It’s not about the employees being stuck there. The employee can quit for a new job and then just gets sued before they can start work. So then the employee either has to wait out the non-compete period (sometimes these are paid out), losing valuable work time, or they have to get a job in a demonstrably different sector/area, where skill transfer may not be as advantageous.

You’re right that this does create a toxic, unmotivated workforce. That said, it can also instill fear in employees from looking for other positions and helps keep wages depressed, since people can’t be persuaded to leave for competitors with higher salaries.

It’s about control.