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The Rebirth Of Company Towns: New Solutions Or A Sign of Hard Times?
Company towns have existed for as long as people have built cities. Some of the earliest, notable examples were worker housing villages built by the Egyptian Pharaohs next to the Great Pyramid at Giza and at Deir el-Medina in the Valley of the Kings. And contrary to stories about only using slave labor, designers, draftsmen, construction foremen, and skilled craftsmen traded devotion to the glorification of the dynasty for a guarantee to be well-fed, sheltered, and clothed in return.
These have essentially been the terms of the Devil’s bargain of company towns ever since.
Deir el-Medina - Wikipedia
In an iteration of this age-old concept, the Disney Company recently announced that it will be developing 1,300 units of affordable housing near Epcot Center in Orlando, Florida. Whether this is in response to Abigal Disney’s relentless lambasting of her late father’s company’s moral and social justice failures or an attempt to buy some goodwill in light of employee grievances about low pay and poor working conditions at Disney theme parks or if, as the company claims, it’s to fulfill a grand vision its founder, dating back to the 1960s, is unknown. But the marketing line is that they are doing it to make “an important difference locally to address one of the nation’s greatest challenges.”
This housing will not be restricted to Disney employees, only, (though that percentage of market-rate housing for the public is still unspecified). Some units will also be made available to the general public, based on income and lack thereof: a requirement stipulated by local government in exchange for speedy planning approvals.
According to reports,
“In the Orlando area, rents are increasing, and the number of residents paying more than a third of their income on rent is among the highest in the country. In 2019, the National Low Income Housing Coalition named Orlando the worst city in the nation for affordable housing, with just 13 affordably priced homes for every 100 low-income renters. The report estimates that the Orlando metropolitan area has a shortage of more than 60,000 units of housing for those with extremely low incomes. Disney’s affordable housing plans are clearly not happening in a vacuum.”
Epcot Housing - The Disney Company
The Disney project is an updated version of the historic company town model. This kind of investment is long overdue considering how little major U.S. corporations like Disney pay in taxes (compared to the percentage of income their employees pay) and how much they benefit from the decades of public investment and public education that built the society and infrastructure that they have built their corporate empires upon, mostly free of charge.
Most Disney World employees make $15 per hour or less. Hardly a living wage in a world where the price of general admission to Disney World starts at $109 a day and up (not including related expenses and extra ticket costs).
A Short History of Company Towns
The basic rationale for building company towns has always been to attract and retain a skilled labor force that the company needed to be a successful enterprise. They were typically located close to a company’s industrial plant or resource extraction and often in places that had sparse populations. Ironically, the quality of life in some company towns rivaled and even exceeded that which could be found elsewhere. In some cases, qualifying for a job and the residency that went with it involved competitions and lotteries because the demand was so great.
However, even in the best circumstances, much like the craftsmen in ancient Egypt, a town’s residents/employees were beholding to their company for everything: a home, a job, education, healthcare, the food on their table, and the clothes on their backs.
As noted in articles by the Social Welfare Libraries at Virginia Commonwealth University, in many cases,
“The remoteness and lack of transportation prevented workers from leaving for other jobs. In some cases, companies paid employees with a scrip that was only good at company stores. Without external competition, housing costs and groceries in company towns could become exorbitant, and the workers built up large debts that they were required to pay off before leaving.”
It was also no coincidence that company towns flourished in the U.S. in the latter part of the 1800s and thrived through the dawn of the 20th century when the chasm between the haves and the have-nots was at its peak and the infamous “robber barons” and mega-rich businessmen and industrialists ruled the world: the echoes of which are very much with us today.
Five of the most famous company towns in the U.S. include Pullman, Illinois, Hershey, Pennsylvania, Steinway Village in New York, Roebling, New Jersey, and Scotia, California. In each case, these new towns were built by one corporate titan and inhabited by residents who all worked for that company… and lived by its rules.
Most company towns also promoted a virtuous “utopian” vision of corporate-centric, healthful, modern living for the new industrial age. This included adhering to high ‘moral’ standards and weak labor laws. In the end, this was a big part of their undoing.
Of these, Pullman, Illinois, was a striking example.
The story of Pullman, Illinois
Pullman was located on 4,000 acres of land south of Chicago. George Pullman, founder of the Pullman Palace Car Company (that build luxury passenger train cars) built his vision of a ‘virtuous village’: clean, hygienic, and vice-free. By 1893, it had over 12,000 residents living in 1,000 homes (a home was defined as a flat in a fourplex attached row house) set along broad, well-lit streets, near good schools, public libraries, and parks. The units had indoor plumbing, cross-ventilation, basement windows, and many other “innovations” of the time that won high praise from social progressives of the time. The overall quality of the homes was far superior to that of the average home back then.
Unlike today’s “housing first” advocates, George Pullman and other company town developers believed that just providing housing was not enough to help their employees lead a virtuous, productive, and happy life. Towns like Pullman would provide residents with everything they needed for a healthy body and mind… at least in the opinion of the town’s patriarch.
But as time went on, all was not well in Pullman.
Pullman - The Pullman Historic Foundation
The rules of conduct in Pullman were strict. There were no “undesirable” businesses or activities allowed in the town. No bars or nightclubs or other “unapproved” social outlets or activities. Public gatherings were banned. Library books were carefully screened for ‘purity’ and political correctness, theatrical performances were heavily censored, and residents were subjected to random “inspections” to weed out troublemakers. Transgressions resulted in fines or losing one’s job and home and consequently having one’s family thrown out into the street. And residents had no say in the governance of their town, whatsoever.
Worst of all, the ‘wonderful’ life residents enjoyed was fundamentally precarious, to begin with. If the company went under the town was out of business, too, and everyone was left to fend for themselves.
Despite all this, applications for jobs remained very high. The late 1890s was a time when the ability for a working person to find a decent job, any job that would afford him the ability to have his family live in a safe town with free education for his children and a roof over their heads, was almost impossible to find. Most major cities were filled with run-down tenements where multiple families were crammed into dark railroad flats. So, Pullman employees begrudgingly put up with all the restrictions.
But, when economic hard times came and rents were jacked up to cover company’s financial losses, many workers found themselves in a profitless situation.
Pullman’s residents eventually went on strike and rioted, in 1894, which brought about the death of 40 people in bloody battles with company-paid police and federal troops called in to quell the riot, by President Grover Cleveland. In the end, when George Pullman died in 1897, he was so despised they had to bury his coffin in thick concrete to prevent the desecration of his remains.
The Pullman strike was, at that time, one of the worst in U.S. history. So much so that a national commission was created to investigate. That commission determined that the forced social-engineering experimentation and “paternalism” at Pullman that was so embodied in every aspect of the town’s ‘culture’ was largely to blame for its downfall.
Modern life after the turn of the century celebrated social change and personal reinvention and other concepts that we take for granted as being uniquely American today. The early 20th century labor movement broke the grip of corporate paternalism. And as middle-class earnings rose after World War II, consumerism became the new ‘utopian’ vision. Public schools and public libraries and public parks became the norm.
The affordability of the automobile also meant it was easier to commute to a job while living somewhere that benefited one’s family life. And the idea of living under the dictates of someone else’s opinion of what is or is not moral also saw major rebellions during the 20th century.
Like Pullman, most of the American company towns only survive today because when their parent companies went bankrupt, as Pullman did at the turn of the century, residents were allowed to buy their homes, which they somehow managed to maintain through the following decades of financial panics, the Great Depression, and two world wars: a testament to the power of pride of homeownership.
(This is a lesson it would be wise for city planners and state agencies to be reminded of today when socioeconomic conditions are forcing more and more people into being renters for life.)
In general, the upward mobility resulting from the growing wealth of the middle-class in the U.S. from the late 1940s through to the end of the 20th century made the whole idea of needing a ‘company town’ to take care of employee’s needs seem quaint and unnecessary… until now.
Echoes of the late 19th century are with us, again. Corporate wealth and power have again grown to unimaginable size and working people are again more and more beholding to their company to maintain their middle-class lifestyle.
It’s true, many of today’s powerful corporations pay their top talent extremely well. Transportation, healthcare, counseling, gym memberships, and even student loan debt repayment are common perks for highly skilled employees at major tech companies and investment banking firms. However, the same can’t be said for their services workers and less skilled labor. (e.g., witness the movement to form labor unions by the rank and file at Amazon and Starbucks.) These same mega-rich corporations drive hard bargains with minimum wage service workers who clean their offices, serve in their cafeterias, protect their premises, and repair their delivery vehicles.
The employment playing field in this age of mega-corporations does not appear to be even close to becoming level any time soon.
Everyone in the pool
Disney’s Orlando development is not the company’s first foray into housing nor are they the only ones partnering with national developers to build, rent, and manage housing developments built near their facilities. Universal Studios and others are also getting in on the action. On the West Coast, major tech companies such as Google and Facebook are also developing housing near their main campuses to address the lack of affordable housing for their staff and to address the political backlash they are getting from their impacts on the communities they operate in.
However, “do-gooder” investments by these corporations are not altruistic. They can be very profitable when combined with local government incentives, zoning giveaways, government-funded grants, and tax credits. And if they are lucky enough to score “Opportunity Zone” status, all the better for their bottom line.
Still, the fact that private companies are finally providing some affordable housing, some of which is also available to the general public and not only for their employees, is a net positive. And in most cases, the locations are logical; on reclaimed, non-residential land close to employment, services, highway access, and public transportation, instead of being crammed into suburban, single-family neighborhoods where none of these things are readily found.
These new, corporate-funded developments are also being forced (mostly due to rising community opposition) to contribute to the costs of public infrastructure, roads, sanitation, and schools as part of the negotiated bargain: a step in the right direction from the “wham, bam, thank you, ma’am,” pay no taxes, shoulder no public impact costs, “by right” development model that California legislators want to see running rampant, everywhere.
In the Seattle area, for example, Amazon has committed $1.2 billion to create and/or preserve 8,000 homes, again, directly due to the intense community opposition to skyrocketing homes prices and the upscale gentrification of neighborhoods resulting from the company’s expansion in the area. In total, including the Seattle area projects, the company’s “Housing Equity Fund” has committed over $2 billion to develop and preserve about 20,000 homes across the country.
According to Catherine Buell, director of the Amazon Fund,
“The Amazon Housing Equity Fund is tackling the affordable housing crisis on multiple fronts and through innovative solutions, such as teaming up with public transit authorities, which brings people closer to more opportunities, services, and a better quality of life.”
But we need to keep in mind that although their press release is filled with all the usual jargon about being “transit-oriented” and housing “teachers, service workers, and first responders,” these will all be rentals, so the paternal system remains intact. All profits flow uphill not down to the residents. And the funding to create these affordable units is subsidized by local and state government and underwritten by federal Low Income Housing Tax Credit financing.
This is good business and good P.R. for Amazon with no real downside.
Facebook and Google are not far behind. They are going about it in somewhat divergent ways, although both seem anchored in the old company town model of looking out for their own.
Right across the street from Facebook’s sprawling, Menlo Park headquarters, the company is building the 1,500 unit, “Willow Campus” housing community.
Willow Campus - Facebook
Facebook joyfully calls it an “integrated, mixed-use village” that will provide residents with all of their needs; a grocery store, pharmacy, office space, personal services, sports, and outdoor facilities… even a shopping center. The development is primarily for Facebook employees, but some units will also be offered to non-employees, though again that percentage has not yet been determined. The number of units that will qualify as “affordable” (30% to 80% of median income) is only 15% of the units.
Facebook’s Willow Campus appears to be mostly indifferent to the fact that their highly paid employees are a big part of the reason housing in the vicinity of their headquarters has become so unaffordable for non-Facebook employee residents. (This has led to intensive gentrification and displacement of residents in neighboring East Palo Alto, which remains one of the poorest cities in the SF Bay Area.)
Google is taking a two-pronged approach; investing in modular construction technology while also making commitments to invest over $1 billion to develop 20,000 units of affordable housing in the communities near their corporate headquarters. The development of these units will be in partnership with existing major housing developers across the country, similar to Disney’s Orlando venture.
But it’s Google’s major investment in prefabricated construction that may be the most beneficial, in the long run. It’s called “Factory OS.”
This venture recently raised $55 million in a Series B funding round, and in addition to Google, investors include Autodesk, Citibank, Facebook, and Morgan Stanley. They have taken over an old shipbuilding hanger at Mare Island, which had previously been home to two other failed, modular housing manufacturers, with a vision to create a new way to design and manufacture modular housing to address the affordability crisis.
Factory OS
Google intends to build several hundred units for its employees, near its Silicon Valley campus, using modular housing produced at the Factory OS facility.
Although this type of venture can’t do anything about the prohibitive land costs in the San Francisco Bay Area, if successful, it may be able to bring down the costs of design and construction, considerably. It might also provide customizable, modular construction units for developers throughout the region.
The failures of previous modular housing ventures at the same Mare Island location were predominately due to limited financing, limited custom design capabilities, limited product lines available, and a general lack of confidence by builders that the ventures would remain solvent long enough to fulfill their orders. One would think this shouldn’t be a problem with the new lineup of investment partners. This would certainly be a net positive for future growth of the prefab construction industry, in general.
Still, the participation of these mega-corporate players in this space remains predominately focused on the company town model, albeit with some updated tweaks and perks. So, one must ask, is this a sign of new solutions to our housing affordability challenges or is it just another way to avoid addressing the deeper problems that are contributing to the overall cost of living “unaffordability” challenges for the majority of California residents?
Is it really sound public policy in a democratic society to have our basic needs more and more dependent upon super-rich corporations controlled by a few incredibly wealthy individuals? Is this really doing anything to address the underlying social and structural inequities and the grossly distorted tax policies and absurd executive compensation practices most of our working citizenry are suffering under?
Equally disconcerting is that much like those company town employees more than a century ago, as a society, we seem to have few other options available to help address housing demand.
Bob Silvestri is a Marin County resident, the Editor of the Marin Post, and the founder and president of Community Venture Partners, a 501(c)(3) nonprofit community organization funded by individuals and nonprofit donors. Please consider DONATING TO THE MARIN POST AND CVP to enable us to continue to work on behalf of California residents.