Non-compete contracts may occasionally make sense, but they should be used much less than they are now, economist Timothy Taylor suggests. About 18% of all US workers are covered by noncompete contracts and they are used by employers mainly to protect trade secrets. “By preventing a worker from taking such secrets to a firm’s competitors, the non-compete essentially solves a “hold-up” problem: ex ante, both worker and firm have an interest in sharing vital information, as this raises the worker’s productivity. But ex post, the worker has an incentive to threaten the firm with divulgence of the information, raising his or her compensation by some amount equal to or less than the firm’s valuation of the information. Predicting this state of affairs, the firm is unwilling to share the information in the first place unless it has some legal recourse like a non-compete contract.” Taylor believes the overuse of non-compete contracts is rendering them obsolete as many of the employees who are subjected to the contracts are not necessarily in hold of material trade secrets. More importantly, they could curb innovation and drive the need for more regulation. Taylor adds that “the presumption in a market-oriented economy should be that workers are free to switch between jobs when they wish to do so. Employers who want to keep employees have many tools to do so, including paying bonuses related to length of time on the job.”