The Effect of Franchise No-poaching Restrictions on Worker Earnings

Abstract

We evaluate the impact of the Washington State Attorney General's enforcement campaign against employee no-poaching clauses in franchising contracts, which unfolded from 2018 until early 2020. We employ a staggered Difference-in-Differences research design and microdata from Burning Glass Technologies job vacancies and salary reports from Glassdoor to document the effect of the enforcement campaign on pay at franchising chains. Our preferred specification estimates a 3.6% increase in chain-specific annual pay according to the job vacancy data and a 1.3% increase in chain-specific reported salaries.

Keywords: franchising, monopsony, no-poach, horizontal anti-competitive practices

JEL Classification: J01, J41, J42, K21, L2, L41