New OECD data ties rising employee restrictions to slower productivity growth as US enforcement moves to the states
The Organisation for Economic Co-operation and Development (OECD) says employers' growing reliance on non-compete clauses is dragging down labor productivity across its member economies, a conclusion that carries weight for U.S. employers. The OECD's Employment Outlook 2026, published July 7, 2026, estimates that a 10 percentage point increase in the prevalence of non-compete clauses within an industry is associated with a 1.9% decline in aggregate labor productivity, driven largely by workers staying in jobs that don't fit their skills and slower diffusion of ideas between firms.
The findings are based on new employee and employer surveys across 15 countries, including Canada, Germany, Japan, and the United Kingdom. The OECD found that between a fifth and a third of private-sector employees are bound by a non-compete clause, with about 30% of employers surveyed saying they had increased their use of the clauses over the past five years. Non-disclosure agreements were even more common, covering roughly half of private-sector employees, according to the report.
The OECD said non-competes have spread well past employees with access to trade secrets or specialized training, the original justification for the clauses. The report pointed to non-competes turning up among fast-food workers in the U.S. and cited...
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