JoshHeaps.Net/JoshHeaps.Net/Content/Socialism/scale.md

title, section, order, summary

title	section	order	summary
After a Pass: How Big, How Fast	Growing the Sector	68	Even if the pilot passes, a co-op sector big enough to change how other employers treat workers is decades away nationally, so growth comes in capped stages sized to audited demand, and the labor-market effect gets its own test in a few local markets.

After a Pass: How Big, How Fast

The pilot tests one thing: can worker co-ops compete, survive and repay market-rate loans (The Test)? That's the case for the bank, and it stands on its own: people get to govern their own workplaces, and the public gets its money back. The bigger hope is different. If co-ops become common enough, conventional employers would have to treat workers better or lose them to co-ops. That's the labor-market effect. The pilot can't test it, because about 400 co-ops employing perhaps several thousand people won't move anyone's wages.

This page works through what comes after a pass: how big the sector would have to get, how long that could take, how to grow without lowering standards, and how to find out whether the effect is real without waiting decades or promising it in advance.

How big is big enough?

Nobody knows. But three kinds of evidence give a sense of it, and they don't all point the same way.

When big retailers raised their own pay, other employers didn't follow. From 2014 to 2023, large retailers like Amazon, Walmart and Target set their own company-wide minimum wages. Those covered over 3 million jobs. A study using payroll records for thousands of firms found the policies raised pay and cut turnover at the companies that adopted them. But the effect on other employers' pay, even ones that hired from the same workers, was "precise" and "economically negligible." The authors' explanation: the retailers mostly kept their workers longer rather than hiring more, and other employers could still find plenty of people (Derenoncourt and Weil, 2024).

An earlier version of the Amazon research did find that other employers raised pay too, and it's still widely quoted. Its own authors later found the result came from a flaw in their method, a statistical effect called mean reversion, and with revised methods they found no evidence of it (Derenoncourt and others, revised 2022).

When one employer hired a lot in a tight market, others did follow. The same study describes a different case. When Veterans Affairs hospitals raised pay for registered nurses, nurses' pay at nearby hospitals rose too. The authors think the difference is that nurses are a small, concentrated market, while low-wage retail work is not. So an employer that adds real demand for scarce workers can move others' pay, and one that just keeps its own workers longer mostly doesn't. New co-ops create new jobs, which puts them closer to the nurses' case, but only if they're a big enough share of the market.

Unions once lifted pay for non-members, at much higher densities. In 1977, about 22% of American private-sector workers were in unions. By 2015 it was 7%. One study estimates that if unions were still as common in each occupation and region as in 1977, non-union men would earn about 6% more, around $3,200 a year, and non-union women about $900 more. That's the "threat effect": employers paid more to keep unions out. It showed up where unions were dense in a particular occupation and region, not as a national average. The study compares places and times, so it can't prove cause and effect (Denice and Rosenfeld, 2018). And co-ops don't work the same way. A union threat happens inside your current job. A co-op only helps workers who can leave for one or buy their own workplace. So this suggests a scale, not a target: an effect like that came with about one private-sector worker in five.

The biggest co-op sectors are still small shares. Mondragon is the largest employer in the Basque Country (Co-operative News), and about 30,660 of its 70,000 workers were there in 2024, not all of them members (Wikipedia, citing Mondragon's 2024 annual report). That's about 3% of the roughly 995,000 people working in the Basque Country (Eustat, via Orain), after almost 70 years. France, with one of the best-supported worker co-op sectors in the world, counted 87,699 people working in its worker co-ops and a related form of community co-op in 2024 (ESS et société, reporting CG Scop).

So the honest answer: any effect is likely to show up locally, in particular jobs in particular places where co-ops are a big share, long before it shows up in national numbers. Whether it shows up at all is what the local test below is for.

How long could it take?

America had about 136 million private-sector jobs in August 2026 (Bureau of Labor Statistics). One percent of that is about 1.36 million.

Nobody knows how many people work in American worker co-ops today. The sector's census counted about 751 co-ops in 2023, triple the number a decade earlier (NCEO summary of the Democracy at Work Institute census), but only 242 firms answered its latest survey, too few to add up workers (US Federation of Worker Cooperatives). So suppose, as a round assumption, that 20,000 people work in them by the pilot's year 12. To reach 1% or 3% of today's private jobs:

If the sector grows by	1% of private jobs in	3% (Mondragon's Basque share) in
12% a year, about the pace at which the number of co-ops tripled over the last decade	about 37 years	about 47 years
25% a year, twice that pace, every year	about 19 years	about 24 years

These are minimums. The number of jobs keeps growing, so the target keeps moving. The 12% pace comes from the number of co-ops, not the number of workers. And fast growth is hard to sustain. Starting from fewer than 20,000 workers makes every figure longer.

So nationally, even a clear success likely means decades before co-ops are common enough to matter to most workers. That's the price of not forcing it, and I'd rather say so now than have someone discover it later.

What fast growth has looked like

Rural electric co-ops grew fast, in conditions this model doesn't have. In the mid-1930s, nine in ten rural American homes had no electricity. By 1953, over 90% of farms had it. The federal Rural Electrification Administration lent to co-ops of farmers who wired the countryside themselves, and two years after it started there were already 350 co-op projects in 45 states (EH.net; America's Electric Cooperatives). Two things made that speed possible. Private utilities had refused to serve those areas, so the co-ops had no competitors. And the loans were cheap: 25 years to repay, and from 1944 an interest rate fixed at 2%, whatever the market charged. This model has neither. Co-ops compete with established firms in every industry, and they pay market rates. The electric co-ops also carry a warning. They built defenders in almost every congressional district, and critics can fairly say those defenders kept cheap loans flowing long after the original job was done (Making It Last).

Employee ownership with tax breaks grew big, in a different form. In 2023, about 6,400 American companies had employee stock ownership plans (ESOPs), with 10.9 million active participants (NCEO). That's equal to roughly 8% of private-sector jobs, though participants aren't the same as jobs, and a plan can own only a small slice of its company. It's the biggest American case of ownership spreading through ordinary finance, and it took 50 years and large federal tax breaks. ESOPs don't give workers one member, one vote. I haven't found any study of whether they lift pay at other employers.

Growing in stages

If the pilot passes, the charter sends Congress a fast-track vote on more capital (The Pilot, in Numbers). Here's how the growth after that is meant to work:

• Each stage is sized to audited demand, not a target. The bank can ask for enough capital to fund the good applications it had to turn away for lack of money, plus at most 20%. Only unique applicants count, only those that met the bank's filed lending standards, and the count is certified by the independent reviewers, not the bank (Making It Last). Delays don't count. There are still no lending or job targets. An institution with a target lowers its standards to hit it, which is what sank Venezuela's co-op push (The Pilot, in Numbers).
• Capped growth. No stage can more than double the bank's capital. A bank that suddenly has to find ten times as many borrowers will lower its standards without meaning to.
• Demand can't be starved, either. Applications and approval rates are published against the pilot's own. A hostile administration can't cut outreach, tighten what counts as "good," and then claim nobody wants to borrow, because the reviewers already re-score rejected applications every year and publish how many met the standards anyway (Making It Last).
• The same rules at every stage. Market rates, the same underwriting, the same limits by industry and county, and no federal guarantee on anything the bank borrows.
• Growth follows the evidence for each kind of work. Lending to co-ops in lower-paid work is sized from that group's own result. If the pilot had too few of them to tell, that lending can't grow faster than the rest (Who the Bank Lends To).
• The same measures, published for every new group of co-ops. Each later round of capital is its own vote in Congress, so every Congress sees how the newest co-ops are doing, not just the pilot's. A passed test shows that co-ops funded one way, at one size, could compete. It doesn't show the same is true at a larger volume, when the bank has to reach further for borrowers.
• The full public cost, every year. The bank publishes its all-in cost to taxpayers per co-op job: losses, running costs, all business help, and what the public's capital could have earned in Treasury bonds instead.

Testing the labor-market effect

The pilot can't test it. But once the sector grows, it can be tested locally, without waiting decades and without deciding anything in advance.

The model is a French experiment that started in 2007. Researchers wanted to know whether job counseling for young unemployed people really created jobs or just moved them from one job seeker to another. They randomly chose what share of eligible people would get counseling in each of 235 local labor markets: 0%, 25%, 50%, 75% or 100%. The counseled did find stable jobs faster. But the gains were short-lived, and partly came at the expense of people in the same markets who weren't counseled, especially in weak markets (Crépon and others, 2013). A test of individuals alone would have missed that.

The same idea can test co-ops.

Where

• A few kinds of work where the pilot showed co-ops can compete. At least one should be work where employers really set pay. In home care, for example, pay depends heavily on what Medicaid reimburses, so employers may not be free to respond. Where that's true, changes in reimbursement are measured and controlled for.
• Local labor markets drawn by lottery, from a pool whose rules are written into the charter: labor markets defined by commuting patterns, with 2,000 to 4,000 private-sector jobs in the chosen kind of work (big enough to measure, small enough that co-ops could plausibly hold a real share), and local governments that opt in. A market counts as opted in only if the governments covering most of its workers do. The draw is public and made within states, so markets are compared with others under the same state minimum wage and Medicaid rates. Markets that border a high-help market are left out of the comparison, because workers and employers cross those lines. Its random seed is published in advance. Members of Congress can't add or remove places.
• Help or none. Half the markets get a high level of outreach and help before the first loan, including outreach to owners who might sell to their workers (When an Owner Wants to Sell to the Workers). The other half get none. The French experiment used several levels, but a middle level would cost a third of the budget and, with this few markets, add almost nothing to what the test can detect. The help runs for five years. The charter sets a minimum budget, so a hostile administration can't quietly starve it: $300 a year for each job in the chosen kind of work in the market, in today's dollars, rising with inflation. That's my first guess, sized in the numbers below. It's paid from its own appropriation, not from loan money, and counted in the bank's published cost per co-op job.

What doesn't change

Lending. Loans in the chosen markets go through the same underwriting, at the same rates, under the same limits by industry and county as everywhere else. Only the outreach and help are concentrated. If the concentration the test needs would break those limits, the limits win, and the test is smaller.

What gets measured

• What happens to co-ops. Their share of the work in each market, with a minimum share filed in advance that counts as "reached." New co-ops and buyouts of existing firms are counted separately. A buyout changes who owns a job but adds no new demand for workers, and the evidence above suggests new demand is what moves other employers' pay. Co-ops that move in from outside the market don't count.
• What happens to conventional employers in the same kind of work: pay, turnover, hours, and working conditions where records exist, like injuries.
• Who gains. Results by gender, race and ethnicity, and co-op membership compared with the local workforce. Most home care and cleaning workers are women, many of them Black, Latina or immigrant workers, and the union evidence found much smaller gains for women.
• Whether co-ops actually let people in. Co-op job openings, how long it takes new hires to become members, and the share of work done by non-members. A large co-op sector that doesn't hire is no outside option for anyone.
• The costs. Total jobs in the market, conventional firms closing, and prices where they can be measured, so that higher pay bought with lost jobs or higher prices shows up.

The data. Government wage records, like the Census Bureau's Quarterly Workforce Indicators, which report pay, hiring and turnover by industry, place, gender, race and ethnicity. The detailed records are used only inside secure federal research centers, and nothing is published that identifies a business. Co-op borrowers agree, as a loan condition, to have their records linked. Home care and cleaning include a lot of work that wage records miss, like independent contractors and households paying workers directly, so worker surveys fill in. An independent team named in advance does the analysis, and its data access can't be revoked by the administration. Pay is tracked for at least five years, because an incumbent could raise pay briefly to stop co-ops forming and cut it once they're gone.

Filed in advance

The markets, the kinds of work, the measures, the analysis and a power calculation are filed before the draw. The power calculation states the smallest effect the test could detect. If that's bigger than any effect that's plausible, the test isn't run, because an expensive test that can't find anything isn't worth running.

The numbers, in a first draft

These are my own rough figures, from public data. The filed version is redone by the independent team with the detailed records. On these figures, the test fails its own rule.

• How noisy pay is. I took the Bureau of Labor Statistics' county pay records for home health care, services for elderly and disabled people, and commercial cleaning (BLS county data, 2014–2024). In counties with 2,000 to 10,000 private-sector jobs in the work, average weekly pay rose by quite different amounts over five years, both from 2014 to 2019 and from 2019 to 2024. Comparing counties in the same state, the typical spread (the standard deviation) was about 8% to 11%. Past growth didn't predict future growth. Weekly pay mixes hourly pay with hours worked and with who's employed, so the Census records, which can follow the same workers over time, could be less noisy. I haven't been able to check that.
• The smallest effect the test could find. With a 9% spread and 100 markets, 50 with help and 50 without, the test would reliably detect a difference of about 5% in pay at employers other than co-ops. "Reliably" means an 80% chance of finding an effect that size, with a 5% chance of a false alarm. There may not be 100 markets to draw from. I count only about 100 counties of the right size in each kind of work, in states with at least two, before any opt out.
• What's plausible. The only guide is the union evidence above: men's pay about 6% higher where unions were about 15 points more common, or about 0.4% for each point. Women's gain was about $900 a year against men's $3,200, and most home care workers are women. It came from comparing places, not from an experiment, and a co-op's pull may not grow point by point the way this assumes. At a 10% co-op share, the men's figure suggests an effect of about 4%, and the women's about 1%.
• So the rule says no, for now. Both of those are below 5%. The filed rule compares the smallest detectable effect with the union figure, weighted by how many men and women do the chosen work. On public numbers it fails for every kind of work I checked, and fails badly for home care. The test only runs if the independent team, using the detailed records, shows it passes. If it never passes, the local test isn't run, and the page says what that means: the labor-market effect stays untested. A smaller effect, like the union one for women, is probably too small for any affordable local test to see.
• What counts as "reached." If the test does run, help markets must average at least 10% of the hours in the chosen work done by workers at new co-ops, measured in year five by the independent team from wage records. That's ambitious. The pilot's own help is judged against about 32 extra co-ops from about 250 founding groups (Help Before the First Loan), roughly one in eight. At that rate, 10% of a 2,000-job market, about seven co-ops of 30, would take something like 55 founding groups in one place. So the test also runs only if the pilot's results make that reachable.
• A checkpoint, so the money isn't wasted. If help markets average under 4% at the end of year three, the help stops and the result is "not tested." The same team audits whether the help was actually delivered. If it wasn't, the result says so, and it's reported as a broken promise, not as co-ops failing. Pay in the markets is still tracked for the full five years.
• What it costs. In a 2,000-job market, seven extra co-ops at the pre-launch help's own limit of $400,000 each cost about $2.8 million, or $280 a job a year over five years. Hence $300 a job. With 50 help markets averaging 3,000 jobs, that's about $225 million over five years. None of it is lending. Loans still go through the bank's normal rules.
• One main measure. The main result is filed in advance: the pay of workers who stay in their jobs at employers other than co-ops, in one kind of work. Everything else, including other kinds of work, groups of workers, new hires' pay and the share of workers below a low-pay line, is reported with a correction for testing many things at once. Employers that set pay across many markets, like home care chains, are reported separately, since they could carry any response into the markets without help.

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). 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). 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), and 8% to 9% for covered workers in a Berkeley report (Reich, 2025).
  • 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). 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). 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).
  • 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). 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). 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). 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), 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)

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). 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). 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, raise pay faster and cost the public less (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.
• Growth can outrun judgment. Audited demand, capped stages and published results are the defenses. None of them is airtight.
• Success builds a lobby. If the sector grows, its members will defend the bank, as the electric co-ops defended theirs. That's why growth depends on the published results and a vote each time, not on how many friends the bank has.