsel at the American Economic Liberties Project, said in a statement. "It's chilling to think that companies have so much control over our lives that they can leverage personal data they've harvested—including your location, demographic, and shopping history—to turn our habits against us and hike up prices on essential goods. But it's already happening."
Groundwork Collaborative executive director Lindsay Owens also praised the FTC move, warning that "a personalized price might sound nice, but it is actually a three-part corporate strategy to spy on you, isolate you, and overcharge you."
"Today's investigation is an important step in cracking down on the methods big corporations use to spy on consumers to rip them off," Owens said in a statement.
Emily Peterson-Cassin, a director at Demand Progress Education Fund, said in a statement that Tuesday's announcement was "another strong sign that the FTC is fighting for consumer power over corporate power."
Zephyr Teachout, a law professor at Fordham University who has helped lead the opposition to surveillance pricing, reacted with excitement on Tuesday.
"Woah!" she wrote on social media. "The FTC is going there! So excited to see the FTC launching a full study into how companies use data to serve different prices to different people. We know the incentive and capacity is there, but the reality of surveillance pricing has been a triple-locked black box!"
Advocates of surveillance pricing sometimes call it personalized pricing and argue that it efficiently allocates resources. Such pricing questions are the subject of great interest among business school academics, especially at elite institutions such as the Massachusetts Institute of Technology and Harvard University, according to a detailed article in The American Prospect last month.
A crackdown on the practice could conceivably have support across the political spectrum. Stock guru Jim Cramer of CNBC—a frequent and vociferous critic of Khan—praised the FTC's announcement on air on Tuesday, while expressing disbelief that he was doing so.
7/ Even @jimcramer agrees that surveillance pricing is not an honest or ethical way to treat customers.
“How could you live with yourself?” if you’re a business that uses this strategy, he asked this morning.
“That is a great report. I agree with [@FTC].” pic.twitter.com/23HEDk8Yqf
— American Economic Liberties Project (@econliberties) July 23, 2024
All five FTC commissioners, including two Republicans, voted to move forward with the investigation, which will focus on intermediary firms—"the middlemen enabling firms to algorithmically tweak and target their prices," according to a blog post the FTC also published Tuesday.
The requests for information don't indicate that the eight firms engaged in wrongdoing, but rather that they can be useful sources of information, an unnamed FTC official told The Hill.
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Big Oil's Un-American Scheme to Price-Gouge Consumers
From ExxonMobil's long-running climate denial to Pioneer's recent price-fixing, it's clear this rogue industry's business model is deny, deceit, and delay.
May 09, 2024
You know how the oil industry is always saying the U.S needs to drill more to lower gas prices and protect energy independence? Well it turns out they've actually been scheming behind the scenes with the Organization of the Petroleum Exporting Countries to do the exact opposite.
A bombshell complaint filed by the Federal Trade Commission (FTC) last week reveals that Scott Sheffield, the former CEO of Pioneer Natural Resources—one of the largest oil producers in the Permian Basin—colluded with OPEC officials in an attempt to artificially limit supply and jack up prices.
The FTC's complaint alleges that Sheffield exchanged private WhatsApp messages with leaders at OPEC, assuring them that Pioneer and other Permian companies would pump the brakes on output in order to keep prices high. He even threatened to "punish" any companies that dared to ramp up production. I don't know about you, but to me it's hard to imagine anything more un-American and anti-competitive than that.
The FTC complaint is the latest proof: The fossil fuel industry will always put their greed above American consumers and fair competition.
This private coordination with OPEC glaringly contrasts with Big Oil's public rhetoric blaming the Biden administration for constraining U.S. production and raising energy costs—a bogus talking point that Republicans have been parroting for months now. The bad faith has been laid bare: Oil executives themselves are colluding with a foreign cartel to throttle supply and price-gouge American consumers to pad their own pockets.
These revelations fit into a broader pattern of the fossil fuel industry's deception and abuse. Just one day before the FTC filing, the Senate Budget Committee held an explosive hearing detailing how oil giants have waged a decades-long, industry-wide disinformation campaign to downplay the catastrophic climate damage that they knew their products would cause, all while raking in record profits. From ExxonMobil's long-running climate denial to Pioneer's recent price-fixing, it's clear this rogue industry's business model is deny, deceit, and delay.
Here's the kicker: Big Oil is about to get a whole lot more powerful. With it looking like the Exxon-Pioneer merger is going to move forward (without Scott Sheffield), and Chevron pursuing a $50 billion takeover of Hess, a few mega-corporations are rapidly consolidating to control our energy grid. Studies show that mergers like these are pretty certain to squash competition, send prices soaring, and concentrate massive political influence to block necessary climate action.
That's the grim future we face if we let them get away with it: A world where a handful of greedy oil oligarchs collude with OPEC to bleed us dry at the pump while knowingly burning our planet. Fortunately, cities and states are fighting back with lawsuits and legislation to make polluters pay for their lies and damages.
Last year, California joined the fight, suing Exxon, Shell, BP, Chevron, and their lobbying arm for deliberately deceiving the public about fossil fuels' climate impacts, aiming to force them to cough up billions for disaster recovery. And right now, states like Vermont are advancing bills to create climate "superfunds" funded by Big Oil's ill-gotten gains. In fact, New York just passed their polluter pay bill in the Senate this week, bringing New Yorkers and the nation one step closer to accountability for Big Oil.
But in order to truly rein in this reckless industry, we need help at the federal level. At a minimum, Congress should eliminate fossil fuel subsidies and strengthen antitrust laws. At the Department of Justice, leaders must investigate the industry's long history of spreading disinformation. And in the White House, President Joe Biden should declare a climate emergency and wield his powers to rapidly increase the production of clean energy resources.
For decades, Big Oil has ransacked our wallets, ravaged our environment, and rigged our democracy. The FTC complaint is the latest proof: The fossil fuel industry will always put their greed above American consumers and fair competition. It's time to make polluters pay.
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The FTC’s New Ban on ‘Noncompetes’ Helps Workers Reclaim Their Power
By restricting employees from joining competitors or starting their own ventures, noncompetes impede not only individual career and wage growth but also the dynamism of the broader economy.
Apr 29, 2024
Changing jobs can often be the best way to get a raise. But employers frequently force workers to sign “noncompete clauses,” contract stipulations that make it harder for workers to move to better jobs and artificially depress wages.
That will change later this year.
The Federal Trade Commission recently issued a new rule declaring that most noncompete clauses in employment contracts are unfair. The new rule bans employers from requiring workers to sign these agreements and prohibits the enforcement of existing “noncompetes” for workers other than senior executives.
The only leverage non-union workers have with their employers is their ability to quit and take a job somewhere else. But employers have been using noncompete agreements to cut that source of worker power off at the knees.
This is an important step toward fostering fair competition and empowering workers.
Noncompete agreements are employment provisions that ban workers at one company from working for, or starting, a competing business within a certain period of time after leaving a job. They’re ubiquitous. The Economic Policy Institute finds that more than one out of every four private-sector workers are required to sign one as a condition of employment.
These agreements aren’t limited to high-wage workers in knowledge-sensitive occupations and industries. More than a quarter (29%) of private workplaces with an average wage of less than $13.00 per hour used noncompete agreements for all their workers, according to one survey.
The only leverage non-union workers have with their employers is their ability to quit and take a job somewhere else. But employers have been using noncompete agreements to cut that source of worker power off at the knees.
The research on the economic impact of noncompetes is clear: By keeping workers from finding better opportunities, they reduce wages and reduce the formation of new firms. In other words, by restricting employees from joining competitors or starting their own ventures, noncompetes impede not only individual career and wage growth but also the dynamism of the broader economy.
Employers don’t need noncompetes to protect their trade secrets, as they sometimes claim. Intellectual property law already provides significant legal protections for trade secrets. Noncompetes have been unenforceable in California for decades without keeping that state from becoming a leader in tech innovation.
Further, noncompetes are often bundled with other anti-competitive employer practices that harm workers.
For instance, over half of firms surveyed that required noncompetes for at least some of their employees also required workers to agree to mandatory arbitration, rather than the court system, to resolve disputes with their employers. This underscores that the purpose of noncompete agreements is to restrict employees’ options, not protect trade secrets.
Noncompetes are about reducing competition, full stop. It’s in their name.
Noncompetes are bad for workers, bad for consumers, and bad for the broader economy. By banning them, the FTC’s rule will help raise wages for workers and take an important step toward creating an economy that is not only strong but also works for working people.
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Chamber of Commerce Sues to Block FTC Ban on Anti-Worker Noncompete Agreements
"Why does the U.S. Chamber of Commerce hate dynamism in the American economy, where workers are free to move to the best opportunities, and companies are free to recruit the best talent?" asked one economist.
Apr 24, 2024
The powerful U.S. Chamber of Commerce sued the Federal Trade Commission on Wednesday in an effort to block the agency's widely celebrated new rule banning most noncompete clauses, pervasive contract agreements that restrict employees' ability to work for or start a competing business.
The Chamber filed its lawsuit alongside the Business Roundtable and other corporate lobbying groups in a federal court in Texas. The suit came shortly after Ryan LLC, a tax service firm, filed the first legal challenge to the FTC's rule in a separate Texas venue.
"The commission's categorical ban on virtually all non-competes amounts to a vast overhaul of the national economy," reads the Chamber's complaint against the rule, which the FTC finalized in a 3-2 vote on Tuesday.
The agency, led by Biden-appointed Commissioner Lina Khan, estimates that roughly 30 million U.S. workers are subject to a noncompete agreement, limiting their ability to start their own companies or switch jobs in pursuit of better wages and benefits.
"Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned," Khan said in a statement Tuesday. "The FTC's final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market."
"Noncompetes are about reducing competition, full stop. It's in their name."
The Chamber, the largest corporate lobbying organization in the United States, signaled its intent to sue the FTC immediately after the agency finalized its new rule on Tuesday.
"The Federal Trade Commission's decision to ban employer noncompete agreements across the economy is not only unlawful but also a blatant power grab that will undermine American businesses’ ability to remain competitive," Chamber president and CEO Suzanne Clark said in a statement following the FTC's vote.
While the organization claims to fight for the interests of businesses small and large, a Public Citizen report published earlier this year found that the majority of the Chamber's legal work supports big corporations.
The Chamber acknowledged in response to questioning from a pair of Democratic senators last year that its corporate members use noncompete clauses—though the group did not specify which members.
"Why does the U.S. Chamber of Commerce hate dynamism in the American economy, where workers are free to move to the best opportunities, and companies are free to recruit the best talent?" asked University of Massachusetts Amherst economics professor Arin Dube in response to the Chamber's pledge to sue over the FTC's rule.
According to the FTC, its ban would boost the average U.S. worker's earnings by $524 a year, increase new business formation by close to 3% annually, and lower national healthcare costs by nearly $200 billion over the next decade.
"Noncompetes are about reducing competition, full stop. It's in their name," Heidi Shierholz, president of the Economic Policy Institute, said Tuesday. "Noncompetes are bad for workers, bad for consumers, and bad for the broader economy. This rule is an important step in creating an economy that is not only strong but also works for working people."
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'Seismic Win for Workers': FTC Bans Noncompete Clauses
Advocates praised the FTC "for taking a strong stance against this egregious use of corporate power, thereby empowering workers to switch jobs and launch new ventures, and unlocking billions of dollars in worker earnings."
Apr 23, 2024
U.S. workers' rights advocates and groups celebrated on Tuesday after the Federal Trade Commission voted 3-2 along party lines to approve a ban on most noncompete clauses, which Democratic FTC Chair Lina Khansaid "keep wages low, suppress new ideas, and rob the American economy of dynamism."
"The FTC's final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market," Khan added, pointing to the commission's estimates that the policy could mean another $524 for the average worker, over 8,500 new startups, and 17,000 to 29,000 more patents each year.
As Economic Policy Institute (EPI) president Heidi Shierholz explained, "Noncompete agreements are employment provisions that ban workers at one company from working for, or starting, a competing business within a certain period of time after leaving a job."
"These agreements are ubiquitous," she noted, applauding the ban. "EPI research finds that more than 1 out of every 4 private-sector workers—including low-wage workers—are required to enter noncompete agreements as a condition of employment."
The U.S. Chamber of Commerce has suggested it plans to file a lawsuit that, as The American Prospect detailed, "could more broadly threaten the rulemaking authority the FTC cited when proposing to ban noncompetes."
Already, the tax services and software provider Ryan has filed a legal challenge in federal court in Texas, arguing that the FTC is unconstitutionally structured.
Still, the Democratic commissioners' vote was heralded as a "seismic win for workers." Echoing Khan's critiques of such noncompetes, Public Citizen executive vice president Lisa Gilbert declared that such clauses "inflict devastating harms on tens of millions of workers across the economy."
"The pervasive use of noncompete clauses limits worker mobility, drives down wages, keeps Americans from pursuing entrepreneurial dreams and creating new businesses, causes more concentrated markets, and keeps workers stuck in unsafe or hostile workplaces," she said. "Noncompete clauses are both an unfair method of competition and aggressively harmful to regular people. The FTC was right to tackle this issue and to finalize this strong rule."
Morgan Harper, director of policy and advocacy at the American Economic Liberties Project, praised the FTC for "listening to the comments of thousands of entrepreneurs and workers of all income levels across industries" and finalizing a rule that "is a clear-cut win."
Demand Progress' Emily Peterson-Cassin similarly commended the commission "for taking a strong stance against this egregious use of corporate power, thereby empowering workers to switch jobs and launch new ventures, and unlocking billions of dollars in worker earnings."
While such agreements are common across various industries, Teófilo Reyes, chief of staff at the Restaurant Opportunities Centers United, said that "many restaurant workers have been stuck at their job, earning as low as $2.13 per hour, because of the noncompete clause that they agreed to have in their contract."
"They didn't know that it would affect their wages and livelihood," Reyes stressed. "Most workers cannot negotiate their way out of a noncompete clause because noncompetes are buried in the fine print of employment contracts. A full third of noncompete clauses are presented after a worker has accepted a job."
Student Borrower Protection Center (SBPC) executive director Mike Pierce pointed out that the FTC on Tuesday "recognized the harmful role debt plays in the workplace, including the growing use of training repayment agreement provisions, or TRAPs, and took action to outlaw TRAPs and all other employer-driven debt that serve the same functions as noncompete agreements."
Sandeep Vaheesan, legal director at Open Markets Institute, highlighted that the addition came after his group, SBPC, and others submitted comments on the "significant gap" in the commission's initial January 2023 proposal, and also welcomed that "the final rule prohibits both conventional noncompete clauses and newfangled versions like TRAPs."
Jonathan Harris, a Loyola Marymount University law professor and SBPC senior fellow, said that "by also banning functional noncompetes, the rule stays one step ahead of employers who use 'stay-or-pay' contracts as workarounds to existing restrictions on traditional noncompetes. The FTC has decided to try to avoid a game of whack-a-mole with employers and their creative attorneys, which worker advocates will applaud."
Among those applauding was Jean Ross, president of National Nurses United, who said that "the new FTC rule will limit the ability of employers to use debt to lock nurses into unsafe jobs and will protect their role as patient advocates."
Angela Huffman, president of Farm Action, also cheered the effort to stop corporations from holding employees "hostage," saying that "this rule is a critical step for protecting our nation's workers and making labor markets fairer and more competitive."
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Giant Food Corps Are Largely to Blame for Higher Grocery Prices
The largest grocery retailers—which include Walmart, Kroger, and Amazon, which owns Whole Foods—used the pandemic as an excuse to raise prices across the board.
Apr 19, 2024
In 2004, I was a single mom raising three daughters on my own. I worked three jobs, including an overnight shift as a translator at our local hospital, to make ends meet. Every time I stood in line at the supermarket, I worried about what I would have to put back on the shelf to stay within our weekly $100 food budget.
My daughters are all grown now. But whenever I’m buying groceries, I still get that horrible feeling in the pit of my stomach as I remember not knowing if we would have enough to eat, and how much—or how little—I could provide for my family with $100.
Prices for all of us have gone way up since Covid-19, and $100 now buys about $65 worth of groceries compared to five years ago. This puts a huge bite on working families, because we spend most of our income every month—as much as 90%—on food and other necessities. So when prices rise, we hurt the most.
Time and again, big companies tell us that if they could only get bigger, they would pass savings on to consumers. This is almost never true.
Big corporations tell us that policies and supply chains are to blame for rising costs, but there’s a big part of the story they don’t want you to know: These giant corporations are themselves largely responsible for higher prices.
According to a new report by the Federal Trade Commission, the largest grocery retailers—which include Walmart, Kroger, and Amazon, which owns Whole Foods—used the pandemic as an excuse to raise prices across the board. The same is true for big agribusinesses like Tyson Foods and DuPont, which sell the lion’s share of meat products and seeds.
These giant companies wrote themselves a blank check during Covid-19, which they now expect us to pay for.
What all of these corporations have in common is they always want to get bigger. Why? Because when consumers have fewer choices, corporations can force us to pay higher prices. This is especially true with food, which none of us can live without. And according to the FTC, a big reason for these higher prices is corporate greed.
Time and again, big companies tell us that if they could only get bigger, they would pass savings on to consumers. This is almost never true. Instead, they give money back to their investors and reward executives—like Walmart’s Doug McMillon, who takes home over $25 million a year, and Kroger’s Rodney McMullen, who makes more than $19 million. That’s 671 times more than the amount an average Kroger’s worker makes.
Corporate consolidation can have deadly consequences. In healthcare, which my organization tracks closely, we see that the domination of private insurance by a handful of companies—Aetna, United Healthcare, and Cigna—leads to bigger bills, worse health outcomes, and lost lives.
The profits of retailers and agribusinesses have now risen to record levels, as much as five times the rate of inflation. How do companies like Tyson Foods, Kroger, and Walmart boost profits? The way they always do: by raising prices, while 65% of Americans live paycheck to paycheck.
No American should ever have to work three or more jobs just to survive: not in 2004, 2024, or 2044. We want a world in which every one of us has what we need not only to live, but also to dream. Identifying who is behind the rising cost of everyday essentials is a necessary first step.
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