Key takeaways
- Company towns are communities built by a single company for their workers, which usually have their own infrastructure, schools, healthcare facilities, and other amenities.
- From convenience to ensuring housing and jobs, these are some of the advantages company towns can offer.
- Although these communities have their benefits, there are drawbacks that usually outweigh the advantages like limited housing options, complicated living arrangements, limited job opportunities, and extended working hours.
Company towns might appear appealing in a world where the working class struggles to commute in and out of work. But, there are things to consider in deciding whether or not living in a corporate town is worth it.
In this Propcast episode, Justin Lieberknecht discussed the efforts of companies in building company towns that ended with an unfortunate practice of paternalism, particularly in the case of the Pullman Company. Let’s learn what a company town is as well as its benefits and drawbacks for employees.
What are company towns?
Also known as a corporate town, this is a community or settlement that is built and primarily controlled by a single company or corporation. The company typically establishes the town to support its operations and provide housing, amenities, and services for its employees and their families.
These towns often develop around industries such as mining, manufacturing, or resource extraction, where a significant workforce is required near the company’s operations. Company towns can vary in size and may have their own infrastructure, schools, healthcare facilities, recreational spaces, and other amenities. While company towns can offer certain advantages such as convenience and a strong sense of community, they can also have detriments, which we will discuss.
Advantages of company towns
The primary purpose of corporate towns is to give the working class benefits while working for their company. And initially, for the Pullman company, it did provide certain advantages as listed below.
Convenience
Living in a company town offers unparalleled convenience as everything you need is within reach. From work to shopping, dining, and recreational activities, you’ll find all the amenities just a short distance away, saving you valuable time and reducing commuting stress.
For the Pullman Company, creating a corporate town was also an attempt to attract more skilled workers.
“He was being so successful and then he started thinking about how he could get better work out of people if they had a better environment,” Justin discussed. “So, he founded the town as a model city, and it had parks, a library, [and] a well-ordered street plan. It did have gas, lighting, and it had electricity and a lot of modern conveniences.”
And to be fair, the workers did save time and money as they skipped traveling long distances just to be at work. Plus, given that public transportation options were limited at that time, it was a big relief to live in a house located exactly where you work.
Strong community
Company towns foster a strong sense of community and belonging. With like-minded individuals working and living in close proximity, it’s easier to build lasting relationships, collaborate on projects, and create a supportive network that enhances both personal and professional growth.
Ensured housing and jobs
In the 1870s, homelessness became a national issue as more “tramps”, an antiquated term meaning men traveling in search of work due to economic hardship, traveled across the country in search of jobs. Thanks to Pullman Company’s corporate town, more workers secured jobs and homes.
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Disadvantages of company towns
While there are undeniable benefits company towns possess, there are also drawbacks for workers. The following are some real-life examples experienced by laborers of the Pullman Company.
Limited housing options
Although a home is promised in a company town, workers have to accept anything that’s offered to them. Even if it is a tenement, they don’t get to choose where to live or what house to select as they are assigned to each unit.
In the case of the Pullman Company, laborers had issues and concerns in their homes.
“While a lot of the houses were great, he cut corners in some of the construction and he even had tenements around the edges. So, some of the houses were pretty shabby. They didn’t have plumbing and they didn’t have great construction materials,” Justin said.
These houses were located on the outskirts of the company town and were rented less. And although it had worse living conditions, workers had to occupy them because “if you wanna work [for] Pullman, you have to live [in] Pullman.”
Extended working hours
Contrary to work-life balance, employees in a company town tend to work for longer hours than usual. The convenience of not traveling back and forth is exchanged for extended task hours, so a 12 to 16-hour shift per day was not uncommon.
Complicated living arrangements
Living in a company town can have multiple complications for workers. For example, in the Pullman Company case, their employees were allowed to stay in the area as long as they worked for the company. But, what happens if you get fired? Your kids are kicked out of school and they become homeless.
“This entanglement sets it up so that the individual’s goals must align with the company’s and they have to bite the bullet if they want to keep that job,” Justin elaborated.
Limited job opportunities
While company towns may offer ample job opportunities within the specific industry or company they are centered around, they often lack diverse employment options. This can limit career growth and make it challenging for residents to explore different professional paths.
This is especially true in the Pullman community. In 1893, there was a depression that caused train car orders to decrease. Because of this, the Pullman Company decided to cut wages by about 25% in just a year. The workers’ monthly salaries went down but their expenditures did not.
Primarily, your first move should be finding a way to spend less. But, how are you going to cut costs if your main expense is the home you’re renting from your company? They were stuck and they couldn’t find a better-paying job because they were working 16 hours a day.
“They don’t have vehicles. They don’t have easy transport to go and find another factory job,” Justin narrated. Plus, they have no say in the market for labor or homes so they weren’t able to go.
As a result of all these concerns, the workers formed a committee and went to the head office to discuss the matters. They requested to lower the rent, but Pullman’s reply? Flat-out refusal. “Pullman says ‘no’,” Justin said. “And it looked like there were these three that appeared to organize the committee and they were just fired…They went in trying to solve this problem and now those three guys have a bigger one.”
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Concluding thoughts
As evident in this Propcast blog, company towns are double-edged swords, coming with both advantages and disadvantages. Aside from the Pullman Company, there are several companies that have tried building their own corporate town including Hershey, Steinway & Sons, Roebling, and Scotia.
Obviously, there are not so many successful company towns. One possible reason is that the drawbacks outweigh all the benefits these communities can offer laborers. From limited housing options and job opportunities to complicated living arrangements, these are just a few of the many reasons why these projects tend to fail.
In relation, these company towns are not so different from a rental business. And so, for all investors out there, “Think about what you’re providing as an environment for another human being. So think about this as your role as an investor in the life of another person,” Justin concluded.
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