3 changed files with 33 additions and 3 deletions
@@ -17,7 +17,7 @@ This model doesn't buy, seize or convert anyone's company. Instead it builds new
 - **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. It serves deals the SBA's rules shut out, which ask a co-op, unlike an ESOP, for cash up front and one worker's personal guarantee. Its results are compared with SBA-financed purchases and ESOP sales, and its pay test follows everyone who worked there at the sale. [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. If a co-op goes bankrupt, only another co-op can buy it whole, and its workers get a real chance to be that buyer. That needs an amendment to federal bankruptcy law, drafted here, and a short model state law closes the ways out that state law leaves open. [The Lock](the-lock.md), [When a Locked Co-op Goes Bankrupt](bankruptcy.md), [The Lock in State Law](lock-state-law.md)
- **It runs as an honest experiment.** A one-time $350 million pilot aims to fund about 400 new co-ops. The success measures are published before the first loan. If, after twelve years, co-ops stay open about as well as similar conventional firms while paying their members fairly, and the bank earned at least what Treasury bonds would have, Congress votes on growing it. If not, it shuts down automatically. It's built so that a hostile government can't quietly freeze it or rig the result, though Congress can always repeal it. It also tests, by lottery, whether serious help before launch gets more co-ops started. Part of the loan money is set aside for co-ops in lower-paid work, so the bank can't drift toward only the safest co-ops, and the verdict has to say which kinds of co-ops it covers. The pilot can't show whether co-ops lift pay at other employers. Even after a pass, a sector big enough for that is decades away nationally. So growth comes in capped stages, and that effect gets its own test in a few local markets. [The Test](the-test.md), [The Pilot, in Numbers](pilot-spec.md), [Help Before the First Loan](before-launch.md), [Who the Bank Lends To](who-gets-loans.md), [After a Pass: How Big, How Fast](scale.md) and [Making It Last](durability.md)
+- **It runs as an honest experiment.** A one-time $350 million pilot aims to fund about 400 new co-ops. The success measures are published before the first loan. If, after twelve years, co-ops stay open about as well as similar conventional firms while paying their members fairly, and the bank earned at least what Treasury bonds would have, Congress votes on growing it. If not, it shuts down automatically. It's built so that a hostile government can't quietly freeze it or rig the result, though Congress can always repeal it. It also tests, by lottery, whether serious help before launch gets more co-ops started. Part of the loan money is set aside for co-ops in lower-paid work, so the bank can't drift toward only the safest co-ops, and the verdict has to say which kinds of co-ops it covers. The pilot can't show whether co-ops lift pay at other employers. Even after a pass, a sector big enough for that is decades away nationally. So growth comes in capped stages, and that effect gets its own test in a few local markets. For raising pay across a whole kind of work, wage boards and unions are faster, and the model doesn't replace them. [The Test](the-test.md), [The Pilot, in Numbers](pilot-spec.md), [Help Before the First Loan](before-launch.md), [Who the Bank Lends To](who-gets-loans.md), [After a Pass: How Big, How Fast](scale.md) and [Making It Last](durability.md)
 - **Co-ops back each other up.** They pool part of their profits into a shared fund. If one fails, its workers are moved into others instead of being left with nothing. [The Federation](federation.md)
 - **Nobody is left behind by low-margin work.** Owning a company doesn't help much when there's barely any profit to own, so a strong floor covers the rest. A fixed formula, not lobbyists, decides which low-paid work gets public help. [Ownership and the Floor](the-floor.md) and [Who Decides What's Essential](essential-work.md)

@@ -17,7 +17,7 @@ An honest list of what the model hasn't solved yet, most dangerous first.

 4. **Is the lock too rigid?** A co-op that should be sold (a better operator exists, the members want out) can only go to another co-op. If the co-op sector is small, that buyer pool is tiny, and viable firms may be liquidated instead of rescued. The federation as buyer of last resort is a partial answer. Critics on the right add a sharper version: a lock that outlasts a repaid loan by generations is a permanent restriction on selling property, bought with one loan, and it binds members who never agreed to it. The lock is now built to hold in layers, including an independent lock share and rules against selling the business piece by piece ([The Lock](the-lock.md#how-the-lock-is-made-to-hold)). Its biggest legal gap is bankruptcy: federal bankruptcy law generally overrides limits on selling a bankrupt company's property, so the lock only holds in bankruptcy if Congress amends that law. [When a Locked Co-op Goes Bankrupt](bankruptcy.md) drafts that amendment. It's modeled on how bankruptcy law already treats charities. Only co-ops can buy a failed co-op whole, its workers can keep it running and bid with the wages they're owed, and creditors who never chose to lend are paid the lock's cost from the federation fund. It still needs Congress, a later Congress can repeal it, and while the co-op sector is small, some viable businesses will be broken up for lack of a co-op buyer. Italy offers a softer model: a co-op there can convert into an ordinary company, but its accumulated reserves go to the co-op development fund, not to the members ([Has This Been Tried?](precedents.md#italys-co-op-funds-coopfond-and-the-marcora-law)). That would keep the part of the lock that stops members cashing out what earlier generations built, and drop the part that stops a firm from ever changing hands.

-5. **Scale.** *(Partly answered.)* Even a total success at pilot scale leaves most workers in conventional firms. The labor-market effect needs a sector large enough to move wages, and nobody knows how long growth to that size takes, if it happens at all. That's the price of not forcing it. [After a Pass: How Big, How Fast](scale.md) works through the numbers: even growing at twice the recent pace every year, co-ops would take about 19 years to reach 1% of today's private jobs. Growth after a pass comes in capped stages sized to demand the reviewers certify, and the labor-market effect gets its own test, by lottery, in local markets where co-ops could become a large share of one kind of work. Still open: the closest evidence cuts both ways (big retailers paying more didn't lift other employers' pay; hospitals hiring nurses did), and co-ops may never become a big enough share anywhere to find out. A first-draft power calculation from public pay records ([The numbers, in a first draft](scale.md#the-numbers-in-a-first-draft)) says the local test could only see an effect of about 5% of pay, bigger than the union evidence suggests a 10% co-op share could produce. So on public numbers the test fails its own rule and wouldn't run. Unless better records change that, the labor-market effect may stay untested.
+5. **Scale.** *(Partly answered.)* Even a total success at pilot scale leaves most workers in conventional firms. The labor-market effect needs a sector large enough to move wages, and nobody knows how long growth to that size takes, if it happens at all. That's the price of not forcing it. [After a Pass: How Big, How Fast](scale.md) works through the numbers: even growing at twice the recent pace every year, co-ops would take about 19 years to reach 1% of today's private jobs. Growth after a pass comes in capped stages sized to demand the reviewers certify, and the labor-market effect gets its own test, by lottery, in local markets where co-ops could become a large share of one kind of work. Still open: the closest evidence cuts both ways (big retailers paying more didn't lift other employers' pay; hospitals hiring nurses did), and co-ops may never become a big enough share anywhere to find out. A first-draft power calculation from public pay records ([The numbers, in a first draft](scale.md#the-numbers-in-a-first-draft)) says the local test could only see an effect of about 5% of pay, bigger than the union evidence suggests a 10% co-op share could produce. So on public numbers the test fails its own rule and wouldn't run. Unless better records change that, the labor-market effect may stay untested. And as a way to raise pay across a whole kind of work, wage boards are faster, more direct and cheaper for the government's budget, though their effect on jobs is disputed ([Compared with wage boards and unions](scale.md#compared-with-wage-boards-and-unions)). The labor-market effect isn't a reason to prefer co-ops for that job.

 6. **Political durability.** *(Partly answered.)* Gradual construction invites gradual repeal. [Making It Last](durability.md) builds the bank to survive a hostile government: the lending standards and the test are fixed in law, board vacancies can't freeze lending, the verdict says "not tested" rather than "failed" if the bank turns away applicants who meet its own standards (every rejection is re-scored, the line is more than 1 in 10 clear passes turned away, and the result has to be one those applicants could have changed; see [the line](durability.md#when-rejections-mean-not-tested)), and repeal can't unlock the co-ops. Still open: after the Supreme Court's 2026 ruling any president can replace the bank's board; money not yet lent can be taken back in a budget bill; the lock's bankruptcy protection depends on a federal law that can be repealed; and at pilot scale the sector has no real constituency. The 1-in-10 line is a judgment call with no benchmark behind it. The bank's law lets applicants and borrowers sue to enforce its deadlines and signed loans ([Who can go to court](durability.md#who-can-go-to-court)), but that's untested, lawsuits are slow, and if the Justice Department won't defend the law itself, the people left to defend it may not be allowed to. The Constitution probably requires that the board have the last word on each loan, so the board can overrule its staff, only in writing, by named vote and in public ([Who has the last word](durability.md#who-has-the-last-word)). Whether the credit officers can keep protection from being fired after *Slaughter* is unsettled, and a president who empties the board hands its power to the Treasury Secretary.

@@ -107,9 +107,39 @@ These are my own rough figures, from public data. The filed version is redone by

 **This test decides nothing by itself.** It isn't part of the pass-or-fail rule, which stays about whether co-ops can compete. Its results are published for voters and Congress to weigh. If co-ops never reach the filed share in the chosen markets, the result is "not tested." If they do and conventional employers don't change, the result is "no effect," and it's reported that way.

+## Compared with wage boards and unions
+
+The labor-market effect is about raising pay for workers who never join a co-op. Other policies go at that directly. Here's how they compare, on the best evidence I could find. The comparison isn't like for like, and I say where.
+
+**Wage boards.** A wage board sets minimum pay for one kind of work, usually with workers and employers at the table. Two recent ones:
+
+- **California fast food.** Since April 2024, restaurants in fast-food chains with more than 60 locations nationally, franchised ones included, have had to pay at least $20 an hour ([California Labor Code 1474](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB&sectionNum=1474.)). California's fast-food and similar restaurants had about 569,000 jobs in 2023 at an average of about $26,900 a year, and about 554,000 jobs at about $30,300 in 2025 ([BLS county and state pay records](https://www.bls.gov/cew/downloadable-data-files.htm)). Not all of them are at covered chains, and those raw changes also reflect everything else going on in California.
+  - **Pay.** The studies agree pay went up because of the law. Compared with similar places, about 7% on average in one careful estimate ([Dube, 2026](https://www.nber.org/papers/w35171)), and 8% to 9% for covered workers in a Berkeley report ([Reich, 2025](https://irle.berkeley.edu/publications/brief/effects-of-the-20-california-fast-food-minimum-wage/)).
+  - **Jobs.** They disagree. One team finds about 3% fewer fast-food jobs than there would have been, around 18,000 ([Clemens, Edwards and Meer, 2025](https://www.nber.org/papers/w34033)). Dube's main estimate works out to roughly 1% fewer, and his other methods range from small losses to small gains. He also finds workers quit much less often. The Berkeley team, using phone location data at each restaurant, finds no job loss ([Reich and Sosinskiy, 2026](https://irle.berkeley.edu/publications/press-release/most-comprehensive-study-yet-finds-no-job-losses-from-californias-20-fast-food-minimum-wage/)). Another team using restaurant-level data finds losses concentrated at small chains, which also opened fewer new locations and closed more ([Melo, Neumark, Sigaud and Wagner, 2026](https://www.nber.org/papers/w35749)).
+  - **Prices.** Prices for all eating out in four California cities rose about 3.3% to 3.6% more than elsewhere by the end of 2024 ([Clemens and others, 2026](https://www.nber.org/papers/w34990)). The Berkeley report, looking at fast-food prices, finds about 1.5%, or six cents on a four-dollar hamburger. They measure different things.
+- **Minnesota nursing homes.** Minnesota's nursing home board set minimums of $19 to $27 an hour depending on the job. They took effect on September 10, 2026 ([Minnesota Department of Labor and Industry](https://www.dli.mn.gov/nhwsb)). Medicaid pays for much of nursing home care, so the raise needed money from the legislature and federal approval of the state's Medicaid plan. That pushed the start back from January 2026 ([the board's 2025 report](https://www.dli.mn.gov/sites/default/files/pdf/nhwsb_annual_report_2025.pdf)). I couldn't find the dollar cost.
+
+**Unions.** The federal agency that protects the right to organize, the National Labor Relations Board, cost $294 million in 2026 ([NLRB budget request](https://www.nlrb.gov/sites/default/files/attachments/pages/node-155/performance-budget-justification-2027.pdf)), about $2 a year per private-sector job. Where states bargain with home care workers, the raises come out of Medicaid, like Minnesota's. The union evidence above is the main reason to think one employer's pull on others' pay exists at all.
+
+**What each costs, roughly.** These aren't the same kind of cost, so here they are side by side rather than netted:
+
+| | Wage board (California) | Co-op local test |
+| --- | --- | --- |
+| Who pays | Customers every year, including low-income ones, plus owners' margins and possibly some lost jobs and openings, mostly at small chains | Taxpayers, once |
+| How much | About $1,900 a year per covered job (7% of $26,900), for as long as the floor lasts | About $1,500 per job in the market ($300 a year for five years), none of it lent back |
+| What it buys | A raise within about two years | A test, which may never run, of whether co-ops at a tenth of the work lift others' pay. On the union evidence, perhaps 4% for men and 1% for women, later, if at all ([The numbers, in a first draft](#the-numbers-in-a-first-draft)) |
+
+If a co-op effect like that did happen and lasted, a one-time $1,500 would be a good buy. But it depends on co-ops reaching a share of the work that this page already doubts they can reach. So as a way to raise pay across a whole kind of work, a wage board is faster, more direct, and cheaper for the government's budget, though its effect on jobs is still disputed. The labor-market effect isn't a reason to prefer co-ops for that job.
+
+**What co-ops do that these don't.** A wage floor raises pay. It doesn't give workers a vote or a share of the profits, it doesn't let them keep what they build, and it lasts only as long as the budget and the politics behind it. Minnesota's slipped for funding. Co-ops give ownership and a vote, but they can't pay more than the work earns ([Ownership and the Floor](the-floor.md)). That's why the model needs both. The case for the bank doesn't rest on the labor-market effect. It rests on whether co-ops can compete and repay ([The Test](the-test.md)). Where they touch:
+
+- **Co-ops don't compete by paying under the floor.** Co-ops pay any floor that covers them, like any other employer, and neither the bank nor the federation seeks exemptions for them. A co-op outside a floor's reach, like an independent restaurant under California's law, still publishes its pay next to the local floor.
+- **A floor can hurt thin-margin co-ops too.** A board that covers every employer, as Minnesota's does, raises a small co-op's costs like anyone else's, and the California evidence suggests small firms feel that most. Where the work is publicly paid, a floor without higher rates squeezes everyone. The bank's loan reviews test whether a borrower could survive a plausible rise in the floor for its work. The pilot reports failures that follow a new floor separately, while still counting them.
+- **In the local test, a floor or contract is recorded, not thrown out.** The draw is within states, so a statewide floor lands on both halves alike. Local floors and new union contracts are different: they could come from co-ops' pull, which is the effect itself, or they could be timed to spoil the test. So every market drawn stays in the main result. New local floors and major contracts, defined by a pre-filed threshold for how much of the work they cover, are recorded as outcomes, including whether co-op members helped win them. A version without those markets is only a filed side check.
+
 ## What this doesn't solve

- **Nationally, it's slow.** Even a clear pass likely means decades before co-ops are common enough to change most workers' options. Nothing here speeds that up. Other policies, like sector-wide wage boards and support for unions, aim at the same goal faster. This model doesn't replace them.
+- **Nationally, it's slow.** Even a clear pass likely means decades before co-ops are common enough to change most workers' options. Nothing here speeds that up. Other policies, like sector-wide wage boards and support for unions, raise pay faster and cost the public less ([Compared with wage boards and unions](#compared-with-wage-boards-and-unions)). This model doesn't replace them.
 - **The effect is unproven.** The closest evidence cuts both ways: big retailers paying more didn't lift others' pay, and hospitals hiring nurses did. Co-ops might differ from both, because they offer ownership and a vote, not just pay. That's what the local test is for.
 - **The local test may never run.** On public numbers, even 100 markets could only see an effect of about 5% of pay, bigger than the union evidence suggests co-ops could produce at a tenth of the work. A smaller effect, like the union one for women, would go unseen. Co-ops may never reach the filed share anywhere, and there may not be 100 markets of the right size whose local governments opt in. If the test can't pass its own rule, the honest result is that the labor-market effect stays untested. And the union evidence behind the scale estimate comes from comparing places, not from an experiment.
 - **Concentrating help will be called unfair.** Conventional employers in the chosen markets will say the government is helping their competitors. The honest answer is that lending terms don't change, the help is time-limited and published, local governments opt in, and it's the only way to learn whether the effect is real. It won't stop the attack.