What does Mark Thoma think about Jimmy John's?

Sometimes articles just demand to be paired up.


From Professor Thoma:

The second view of inequality, one that is gaining traction, emphasizes market imperfections and the exploitation of power relationships. Adherents to this school of thought believe that market systems have an inherent tendency toward large monopolies, and this tendency has been furthered by technological change, globalization, and economic strategies by incumbent firms that make it hard for new competitors to enter the market.

As monopoly power becomes established, those with economic and political power can capture the political process and prevent the enforcement of antitrust law and regulatory change that could threaten their market dominance. The political power large firms have can also be used to undermine unions destroying any chance workers have to bargain on equal footing for wages. This leads to even higher profits and more inequality.

...

These courses do spend time looking at the economic consequences of monopolistic completion, oligopolies, and monopolies, though not enough in most cases. But students are left with the impression that these market structures are aberrations from the norm rather than the normal state of affairs. That needs to change. And what is missing altogether in most cases is a discussion of power relationships. Quoting Professor Stiglitz once again, “historically, the oppression of large groups – slaves, women, and minorities of various types – are obvious instances where inequalities are the result of power relationships, not marginal returns.”

I'm not an economist so obviously anything I say on the subject should be viewed skeptically, but I would assume that when people in power routinely demand concessions from those without power and those concessions are of slight value to those making the demands while being onerous to those complying, we have strong evidence of an unhealthy power dynamic.


From Kerry Close:

Of the workers who have signed non-competes, fewer than half say they had access to trade secrets that a potential rival company could take advantage of. What’s more, 37% of workers say they have signed non-compete agreements at some point in their careers.

While engineering and computer/mathematical occupations have the highest prevalence of non-competes, the agreements aren’t exclusive to highly-skilled professions. For instance, 15% of workers without four-year college degrees are subject to non-competes, while 14% of employees earning less than $40,000 a year have signed a non-compete. That’s despite the fact that employees in both sectors are about half as likely to possess trade secrets than more highly educated and higher-earning counterparts in the work force.

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In one of the most puzzling and criticized example of non-competes, fast food sandwich chain Jimmy John’s requires workers to promise they won’t work for a competitor, defined as a nearby business that derives at least 10% of its revenue from sandwiches, within two years of leaving their job. Specifically citing Jimmy John’s, two senators introduced a bill last summer that would prohibit the use of non-compete agreements for employees earning less than $15 an hour, $31,200 a year or the minimum wage in the employee municipality. It would also require employers to tell prospective hires that they may be asked to enter into such an agreement.