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What Biden's Latest Executive Order Means For Businesses And Consumers

SCOTT SIMON, HOST:

President Biden believes big business just has too much power in the U.S., and that harms Americans.

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PRESIDENT JOE BIDEN: Lack of competition cost the median American household $5,000 a year.

SIMON: And this week, he signed a broad executive order that tries to promote competition. NPR's Andrea Hsu has been studying that order - one part in particular could affect tens of millions of workers - and joins us now. Andrea, thanks for being with us.

ANDREA HSU, BYLINE: Thanks, Scott.

SIMON: The president wants to make the U.S. more competitive, which would seem to be a noncontroversial goal. What's the broader thinking?

HSU: Yeah. At the signing yesterday, Biden said fair competition has made America the wealthiest, most innovative country in history. But he said there are a lot of things standing in the way of competition that he wants federal agencies to deal with, namely big companies with a lot of power.

So, for example, he talked about prescription drugs. He pointed out that Americans pay more than double what people in other countries pay for their medicine. So he's asking the FDA to work with states and tribes to import drugs from Canada. He also talked about hearing aids. He wants them to be sold over the counter so they cost hundreds of dollars instead of thousands of dollars. He talked about internet service, seed for farmers, airline fees, and there's a lot more.

SIMON: He argues that increasing competition will lower prices for consumers but says that somehow that will also raise wages. So what's the logic going there?

HSU: That's right. So he's asking the Federal Trade Commission, another agency, to ban or limit noncompete agreements. These are the agreements that a lot of people end up signing when they're hired, saying if I leave this job, I won't go work for a rival company or start one myself. So, Scott, you know, these are common in tech and science, but it turns out they're also widely used in a lot of blue-collar jobs, and they prevent employees from going to work for a competitor. Biden gave the example of workers who operate machines that lay asphalt.

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BIDEN: You know, you're in Arkansas doing it. A lot of specific examples - you can't take a job in west Texas to do it. What in the hell does that have to do with anything? No, I'm serious.

HSU: He says all these agreements do is make it harder for workers to leave one job for a better-paying job elsewhere. And the White House says about half of private sector employers use these kind of agreements.

SIMON: Can he do that - a federal ban on noncompete agreements?

HSU: Well, it's unclear. It's certainly not going to be immediate, and it may not be a total ban. I talked with Russell Beck. He's this attorney in Boston who tracks state laws on noncompetes. He thinks the Federal Trade Commission is likely to do something narrower, maybe something focused on low-wage workers. But he doesn't think they'll ban noncompetes in all workplaces.

RUSSELL BECK: I would be very surprised if the FTC went so far as to ban noncompetes for people who really do have trade secret information, other confidential information that needs to be protected.

HSU: But Beck says it's also in question whether the FTC has the authority to enact such a ban. You know, regulation of noncompete agreements has until now been left to the states. Three states already ban them, California being the biggest, and close to a dozen states ban them for low-wage workers. So even if the FTC does move on this, it's going to take a while. I spoke to a former acting chair of the FTC, and she said we may see a proposed rule out fairly quickly, but federal rulemaking, you know, takes forever. It has to be submitted to Congress. There are public comment periods, revisions and so on. And so it could be a year before a rule is issued. And that, Scott, would be considered fast.

SIMON: NPR's Andrea Hsu, thanks so much.

HSU: Thank you, Scott. Transcript provided by NPR, Copyright NPR.