October 9, 2017

What Facebook Can Learn From Company Towns

This story first appeared on CityLab; find the original here.

In the early 20th century, hundreds of company towns dotted America—quasi-public municipalities where the corporation you worked for built your house, taught your kids, maintained your roads and sewers, and even sold you groceries. Such towns once contained 3 percent of the U.S. population, according to the Economist.

As the country’s workforce became more mobile and prosperity rose, on-site worker housing became less necessary; most of the old company towns have evolved into places separate from their corporate patrons.

But the company town is not dead yet. Facebook recently announced a new campus with 1,500 residences and a walkable retail district near its headquarters in Menlo Park, California. Few details have been disclosed at this point, other than that it’s called the Willow Campus and it will be designed by OMA, the Dutch architecture firm founded by Rem Koolhaas.

Today’s company town, as in days of yore, is the product of three forces: economic expansion, corporate sophistication, and optimistic urban planning. The earliest examples of company towns in the U.S. were textile mill communities in antebellum New England. Estimates for the total number of these communities that existed in the U.S. range from 2,000 to 3,000. Their purpose was to “facilitate production in isolated areas, and to manage labor and resources effectively,” says Marcelo Borges, a history professor at Dickinson College who studies them.

The towns could be genially paternalistic, outright exploitative, or somewhere in between.

The towns could be genially paternalistic, outright exploitative, or somewhere in between. Corporations viewed them as an effective way to manage labor relations—extra leverage that could serve as both carrot and stick. If companies owned all the infrastructure their employees used, they could set them up in high-quality homes and amenity-rich communities, in the hope of keeping them happy and productive. But if flush toilets weren’t enough to head off picket lines, having their bosses as landlords put potential labor organizers in a vice grip.

“Company welfare was seen as an important strategy to promote loyalty,” says Borges. “There were critics of this strategy who considered it another form of labor control, and there were also exclusions [from housing] along ethnic and racial lines.”

Two company towns established about 15 years apart—Marktown, Indiana, and Hershey, Pennsylvania—illustrate the perils of the model, and provide some context for understanding what might become of Facebook-ville in a few generations. Both started out as worker-friendly visions of enlightened Gilded Age industrialism, but their fortunes diverged dramatically. Today, Hershey is a relatively prosperous town of 14,000 that embraces its heritage as the home of a beloved candy company; Marktown, once a steel manufacturing center, is now beset by vacancy and disinvestment, hemmed in by hulking oil refineries. What happened?

Marktown: Built to Last, Now Struggling to Survive

Built 100 years ago, Marktown was named for industrialist Clayton Mark, who manufactured steel and pressed it into pipes and tubes. Mark hired the Chicago architect Howard Van Doren Shaw to design a model workers’ community. Shaw had previously studied labor instability, a pressing concern of industrialists like Mark: Often, factory workers would stay at a job for only a few months, leading to high turnover.

The reason for it, Shaw concluded, was a lack of high-quality housing. With better housing, he believed, companies would have a more stable labor force and healthier bottom lines. So Shaw built Marktown’s houses out of durable, fireproof brick, finished them in stucco, and painted them in bright pastels (which still shine through spiderweb cracks and crumbing corners). All the most modern conveniences (for 1917) were included: running water, coal-fed furnaces, and full basements.

Abandoned building in Marktown, an East Chicago, Indiana, company town.

photo by: vxla/Flickr/CC BY 2.0

Marktown’s decline is tied to the story of the American steel industry. Technological advances meant fewer workers were needed to make the steel. At its peak, 14,000 people labored at the Indiana Harbor Works adjacent to Marktown. The same facility (today owned by Luxembourg-based ArcelorMittal) now employees fewer than 5,000 people.

“I think what made us persevere and hang on is the quality of the construction,” says Paul Myers of the Marktown Preservation Society, who grew up in Marktown and still lives there. “If this was [made of] frame structures, it would have been gone.”

Shaw envisioned an intimate community with narrow, walkable streets, so neighbors could sit on their front porches and chat with the people across the way. Marktown’s streets are so narrow that today, residents park on the sidewalks and stroll down the middle of the street. It seems clumsy at first, but in practice it’s not so different from urban shared streets or woonerfs, where the integration of pedestrian and vehicular traffic is the main selling point.

A street in Marktown, an industry town in East Chicago, Indiana.

photo by: Samuel A. Love/Flickr/CC BY-NC-ND 2.0

Marktown was meant to house 8,000 people on the shores of Lake Michigan, but it was never completed; only 200 houses across about a dozen blocks were built. The oil and gas company BP, one of Marktown’s industrial neighbors, has been purchasing properties and demolishing them (about two dozen so far) since 2014. Marktown has been on the National Register of Historic Places since 1975. A BP spokesperson told the Northwest Indiana Times that the company is purchasing properties “around the perimeter of the plant in an effort to create additional green space.” Myers, however, complains that BP has “no respect for their neighborhood.”

Hershey: A Candy Village That Found a Sweeter Tomorrow

15 or so years before Marktown, confectioner Milton Hershey was attracted to eastern Pennsylvania for its dairy farms, and he began building a factory there in 1903. He named streets of worker housing after tropical places where cacao grows: Granada, Caracas, Ceylon. The single-family homes on these streets featured “spacious lawns, surrounded by shrubbery and flowers,” according to the Hershey Derry Township Historical Society. Major public buildings in Hershey were designed in a variety of styles, from Art Deco to Italian Renaissance.

Initially, to purchase property or build on Hershey property, you had to be a Hershey employee. From the outset, Hershey encouraged people to buy or build, not rent, homes—a far cry from companies that paid wages in “scrip” (currency only usable at the company store) and overcharged worker-residents. A Hershey ad from 1911 made the pitch like this: “It is surely bad business to invest your money in real estate in an old fogey town where there are no modern improvements, no building restrictions, and no industry to support the town”—as opposed to a newfangled town like Hershey.

Milton Hershey also poured money into public amenities, even in the depths of the Great Depression. As unemployment roiled the rest of the nation, he took advantage of rock-bottom material prices and a hungry labor force to build a hotel, a theater, a sports arena, and more as part of his “Great Building Campaign.”

The Hershey Theater

The non-candy arm of Hershey’s business bled money for decades. But Milton Hershey didn’t care. “He was much more interested in the town being attractive and livable,” says Pam Whitenack, director of the Hershey Community Archives.

Across the town’s borders, Milton Hershey built and subsidized inter-city rail lines, opening the door for his workers to live elsewhere. “People very readily could shop in other places,” says Whitenack. “If you lived in Hershey, you weren’t confined to the Hershey department store.” The industrialist saw Hershey as one node in a network of communities, not as an isolated fiefdom whose insularity might bring him better returns.

The results of that conviction can be seen in Hershey’s current state of relative economic health: Bolstered by tourist dollars from its popular amusement park, the town boasts a wealth of history museums and other attractions. And they still make chocolate here, too. The Hershey Company’s corporate headquarters remains in Hershey, and though it closed down its original chocolate factory several years ago, a new facility was built nearby. The company employed 4,300 people in the area as of 2015.

How a Company Town Can Last

Facebook also emphasized community and connection for its new campus, and that includes plans for future rail links. (Count the number of times people use the word “community” in the video.) Like Hershey, Facebook sees engaging with the surrounding area as improving its return on investment. That’s a stark contrast to other tech titans in Silicon Valley, who prefer their campuses to be isolated and self-contained. Think of Apple’s new Norman Foster-designed headquarters, a cool, insular ring of glass surrounded by a moat of parking spaces.

Perhaps the greatest factor in Hershey’s ongoing prosperity was Milton Hershey’s decision to pay forward his largesse. He established a boarding school for low-income kids. Upon his death, the chocolate company started a trust fund that currently pays out $1.5 to 2 million a year to local public schools. Milton Hershey Medical Center, now the region’s largest employer with 12,000 staff, began with a $50 million gift from a Hershey foundation to Penn State University. Milton Hershey ensured there were economic pillars in Hershey beyond the candy factory.

All of Milton Hershey’s investments in the public and cultural realm, and the deep well of resources that he established to maintain them, gave his town some room to maneuver should the economics of making chocolate in eastern Pennsylvania become unworkable. In case a new startup ever finds a better way to share baby photos, that’s a lesson Facebook might want to hold on to.

The main lesson for Facebook and other tech titans that are mulling worker housing is that company towns should be investments for the future, not just temporary fixes for an immediate problem—as in Silicon Valley’s acute affordable housing crisis. From Marktown’s sturdy construction to the suite of trust funds and foundations that helped diversify Hershey’s economy, company towns that last measure their payback in high-quality public space and goodwill, decades down the line. They’re symbiotic economic systems with a life and vitality of their own. If Facebook’s village, like Hershey, survives, successive waves of development will build on Mark Zuckerberg’s vision, and the lines between patron and beneficiary will blur.

By: Zach Mortice, CityLab

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