Socialism: make membership work where people don't stay long

Add high-turnover.md: in home care, a 12-month probation and the
three-quarters rule could fail a co-op doing everything right. Make
membership automatic after a short probation, take the buy-in from
profit shares rather than pay, count agency hours and push-outs, and
phase the rule in. Align the lock, the pilot's safeguards and measures,
worker ownership, the index and open problems.

Co-Authored-By: Claude Opus 5.5 <[email protected]>
Claude-Session: https://claude.ai/code/session_01QWPs69B8nQZjtPEUXMKzZx

JoshHeaps.Net/Content/Socialism/high-turnover.md

@@ -0,0 +1,105 @@
+---
+title: When People Don't Stay Long
+section: The Co-op
+order: 28
+summary: In jobs like home care, most workers leave within a year or two, so the model makes membership automatic after a short probation, keeps the buy-in small and out of people's paychecks, and guards against co-ops that push people out before they'd join.
+---
+
+# When People Don't Stay Long
+
+This model's co-ops are run by their members, and it takes membership seriously. After a trial period (probation) of at most 12 months, workers become members, and members must do at least three-quarters of the work hours ([The Lock](the-lock.md)). That rule stops a co-op from turning into a small club of owners employing everyone else.
+
+But in some of the jobs where co-ops matter most, people don't stay long. In those jobs, the rule as first written could fail a co-op that was doing everything right.
+
+## The problem
+
+**Home care loses most of its workers every year.** Home care aides help older and disabled people at home: bathing, meals, medication. An industry benchmarking survey published in 2024 put home care worker turnover at about 79% a year ([Home Health Care News, 2024](https://homehealthcarenews.com/2024/07/home-cares-industry-wide-turnover-rate-reaches-nearly-80/)). Turnover here means the number of people who left in a year, divided by the average number of workers.
+
+**Co-ops do better, but still lose a lot of people.** In 2017 there were 14 home care co-ops in nine states, employing about 2,400 caregivers. One account puts their turnover at about 38%, against 82% for the industry at its peak ([OnLabor, 2022](https://onlabor.org/worker-retention-in-homecare-could-cooperatives-be-the-solution/)). That's a small, uncontrolled comparison, but it points one way.
+
+**With that much turnover, many workers never get past a 12-month probation.** If people leave at a steady rate through the year, here's roughly what share of the workforce at any moment has been there long enough to join:
+
+| Turnover per year | Past 3 months | Past 6 months | Past 12 months |
+| --- | --- | --- | --- |
+| 20% | 95% | 90% | 82% |
+| 38% (home care co-ops) | 91% | 83% | 68% |
+| 65% | 85% | 72% | 52% |
+| 80% (home care industry) | 82% | 67% | 45% |
+
+This is a simple model, and it counts people, while the rule counts hours. Both of those make the real picture somewhat better: many people leave in their first few weeks, and people who stay tend to work more hours. But the point holds. **With a 12-month probation, a home care co-op can fail the three-quarters rule even if every eligible worker joins.**
+
+**The biggest real example shows the other half of the problem.** Cooperative Home Care Associates in the Bronx was started in 1985 by 12 home health aides and is one of the largest worker co-ops in the country. It's also unionized, with 1199SEIU ([CHCA](https://www.chcany.org/about)). It offers ownership after just three months. But workers have to choose to buy a $1,000 share, paid over time from their paychecks. In 2005, about 70% of its aides were owners, and 95% to 97% of those owners worked full time, so by hours it may well have met this model's rule. At a smaller sister co-op in Philadelphia, about 40% of aides were owners ([PHI, 2005](https://www.phinational.org/wp-content/uploads/legacy/clearinghouse/homecarecooperatives_workerownership.pdf)). By 2021, one account put CHCA at over 1,000 owners among 2,600 employees ([OnLabor](https://onlabor.org/worker-retention-in-homecare-could-cooperatives-be-the-solution/)). That count may include office staff, and it's by head, not by hours. But it suggests that when membership has to be chosen and paid for, many workers don't take it up.
+
+To be fair to CHCA: it has stayed a real, worker-governed co-op for about 40 years with many workers who weren't owners. A union contract covering everyone helps explain why. This model still sets a membership rule, because not every co-op will have CHCA's history or its union.
+
+## Two bad answers
+
+- **Loosen the three-quarters rule.** That lets a co-op run on non-members again, which is exactly the slide the rule exists to stop. In a high-turnover business, "most of the workers aren't members" can easily become permanent.
+- **Exempt care work.** That would exempt the co-ops whose workers are least able to protect themselves.
+
+## The answer: let people in sooner, by default, at no cost up front
+
+### Membership is automatic
+
+When probation ends, a worker becomes a member **unless they say no**. They don't have to apply, and nobody has to approve them.
+
+This matters more than it sounds. When one large company started signing new workers up for its retirement plan automatically, 86% of new hires took part, compared with 37% of workers hired just before, at the same length of time on the job. The biggest gains were among the lowest-paid, whose participation went from 13% to 80% ([Madrian and Shea, 2000](https://www.nber.org/papers/w7682)). People mostly stay with whatever happens by default. So the default should be membership.
+
+A retirement plan and a co-op aren't the same, and the same study found that people signed up by default mostly stayed passive about their choices. A member signed up by default may not act like an owner at first. The model's bet is that having the vote is the precondition for using it.
+
+- **Saying no is easy and goes through someone independent.** A worker can opt out by phone, in person or in writing, in their own language, with the co-op's [lock-holder](the-lock.md#how-the-lock-is-made-to-hold), the independent body that guards each co-op's lock, rather than with their manager. So managers can't quietly talk people out of joining. Anyone who opts out can change their mind within 30 days, or join later at any time.
+- **Members and non-members get the same pay and schedules.** A co-op can't pay non-members more, or give them better shifts, to keep them from joining.
+- **People who freely opt out don't sink the co-op.** Hours worked by people who opted out through the lock-holder count toward the three-quarters rule, up to one-tenth of all hours. Beyond that, they count as non-member hours. So a co-op isn't punished for a few workers' free choices, but it can't run on them either.
+
+### Joining costs nothing up front
+
+Existing home care co-ops charge refundable fees of $25 to $1,000, often taken from paychecks a little at a time (PHI, 2005). That's a real cost for someone earning an aide's wage, and in many states a deduction from pay needs the worker's written permission.
+
+So in this model, **the buy-in comes out of the member's own profit shares, not their paycheck.** It's capped at $1,000. Until it's covered, part of each profit share goes toward it instead of being paid out in cash, though never the cash a member needs to pay tax on their share. A member can choose to pay it faster from their pay if they ask in writing. Either way, it sits in their own [capital account](capital-accounts.md) and comes back to them when they leave.
+
+### A short probation
+
+Probation still can't be longer than 12 months. But a co-op can make it shorter, and the model's standard bylaws use three months, as Cooperative Home Care Associates does. The table shows why a high-turnover co-op will want that: at 38% turnover, a three-month probation puts about 91% of the workforce past it.
+
+**Why letting people in early is affordable.** It's the [profit share ramp](worker-ownership.md). A new member starts with a small slice of the profit that grows over the years. So admitting someone after three months costs the other members very little money. What the new member gets right away is the vote. Under this model, that doesn't wait.
+
+### No pushing people out before they'd join
+
+If membership comes at three months, a co-op that wanted to stay a small club could let people go at two and a half, or cut their hours until they quit. So:
+
+- **Every hour counts, whoever signs the paycheck.** Hours worked on the co-op's business by staffing-agency workers, contractors or a related company's staff count as non-member hours. A co-op can't get around the rule by putting its workers on someone else's payroll.
+- **Probation counts across rehiring.** Time on probation adds up across every stint at the same co-op within three years. Letting someone go and rehiring them doesn't restart the clock.
+- **Pushing people out counts as letting them go.** If someone on probation quits within 60 days after their hours were cut by a quarter or more, or after they lost their regular clients, it counts as the co-op's decision, not theirs.
+- **The test looks at results.** Each year the co-op reports how many people it hired, how many it let go (counted as above) before they could join, and why. The lock-holder compares that with the same co-op's record after people become members, and with similar co-ops. It looks only once there are enough cases to mean something, at least five over three years. Dismissals for a documented reason, like a client's safety or a failed background check, don't count. A worker can also complain directly to the lock-holder.
+- **A finding has to be earned.** Before a pattern counts against the co-op, the co-op sees the evidence and can answer it. A confirmed pattern counts as failing the membership rule for that year.
+
+### A start-up period
+
+A new co-op that's hiring fast will always have many people on probation. So the rule phases in. There's no hours test in the first year, members must do at least half the hours in the second, and three-quarters from the third on. Automatic membership and the 12-month limit apply from day one.
+
+### Unions stay
+
+Becoming a member doesn't end a union contract or anyone's right to organize. A union can keep representing workers, members and non-members alike, as 1199SEIU does at CHCA. Members are also paid for time spent on the co-op's committees and board, as CHCA and its sister co-op already do (PHI, 2005), so taking part in governance doesn't cost an aide a shift.
+
+## The ramp, when people leave early
+
+The founding plan sets the profit share ramp at five to ten years. In a job where many people stay two or three, most will leave before they ever reach a full share. At 38% turnover with a three-month probation and a five-year ramp, only about one worker in seven has a full share at any moment. That's a real cost of the ramp, and it's worth saying plainly.
+
+Some things make it less harsh than it sounds:
+
+- **The vote doesn't ramp.** A member who stays one year has the same vote as one who stays thirty.
+- **Time on the ramp adds up.** Someone who leaves and comes back within a few years picks up where they left off, and protected leave, like parental or medical leave, counts as time worked ([Worker Ownership](worker-ownership.md)). That matters in care work, where many workers, most of them women, step out for a while to care for their own families.
+- **Whatever they built goes with them.** A member's account is paid out when they leave, and small balances are paid all at once ([Member Capital Accounts](capital-accounts.md#how-its-paid-out)).
+- **In care work, the profit is small anyway.** At home care's thin margins, a full share is worth a couple of thousand dollars a year, and a typical member's is less ([Member Capital Accounts](capital-accounts.md)). For these workers, most of what matters is pay, hours and a say in how the work is done.
+
+A co-op can choose the short end of the ramp. This page doesn't shorten it further, because the founding plan sets that range on purpose. A longer ramp is what lets a co-op hire without every new member cutting into everyone else's share right away. Whether low-margin, high-turnover co-ops should be allowed a much shorter ramp is an open question ([Open Problems](open-problems.md)).
+
+## What this doesn't solve
+
+- **Ownership doesn't fix the pay.** Home care wages are low largely because much of the work is paid for by public programs like Medicaid, at rates the agencies don't set. A co-op can't pay more than it's paid. It can offer steadier hours, training and a say, and co-ops seem to keep people longer. But the pay problem needs better public rates, rules that send more of those rates to workers, and unions bargaining for them, along with [the floor](the-floor.md).
+- **The numbers are rough.** Turnover varies a lot between agencies, the home care industry figure comes from a survey of agencies that chose to take part, and the co-ops' 38% comes from a small count. The pilot will measure this directly and report [results by industry](pilot-spec.md#what-gets-measured).
+- **Automatic membership hasn't been tried at a large care co-op.** It should raise membership a lot. How much, and whether default members take part in governance, is unknown.
+- **A short probation means less time to judge fit.** A co-op admits people it has known for three months, and they vote. That's the trade-off the model accepts. The ramp limits what a poor fit costs in money. It doesn't limit their vote.
+- **The stable minority can still run things.** Office staff and coordinators often stay while aides come and go. One member, one vote and paid meeting time help. They don't guarantee aides a real voice.
+- **Some things need legal work.** How membership interacts with tax filing for members without Social Security numbers, with visa status, and with the asset limits of public benefits needs answers before care co-ops sign people up automatically. So does whether federal labor law still protects union activity by members who own the firm.
+- **Opting out can still be pressured, and pushing people out can still be hidden.** An independent lock-holder and results-based checks make both harder. They can't make them impossible.

JoshHeaps.Net/Content/Socialism/index.md

@@ -13,7 +13,7 @@ summary: A working model for building an economy where the people who do the wor
 
 This model doesn't buy, seize or convert anyone's company. Instead it builds new worker-owned companies alongside existing ones, then lets customers and workers choose between them.
 
-- **Workers own their company.** Every member gets one vote. A share of the profits grows with tenure until long-time members split them equally. Salaries still exist, and hard jobs still pay more. Part of each year's profit builds up in a personal account that's paid out when you leave, and part goes into a permanent reserve that keeps the business investing. An insurance pool the co-ops pay for protects workers' last paychecks and part of their savings if the co-op fails. [Worker Ownership](worker-ownership.md), [Member Capital Accounts](capital-accounts.md), [Protecting Members' Savings](savings-guarantee.md) and [Investing for the Long Run](the-long-run.md)
+- **Workers own their company.** Every member gets one vote. A share of the profits grows with tenure until long-time members split them equally. Salaries still exist, and hard jobs still pay more. Part of each year's profit builds up in a personal account that's paid out when you leave, and part goes into a permanent reserve that keeps the business investing. An insurance pool the co-ops pay for protects workers' last paychecks and part of their savings if the co-op fails. Membership comes automatically after a short probation, so co-ops in high-turnover work like home care don't end up run by the few who stay. [Worker Ownership](worker-ownership.md), [When People Don't Stay Long](high-turnover.md), [Member Capital Accounts](capital-accounts.md), [Protecting Members' Savings](savings-guarantee.md) and [Investing for the Long Run](the-long-run.md)
 - **A small public bank lends to worker co-ops.** It charges market rates, so it only succeeds if co-ops can really compete. Its whole job is to be willing to lend to a kind of company other banks won't. Spain, Italy and the US have all tried versions of this, and the pilot is built around what went right and wrong. [The Bank](the-bank.md) and [Has This Been Tried?](precedents.md)
 - **Owners who want to sell to their workers can.** The bank lends for these sales on a separate track, with its own $100 million and its own test. Only healthy firms qualify, there's no new tax break, the price is capped at an independent appraisal, the seller shares the risk, and the whole workforce votes. [When an Owner Wants to Sell to the Workers](buyouts.md)
 - **Co-ops funded this way stay co-ops forever.** They can't be sold to conventional owners, and members can't vote to cash out what earlier members built. An independent lock-holder can veto any attempt, including selling the business off piece by piece. [The Lock](the-lock.md)

JoshHeaps.Net/Content/Socialism/open-problems.md

@@ -33,4 +33,6 @@ An honest list of what the model hasn't solved yet, most dangerous first.
 
 12. **Voluntary buyouts: in or out?** *(Answered.)* In, on a separate track: $100 million of its own, healthy firms only, a willing seller, no new tax break, a capped price the seller shares the risk on, a vote of the whole workforce, and its own test of money and pay, so it can't flatter the startup result ([When an Owner Wants to Sell to the Workers](buyouts.md)). Still open: whether a price set by the market is fair to workers who pay it out of their own future work, and whether about 60 deals can show more than that the loans get repaid.
 
+13. **Work where people don't stay long.** *(Partly answered.)* In home care, most workers leave within a year or two. Membership is now automatic after a short probation, the buy-in comes out of profit shares rather than pay, and pushing people out before they'd join counts against the co-op ([When People Don't Stay Long](high-turnover.md)). Still open: with a five-to-ten-year profit share ramp, only a small minority of care workers ever reach a full share, so the people who stay collect much of the profit the others helped make. A much shorter ramp for low-margin, high-turnover co-ops would fix that, but it would go against the founding plan's range and weaken the ramp's protection against under-hiring. Also open: whether default members take part in governance, and the legal questions around tax IDs, visas, benefit asset limits and union protection for worker-owners.
+
 *Not problems here, because nobody's company is forcibly bought:* valuing every firm in the economy, owners stripping value before a takeover, foreign capital flight, and years of payouts to former owners. The contractor boundary isn't an economy-wide problem either. Its co-op version, hiring non-members to dodge membership, is handled by [the lock](the-lock.md)'s membership requirement.

JoshHeaps.Net/Content/Socialism/pilot-safeguards.md

@@ -20,7 +20,7 @@ This page lists the ways someone could cheat [the pilot](pilot-spec.md), or sabo
 - **Every deal with an insider is disclosed.** Any contract with a founder, manager, member's family, or a company they own is reported to the bank and checked each year to confirm it's priced like a deal between strangers. Overpayments are treated as a breach of the loan.
 - **Members can fire management.** Any management or franchise contract can be ended by a members' vote on short notice. A contract the members can't get out of is a boss.
 - **The business owns what it needs to operate, or can buy it.** If key assets are leased from an insider, the bank gets a claim on them or the co-op gets an option to buy them at a fair price. That way the co-op can't be held hostage, and the bank's collateral is real.
-- **Membership is real.** Probation lasts at most 12 months. At least three-quarters of the work hours must be done by members. Both are checked every year. A co-op that falls short counts as failed in the [pilot's survival measure](pilot-spec.md#what-gets-measured).
+- **Membership is real.** Probation lasts at most 12 months, counted across rehiring, and membership is automatic when it ends unless the worker opts out through the lock-holder. Members must do at least half the work hours in the co-op's second year and three-quarters from its third, counting hours worked through agencies or contractors. Pushing people out before they'd join is tracked and counts against the co-op ([When People Don't Stay Long](high-turnover.md)). All of this is checked every year. A co-op that falls short counts as failed in the [pilot's survival measure](pilot-spec.md#what-gets-measured).
 - **Lying costs something.** False statements on a loan application mean immediate repayment, and the people who made them are personally liable.
 
 ## Draining it through "investors"

JoshHeaps.Net/Content/Socialism/pilot-spec.md

@@ -108,7 +108,7 @@ All of this is written down and filed in a public study registry before the firs
 1. **Fair survival.** Does the co-op stay open and keep treating its members fairly? A co-op counts as *failed* if any of these happens:
    - it closes, or falls below three members or a minimum level of sales;
    - for two years running, its members' median pay per hour (wages plus profit share) falls below 85% of the matched conventional firms' median;
-   - it stops being a real co-op: fewer than three-quarters of its work hours are done by members, or its workers are kept on probation past the limit.
+   - it stops being a real co-op: from its third year, fewer than three-quarters of its work hours are done by members, or its workers are kept on probation past the limit, or it pushes people out before they'd become members ([When People Don't Stay Long](high-turnover.md)).
 
    The pay rule matters. Co-ops can survive a bad stretch by cutting their own pay instead of cutting jobs, and the best existing study couldn't rule that out. A co-op that survives by paying its people far less than the business down the street hasn't passed.
 2. **The bank's money.** At the end, after every loss, write-off and running cost, and every dollar spent on business help, has the loan book earned at least what the same money would have earned in Treasury bonds over the same years? Anything less means taxpayers lost money compared with just holding bonds. Loans still outstanding are valued at what a buyer would pay for them. Loans that were restructured to avoid default are marked down, so going easy on struggling borrowers can't hide losses.

JoshHeaps.Net/Content/Socialism/the-lock.md

@@ -16,7 +16,7 @@ What it covers:
 - **No sale to a non-co-op.** A co-op may merge with or be absorbed by another locked co-op. It may never be sold to conventional owners.
 - **No demutualization.** Members cannot vote to dissolve the co-op and split the value. (This is the failure mode that ended many US mutual savings banks and UK building societies: a generation of members cashed out what earlier generations built.)
 - **No outside voting equity.** Outside money comes in only as voteless, expiring claims (see [Capital, After](capital.md)).
-- **Membership requirement.** A locked co-op cannot run on hired non-member labor. Workers become members after a defined probationary period (the pilot caps it at 12 months). This blocks the "degeneration" pattern, where a co-op becomes a small ownership club employing a large wage-labor underclass. Mondragon's non-member foreign subsidiaries are the warning case.
+- **Membership requirement.** A locked co-op cannot run on hired non-member labor. Workers become members after a defined probationary period (at most 12 months), automatically unless they opt out. In jobs where most people leave within a year or two, that takes a shorter probation ([When People Don't Stay Long](high-turnover.md)). This blocks the "degeneration" pattern, where a co-op becomes a small ownership club employing a large wage-labor underclass. Mondragon's non-member foreign subsidiaries are the warning case.
 - **Indivisible reserves.** A slice of every year's profit goes to a collective reserve no member can ever withdraw. On dissolution, after debts are paid, remaining assets go to the federation fund, not to the members. Italian co-op law already works this way. It removes the incentive to kill the co-op for its assets.
 
 What the lock does *not* do: keep failing firms alive. A locked co-op can still go bankrupt, and its assets can still be sold in liquidation. It just can't be sold as a going concern to anyone but another co-op.
@@ -47,6 +47,7 @@ A lock written only into a co-op's own rules can be voted away by its members. A
 - **It can't be a buyer, or benefit from a sale, in any deal it reviews.** If the co-op's federation might absorb the co-op, or would receive its assets on dissolution, a different lock-holder reviews that deal.
 - **It isn't the only one who can enforce the lock.** Any member, any other locked co-op, the bank and the state attorney general can also go to court.
 - **It publishes an annual review** of the co-ops it holds shares in.
+- **It also guards membership.** Beyond its four votes, it has one more job: it takes workers' decisions to opt out of membership and checks each co-op's membership records, so that the membership requirement means something ([When People Don't Stay Long](high-turnover.md)). It has no say over who is hired, fired or paid what.
 
 **Where the legal risk really is.** Courts are wary of "restraints on alienation": conditions that stop an owner selling property, especially forever ([Cornell Legal Information Institute](https://www.law.cornell.edu/wex/restraint_on_alienation)). For company shares, reasonable restrictions are generally allowed, so that risk is manageable. **The bigger threat is bankruptcy.** Federal bankruptcy law generally overrides contract terms that restrict transferring a bankrupt company's property ([11 U.S.C. § 541(c)(1)](https://www.law.cornell.edu/uscode/text/11/541)). Without a change to that law, a court-run sale could hand a failed co-op's whole business to any bidder, lock or no lock. So the bank's statute has to amend the Bankruptcy Code for locked co-ops. That needs Congress, and it's listed in [Open Problems](open-problems.md).
 

JoshHeaps.Net/Content/Socialism/worker-ownership.md

@@ -15,7 +15,9 @@ A worker co-op under this model means two things, and they are not the same thin
 
 Why the ramp: it kills the dilution panic. Under flat equal shares, every new hire immediately eats everyone's slice, and cooperatives empirically under-hire for exactly that reason. With a ramp, hiring decisions move toward "does this person grow the pie" during precisely the window when their value is most uncertain.
 
-Protected leave (parental, medical, caregiving) counts as tenure, so taking time off to care for someone doesn't set your share back.
+Protected leave (parental, medical, caregiving) counts as tenure, so taking time off to care for someone doesn't set your share back. So does earlier time at the same co-op: someone who leaves and comes back within a few years picks up where they left off.
+
+Membership itself comes automatically after a short probation, unless a worker opts out. In jobs like home care, where most people move on within a year or two, that's what keeps a co-op from becoming a club of the few who stay ([When People Don't Stay Long](high-turnover.md)).
 
 Where does the profit share actually go? Part is paid in cash each year, and part builds up in a personal account that's paid out when you leave. See [Member Capital Accounts](capital-accounts.md).