See the new issue of Briefings magazine, available at newsstands and online.
It sounds like a worker’s paradise. Your employer builds a stunning headquarters and surrounds it with a grocery store, dry cleaner, hair salon and parks. You can even live right next door, in company-built apartments. Facebook is doing all that and more, building a new headquarters and what it calls a “village” in Menlo Park, California, in an attempt to be a good neighbor and keep its workforce enthusiastic and engaged. Other Silicon Valley firms are considering following suit.
But the company town concept has been tried before, and history shows that the roles of landlord and employer don’t always mesh. The most prominent example: Pullman, Illinois, a model town built by George Pullman, the visionary industrialist whose luxury sleeper cars and first-class porter service revolutionized long-distance travel. Built in the early 1880s a few miles south of Chicago, the town of Pullman was designed with similarly grand intentions. George Pullman’s hope was to create an aspirational environment for workers and their families, in part to avoid what he reportedly described as the “loss of time and money consequent upon intemperance, labor strikes and dissatisfaction, which generally result from poverty and uncongenial home surroundings.”
The town of Pullman was nothing like the cramped, squalid company towns that existed at the time. It had well-manicured gardens, multiple churches, a hotel, a theater, a bank, a restaurant and a post office. The homes were well ventilated and had indoor plumbing, and trash was removed regularly. In decidedly modern fashion, the streets were named after contemporary inventors, including Samuel Morse and John Ericsson. Everything in the town was owned by the company.
At its peak, the town housed more than 14,000 people, all within walking distance to the factory. But instead of creating engaged employees, the town ultimately enraged employees. Residents resented that they couldn’t buy the homes they lived in and felt they were under constant watch by their employer.
In 1893 a devastating recession swept the nation. Pullman laid off workers and slashed wages of rank-and-file employees, but he refused to lower prices in town. Rents alone were 25 percent higher in Pullman than in surrounding areas.
‘He had a conscience, but at the end of the day, when the chance camea to realize more profit, he took it.’
“I think Pullman had a conscience, but at the end of the day, when the chance came to realize more profit, he took it,” says Raymond Hogler, management professor at Colorado State University and author of “Employment Relations in the United States: Law, Policy and Practice.”
Pullman listened to grievances listed by a workers’ committee. He promised that he wouldn’t punish anyone for complaining, but that he wouldn’t raise wages or cut prices in town. The next day, three men on the committee were let go—Pullman claimed they were going to be fired anyway.
On May 11, 1894, Pullman workers went on strike; within days, hundreds of thousands of railroad workers in other parts of the country also walked out. The nation’s train service was derailed for two months. In an unprecedented move, President Grover Cleveland sent federal troops to break up the strike and get interstate commerce moving again.
George Pullman died in 1897, and two years later the town of Pullman was annexed by Chicago. Historians consider the town’s downfall as an important event in the evolution of US labor rights. Experts also see it as a lesson in employee engagement gone awry. Leaders can build towns and offer free food and other incentives to engage employees, but workers will anger fast if leaders aren’t ultimately open and honest with them. “For any leader, it’s tough to balance your civic or social responsibility with that of the corporation,” says Michael Shymanski, president of the Historic Pullman Foundation.
(click the image to enlarge)