The Federal Trade Commission proposed a rule Thursday that would ban U.S. employers from imposing noncompete clauses on workers, a sweeping measure that could make it easier for people to switch jobs and deepen competition for labor across a wide range of industries.

RELATED: Noncompete clauses can bring wages down by 20%, Treasury Department report finds

The proposed rule would prevent employers from imposing contract clauses that prohibit their employees from joining a competitor, typically for a period of time, after they leave the company.

Advocates of the new rule argue that noncompete agreements contribute to wage stagnation because one of the most effective ways to secure higher pay is switching companies. They argue that the clauses have become so commonplace that they have swept up even low-wage workers.

Opponents argue that by facilitating retention, noncompete clauses have encouraged companies to promote workers and invest in training, especially in a tight labor market. The public has 60 days to submit commentary on the rule before it takes effect.

During a Cabinet meeting, President Joe Biden called the FTC action "a huge step forward in banning non-compete agreements that are designed simply to lower people's wages."

"These agreements block millions of retail workers, construction workers and other working folks from taking better jobs and getting better pay and benefits in the same field," Biden said.

The FTC has moved aggressively to curb the power of major corporations under Chair Lina Khan, a legal scholar and Washington outsider whose appointment by Biden signaled a tough antitrust stance.

The agency estimates that the new rule could boost wages by nearly $300 billion a year and expand career opportunities for about 30 million Americans.

"Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand," Khan said in a prepared statement.

The FTC's proposal comes amid an already competitive job market, particularly in industries that suffered mass layoffs during the first year of the COVID-19 pandemic and have since struggled to recall their workers. Many workers remain on the sidelines, holding out for better pay, coping with lingering childcare or health issues, or opting for early retirement.

"There is a potential that it will contribute to the 'great resignation' that everyone is talking about to some degree, but employers are simply losing one of the tools in their toolbox and there are other ways to retain top talent," said Vanessa Matsis-McCready, associate general counsel and director of human resources for Engage PEO, which provides HR services for small- and medium-sized companies. "You will see a lot of business trying to retain top talent via raises or other fringe benefits."

Employers nationwide are still hiring and layoffs are historically low, despite high-profile job cut announcements from companies such as software provider Salesforce, Facebook's parent company Meta, and Amazon. The government is expected to announce Friday that employers added a solid 200,000 jobs last month, and that unemployment remained 3.7%, near a half-century low.

A 2019 analysis by the liberal Economic Policy Institute estimated that 36 million to 60 million workers could be subject to noncompete agreements, which the group said companies have increasingly adopted in recent years.

While such agreements are most common among higher-paid workers, the study found that a significant number of low-wage workers were subjected to them. The study found that more than a quarter of responding establishments where the average wage is less than $13 an hour use noncompetes for all their workers.

On Wednesday, for example, the FTC took action against three companies for unlawfully imposing noncompete clauses against workers, including low-wage security guards who were threatened with a $100,000 fine if they violated the agreement.

The EPI study found that many companies still impose noncompete clauses in several states that already ban or restrict them, including in California, where the practice has been prohibited for a century.

The proposed FTC rule would require companies to scrap existing noncompete causes and actively inform workers that they are no longer in effect, as well as prohibiting the imposition of new ones.

The proposal is based on a preliminary finding that noncompete clauses quash competition in violation of Section 5 of the Federal Trade Commission Act. It would not generally apply to other types of employment restrictions, like non-disclosure agreements.

But Emily Dickens, chief of staff and head of public affairs for the Society for Human Resource Management, said the proposed FTC rule is overly broad and could potentially harm businesses that depend on them to thrive. She cited very small, emerging industries where crucial know-how cannot be safeguarded through non-disclosure agreements alone.

Dickens said SHRM, a group of more than 300,000 human resources professionals and executives around the world, will encourage its members to present specific situations that could justify noncompete clauses during the FTC's commentary period.

Although "there are jobs where it makes no sense to have noncompete," Dickens said, "this kind of blanket ban is going to stifle innovation."

While defenders of non-compete clauses argue they help start-ups and small business retain talent, opponents say they hinder recruitment at those same entities.

The Economic Innovation Group, a Washington-based public policy research group, applauded the rule and called on Congress to pass proposed legislation that would impose a similar ban with more permanency.

"Restricting the use of non-compete agreements is fundamentally good policy that will boost wages, improve workforce mobility, and encourage entrepreneurship and innovation throughout the economy," said John Lettieri, EIG's president and CEO.

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Associated Press writers Chris Rugaber and Nancy Benac in Washington contributed to this report.

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This story was first published on January 5, 2023. It was updated on January 6, 2023 to correct a quote from Vanessa Matsis-McCready of Engage PEO.

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This story was first published on January 5, 2023. It was updated on January 6, 2023 to correct the name of the Society for Human Resource Management. It also clarifies that the study by the Economic Policy Institute was based on a survey of responding companies.

WASHINGTON, D.C. — No matter where you look in the country right now, “Now Hiring” and “Help Wanted” signs are everywhere. They are signals that workers are playing a big role in the nation’s economic recovery from the pandemic.

“We have never seen anything like this before,” said Kishore Kulkarni, an economics professor at the Metropolitan State University of Denver.

He said the tight labor market means businesses have no choice but to pay workers more to get them in the door.

“They have to because right now the ball is in labor's court and they are dictating some terms of what the wages should be,” Kulkarni said.

A new survey from the National Association for Business Economics backs that up.

Their October survey found 58% of businesses reported having to increase workers’ pay, up from 51% from their previous survey in July.

NABE’s Ken Simonson said the number of businesses reporting that was a record in the survey’s nearly 40-year history.

“More companies in the survey had raised wages in the last three months than we had ever seen before in the history of this survey,” said Simonson, who is also the chief economist for the Associated General Contractors of America.

Within that, the U.S. Bureau of Labor Statistics reports wages are up 4.5% percent this year. Certain industries are seeing bigger jumps, including construction, with wages up 7.1%, and hospitality, where wages are up 11.2%.

So, what does that mean for the debate over minimum wage?

“I think that minimum wage is much less of an issue than it was even two years ago, just before the pandemic hit,” Simonson said. “I'm sure that there are members of Congress who would still like to raise that floor, but I don't think you're going to see companies that have started offering $14 or $16 and bonuses or college tuition, go back to anything like that statutory minimum wage. So, for now, that's not going to be an issue.”

MSU economics professor Kulkarni said rising wages can be a double-edged sword. Employees benefit from making more money, but some things end up costing more.

“The number one concern is how big is inflation going to be,” Kulkarni said.

It’s a labor and wage situation experts believe will eventually sort itself out.

“In about eight to 10 months, this will all calm down,” Kulkarni said, “but this holiday season looks like a season which is unprecedented and that we will have a tremendous demand for labor.”

It is a holiday season for the job market with the potential to look unlike any before.

About 10,000 members of the United Auto Workers union went on strike against farm and construction equipment maker John Deere early Thursday morning.

The UAW had reached a tentative agreement on a new six-year contact with the company two weeks ago, only to see 90% of the rank-and-file members of the union reject it in a ratification vote that concluded this past Sunday. Union and management negotiators talked into the night Wednesday trying to reach a new deal but were unable to do so.

This is the nation's largest private-sector strike since the UAW waged a costly six-week strike against General Motors two years ago. And it continues a recent trend of workers flexing more muscle as the dynamics of the labor market tip more toward them and away from employers. Businesses have been struggling to find the workers they need to fill a recent record number of job openings. There has also been a record high number of workers quitting jobs.

Last week, 1,400 members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike against Kellogg, shutting plants where cereal brands such as Rice Krispies, Raisin Bran, Froot Loops, Corn Flakes and Frosted Flakes are made.

And earlier Wednesday, the International Alliance of Theatrical Stage Employees — which represents technicians, artisans and craftspersons in the entertainment industry — announced it had set a strike deadline for early Monday morning if they could not reach a new contract with the Alliance of Motion Picture and Television Producers for 60,000 film and television workers. The union said that 98.6% of members had voted to authorize a strike if there is no new deal by then.

Video below: Kellogg addresses strike in new vide

However, the U.S. Labor Department reports that the number of strikes so far this year is actually down compared to the same period of 2019, the year before the COVID-19 pandemic riled labor markets.

Overall wages are up, as it appears that employers — both unionized and nonunion — are more willing to give workers what they want to keep them on the job.

Good times at Deere

The strike at Deere & Co., the formal name of the company popularly known as John Deere, shuts operations at 11 factories in Illinois, Iowa and Kansas, and three distribution centers in Georgia, Illinois and Colorado. The company makes both agricultural and construction equipment. Demand for its products has been strong.

The company said in August that it sees growing orders through the rest of this fiscal year that runs through Nov. 1, and into the first fiscal quarter of next year.

The rejected contract for UAW members at John Deere would have given them immediate raises in their base pay of 5% to 6%, and additional wage increases later in the contract that could have increased average pay by about 20% over the six years of the rejected deal. It also eliminated a second lower tier of pay for some more recent hires of the company, bringing them up to the pay of other UAW members.

The average production worker at Deere made about $60,000 last year, and could end this contract earning about $72,000.

Among the features of the rejected contract was the return of a cost of living adjustment — once a common feature of union contracts that has become rare in recent years. But it could have been lucrative at a time that inflation is running at levels not seen for decades. It also included improvements in benefits, including an enhanced retirement bonus of up to $50,000.

But unlike the last two UAW contracts at Deere, which were negotiated during difficult times for the company, these negotiations took place at an especially good time for the company.

That might have made reaching an agreement that membership would embrace more difficult. The current financial success at Deere may have led some of the union members to believe they deserved an even better package than the one that was rejected, especially after less lucrative deals in the past.

Revenue for the first three quarters of Deere's fiscal year rose to $32.7 billion, up 11% from the same period of 2019 ahead of the pandemic. Net income soared to a record $4.7 billion, up 84% on the same basis. The company was able to do so while dealing with many of the supply chain issues dogging the auto industry, and it was able to raise its outlook for full-year profits to as much as $5.9 billion.

The company has been hiring during the last year as well, as union-represented jobs at Deere climbed 19% since Nov. 1 of 2020.

Shares of Deere are up 23% year-to-date, although Wednesday's close was off 16% from where shares stood in early September.