chrisw:
If I am working for a company and rising through the ranks, eventually I will have responsibility for accounts. After a certain point, those accounts remain clients because of me, not my company, so without a non-compete, nothing would stop me from striking out on my own and taking my clients with me. They could pay half of my billing rate from my company, and I’d earn double the salary. The non-compete prevents me from doing that.
In California, where non-competes for almost all employees are illegal (with no fuzzy boundaries that can take a court case to decide), they are not generally used, but it is common for employee agreements to include non-disclose and non-use of employer-proprietary information (including client lists), and specify that the departing employee cannot recruit other employees away from that employer.
https://www.treasury.gov/connect/blog/Pages/The-Economic-Effects-of-Non-compete-Agreements-.aspx describes some of the effects on non-compete agreements, including:
The practical effect of all this is to reduce worker bargaining power, sometimes causing workers to leave their fields entirely or to forego valuable opportunities for advancement and career growth.
These effects also have important consequences for the broader economy. When workers are prohibited from switching jobs, new firms find it difficult to hire. Innovations spread more slowly, possibly inhibiting the development of industrial clusters like Silicon Valley. And the overall “match quality” of workers and firms is reduced as workers are prevented from making the optimal use of their talents.