Company Housing

In the United States, employers have provided housing to workers in mining, lumbering, textiles, and a handful of other industries. Company towns developed largely because the work sites were located in isolated, largely unsettled regions; some manufacturers in suburbs housed skilled workers to discourage turnover. Most employers did not charge monopoly rents, although at times they used restrictive housing leases to limit collective action.

Company housing was important in several industries. New England textile mills housed young women in the 1800s to monitor the women's work in the mills and their social activities. Some manufacturers on the outskirts of cities in the early 1900s housed their most skilled workers. Mining towns and timber camps typically housed the majority of the workforce in isolated mountainous areas with little prior settlement. Most company towns met their demise as the surrounding areas became more densely settled and transportation improved.

The quality of company housing depended on the permanence of the work site and the incomes of workers. In the timber industry, where companies exhausted the resource and moved on within a year or two, the housing was often rough-hewn, temporary bunkhouses that housed several men. In the coal industry where it might have taken 10 to 30 years to mine a seam, the companies built towns with a range of housing. Bachelors and young men seeking to save money often lived in cheap shanties, and poorer families lived in smaller houses or boarded workers in larger houses, whereas families of skilled workers tended to live in more spacious houses. The newly built housing was often an improvement over the existing rural housing in areas such as the Appalachian mountains. Typically, the quality of sanitation and other services was about the same as in noncompany towns of similar size. On the other hand, the impermanence of the resource base often meant that the houses were not as long lasting as houses in towns with a broader industry base.

The quality of life also varied substantially across company towns. Towns with larger populations offered more amenities because economies of scale lowered their costs. Newer towns offered better and more modern facilities, whereas older towns relied on the technologies extant when they were built. Towns blessed with more spacious and less mountainous locations could usually offer better housing at lower cost. Some of the larger mining employers also experimented with welfare capitalism, providing better housing and services to attract and keep more productive workers.

Company towns were controversial institutions. Economics textbooks cite them as classic examples of monopoly, and many cite them as a tool for union busting. This emphasis on monopoly is incorrect. The rents for company housing were often lower than the rents workers paid in independent cities and towns. The rates of return on investment in company housing were similar to normal rates of return in competitive industries. The companies were unable to exploit a local monopoly because they had to attract workers from other areas in a regional labor market where they would compete with several hundred other employers. Typically, companies had to match higher monthly rents with a similar increase in wages.

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