American Companies Plan on Becoming Employers' Landlords by Building Company Towns

The housing crisis in the United States has prompted some major companies to consider building company towns. Instead of relying on traditional rental properties, companies such as Google, Tesla, and Meta are exploring the idea of becoming landlords themselves, building company towns, and purchasing large pieces of land to provide housing for their workers.

What is a Company Town?

A company town is a place where a single company or employer owns most, if not all, of the land, housing, stores, and other facilities. Workers often lived in company-provided housing, shopped at company-owned stores, and sometimes even used company currency.

The origins of company towns can be traced back to the Industrial Revolution when industries sought to attract and retain a stable workforce in remote or developing areas. These towns were typically built and owned by companies, providing housing and amenities to workers who were employed at the company’s factories or mines. This arrangement allowed companies to exert considerable control over their workforce, ensuring productivity and minimizing disruptions.

Key historical examples of company towns include Pullman, Illinois, and Hershey, Pennsylvania. Pullman, established by the Pullman Palace Car Company in the 1880s, was designed as a model community with high-quality housing and public services. However, it became infamous for the 1894 Pullman Strike, which highlighted issues of worker exploitation and corporate control. Hershey, Pennsylvania, created by the Hershey Chocolate Corporation, was another notable company town, known for providing extensive amenities and fostering a sense of community among its workers.

Over time, company towns evolved in response to changing economic conditions and labor laws. While early company towns were often criticized for restricting workers’ freedoms and fostering economic dependency, some modern iterations have attempted to provide more balanced and supportive environments. Today, the concept of company towns is seeing a resurgence in new forms, often with a focus on sustainability and employee well-being, as companies explore ways to foster community and innovation within their workforce.

In the early 20th century, company towns were a common sight, designed to provide housing, schools, stores, and a sense of community for workers. But company towns often prevented workers from leaving by controlling key aspects of their lives, such as housing and basic needs, which were provided by the company. This made it difficult for workers to leave because they depended on the company for their livelihoods and necessities.

For workers, the experience of living in a company town can vary greatly depending on the company’s policies and the amenities provided. In some historical examples, workers benefited from access to high-quality housing, healthcare, and education, which improved their quality of life. However, there were also instances where companies exerted strict control over workers’ lives, including restrictions on union activities and personal freedoms. The degree of paternalism exercised by the company often shaped the workers’ experience, influencing everything from workplace conditions to recreational activities.

Fast forward to the present day, and Silicon Valley giants are revisiting this concept, exploring the creation of self-contained communities for their workforce. While the concept of company towns is not new, this modern approach involves providing a range of amenities and services within the community, such as parks, restaurants, and shops, to create a sense of community and improve the work-life balance of employees.

Is it legal to have Company Towns?

Company towns are legal in many places, but there are regulations that prevent companies from exclusively using their own currency or script within those towns. It’s worth noting that the concept of company towns has evolved over time, and modern company towns may not have the same characteristics as their historical counterparts.

The Modern Company Towns

Elon Musk, the CEO of Tesla, is planning to build an entire town near Austin, Texas, where three of his companies, Boring, Tesla, and SpaceX, have operations. The new company town is intended to offer below-market rents to his employees, providing an attractive solution to the housing challenges faced by many workers. Similarly, Meta, the parent company of Facebook, is also considering the construction of a company town to provide housing for its employees. Google is already in the process of building a 153-acre neighborhood near its headquarters in Mountain View, California, which will include over 7,000 residential units and 26 acres of public parks and open space.

While the idea of corporate-built company towns can address the issue of housing shortages, it has also sparked concerns about employee flexibility. With health insurance already tied to employment, intertwining housing with work could further limit an individual’s freedom to change jobs or locations. Critics argue that this deliberate entanglement is an attempt by companies to exert greater control over their workforce.

In response to these developments, legislation has been introduced to address the growing need for affordable housing. The proposed Workforce Housing Tax Credit Act seeks to provide states and developers with a new source of funding for the production of affordable rental housing. The Workforce Housing Tax Credit (WHTC) Act aims to incentivize the creation of housing for middle-income families. However, skeptics question the true intentions behind the legislation, speculating that it may serve as a tool for companies to claim tax credits while gaining additional influence over their employees.

The trend of companies building towns for their employees is not confined to the United States. Globally, mega-projects like NEOM are emerging as examples where entire towns are being constructed to accommodate workers. This global phenomenon highlights the evolving nature of the employer-employee relationship and the growing influence of corporations in shaping the living environments of their workforce.

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