Matt Marx, MBA a now-professor at MIT Sloan was interviewed by Carmen Nobel and explains California offers an ocean of opportunities saying, “There's an open labor market," he continues. "People can leave (their jobs) when they want."
Nobel also revealed Marx co-authored an upcoming paper, Regional Disadvantage? Non-Compete Agreements and Brain Drain, that will investigate how non-competes drive “high-tech talent away" and that creates a “brain drain of smart inventions." The other authors included Harvard professors Lee Fleming and Jasjit Singh.
To prove brain drain, Marx researched patents from the United States Patent and Trademark Office (USPTO) and looked for only those inventors who had multiple patents from 1975 to 2005.
Seems this research group stumbled on a little 19-aught-five (1905) law in Michigan, Public Act No. 329 that said “all agreements and contracts by which any person…agrees not to engage in any avocation or employment…" and Fleming says this Act did cover non-compete agreements, meaning they were illegal. Probably for the good anyway—can you imagine Henry Ford firing top engineers only to leave them standing in the bread lines with a pink slip from Henry informing them General Motors and Dodge and Chrysler are out of the question?
Public Act No. 329 was repealed in 1985 (took them long enough) and non-competes were legal once again in Michigan—a state full of inventions and ideas, especially in Detroit.
Off on their research journey, Marx et al found that from 1975 to 1996 “…the rate of emigration grew in Michigan—0.24 percent to 1.18 percent" and did drop in states without non-competes—0.20 percent to 0.13 percent."
Still. it’s interesting to me that one of these professors (Fleming) says of California and its denial of non-compete agreements, “Are people going to California because they're trying to get out of the non-compete in their original state, or are they going to California for the weather or whatever else?" I do suppose this could be a hypothetical reason, but I think high-tech job seekers are more interested in high-tech opportunities, not the Santa Ana winds or the sunshine California offers.
Brain drain via enforcement of non-compete clauses on the other hand does seem to affect a group of unique people. The excellent or best engineers, scientists, and research and development folks; these are the people leaving states with non-compete clauses, not those who fall on the average scale of skills, knowledge and experience.