Price Fishback
Appearances
Today, Explained
Elon's company town
I do. I wrote a dissertation and a bunch of articles about company towns and company housing and violent strikes and all sorts of things like that.
Today, Explained
Elon's company town
Well, so there was a really nice article written in the Bureau of Labor Statistics Bulletin back in 1919 by a guy named Liefer Magnusson. And so he'd done a survey of about 213 companies that had towns. And so one of the major reasons they had, and what he talks about in the article, is isolation. You're just out in the middle of nowhere.
Today, Explained
Elon's company town
And if you're out in the middle of nowhere, there's nobody else that's going to really come and build something. And if they do come and build something like build housing or create a store, then they're going to have pretty much monopoly. And then you're going to run into problems where they're going to charge high prices and high rents. And now you have to pay higher wages to get people to come.
Today, Explained
Elon's company town
And so, you know, it's kind of made sense to vertically integrate the whole thing. And just, you know, you're out in the middle of nowhere. You need housing. You need these things. And so let's just build it and bring them there.
Today, Explained
Elon's company town
So you have all sorts of different types of employers. Some of them are very community-minded and things like that, and they have other guys just trying to make money. And so the range of conditions in company towns was pretty wide. A lot of times they're trying to get started. So if they're trying to hire 100 employees or 200 employees, they need to build housing pretty quickly.
Today, Explained
Elon's company town
And so it's usually pretty much the housing looks pretty much the same. They try to design the towns and things like that. And then they try to improve things, the good employers. try to put in things like YMCAs and swimming pools, and they have a baseball team and things along those lines.
Today, Explained
Elon's company town
But they're also providing the sewers and the store and the housing, and also a lot of times they're providing the security as well.
Today, Explained
Elon's company town
There are actually quite a few, because usually what happens is the town starts out as a company town, and then say what happens is another mine moves in nearby, or maybe three or four mines move in nearby, and then what happens is you develop an independent town. in and amongst all the company towns. And so that allows you to expand.
Today, Explained
Elon's company town
And so probably a number of towns in West Virginia that weren't too deep into the mountains actually became independent towns, actually building off of the fact that there were several company towns around. And once you get that kind of situation, the company often sells off the housing.
Today, Explained
Elon's company town
Well, I think one of the biggest problems is that the possibilities of labor strife go up. Oh, yeah. And one of the reasons is, if you just think about it, normally if you're mad at your grocer, you're mad at your grocer, but that doesn't influence your attitude towards your employer, or your landlord, or something like that.
Today, Explained
Elon's company town
But if your landlord, your grocer, and everybody else, and the policemen are all... hired by the company and also the hospital or the medical doctors and stuff. Well, then, you know, if you're mad at one, you're mad at everybody. Most of the towns actually didn't have bad experiences necessarily, but you do get situations where things just really go badly.
Today, Explained
Elon's company town
The Ludlow situation in Colorado in 1913 and 1914 was an example where Standard Oil owned the town. It was a coal mining town and things. It actually was a pretty nice town, actually, if you look at it. They had a lot of nice amenities and things along those lines because usually big companies actually provided better amenities.
Today, Explained
Elon's company town
Then they had a strike, and after about six weeks, the company wanted to bring in other workers, which meant that they pushed workers out of their houses. And so that's always a really bad situation, as you can imagine. And then you have pickets, and people are protesting and stuff. And you could be there, and you could have a car backfire, and all of a sudden people start shooting.
Today, Explained
Elon's company town
And then it goes really badly from there. And so then they had a situation where eventually they called in the troops and the troops, they actually ended up attacking a mining tent town and like 13 women and children died in a fire. I mean, it was just horrible. That was known as the Ludlow Massacre. So that's kind of like the worst thing that can possibly happen.
Today, Explained
Elon's company town
I think the key to the circumstances goes right is that the employer is a good employer. And I think that happens in a lot of different cases. They actually, you know, they're paying wages, above market wages. One of the things that the employers liked about having the company town is that they thought they would get more stable employees. They attracted more married families and things like that.
Today, Explained
Elon's company town
And so if you can get away from a Kind of a bad situation where everybody's a bachelor and they're moving around all the time. That's usually, you can find those kind of towns and they have really lousy housing. But the ones that are relatively permanent sometimes lasted 50, 60, 70 years. Just depended on how long the mine would last or how long... the relationship would last.
Today, Explained
Elon's company town
And Oneida worked well because it was a religious group and they were all pretty similar. So the more similar they were, the more likely they were to agree on everything that was going on. And I think the owners were the leaders. As a matter of fact, the CEO probably was hired by a lot of the people who were employees of the town.
Today, Explained
Elon's company town
Oh, I think so, to some degree. I mean, so you have mining towns. You still have mining operations here in Arizona and in other places, right? And so they're opening up new mines and redoing old mines and stuff. And a lot of the towns around southern Arizona, for example, they grew up. relatively close to the mine, but weren't necessarily part of the mine itself, right?
Today, Explained
Elon's company town
And Tucson is close enough that you could commute from Tucson, commute from Nogales and other kinds of places. And so having the automobile really helps. And then on top of that, I mean, particularly for something like SpaceX, where it's a lot of engineers and things, a lot of them probably can just zoom in or wherever and, you know, come in occasionally.
Today, Explained
Elon's company town
It just depends on what they're actually producing on the site and what kind of skills those people need.
Today, Explained
Elon's company town
I don't think it needs one. I mean, I think the better company towns, Rockefeller and Standard Oil and the steel companies and the number of coal companies, they had owners who were very religious, right? And they felt like they were building a community and all sorts of things. And then it really hurt the reputations when you had these labor strife and things like that.
Today, Explained
Elon's company town
But a lot of them felt like they were making their workers better off. They were paying above normal wages Their rents were typically low in these places. And so you do have like these charismatic people or people who believe that they're doing good things and they're helping their workers and doing things along those lines. And so I can see how Musk would kind of like to do that kind of thing.
Today, Explained
Elon's company town
He seems to like to dabble in everything. I wish he'd just make better batteries so we can improve.
Today, Explained
Elon's company town
Well, certainly. I mean, if he's really planning on having SpaceX be there for quite some time, I imagine they're going to build good quality housing. And these days you can build good quality housing in nice neighborhoods and have it be variable as well. It depends on who he's trying to house and how expensive it is.
Today, Explained
Elon's company town
And, you know, one of the questions, is he building the housing and going to sell it or is he going to build it and have people rent it? And then once the community is close enough to Austin that all sorts of other things are going on, then you'd sell the housing to people because that's typically what happens in those kind of settings.
Today, Explained
Elon's company town
Well, I think the company town was really important for developing areas that were relatively isolated. And then what happens is in a number of places where the activity actually expands and you have the same kind of things around it or you have complementary industries that develop, then what happens is the company town becomes a thriving town that's independent.
Today, Explained
Elon's company town
They sell off the housing and everything goes along. So I think that's a feature of it. It's not how every place developed, but it's certainly how isolated places developed, I think.
Today, Explained
Elon's company town
This is Today Explained. So I'm Price Fishback. I am a Regents Professor and APS Professor of Economics at the University of Arizona.