Colleagues & Neighbors

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A brief history of workforce housing in America

A Mountainous Challenge
In the early 1970s, the well-heeled residents of Aspen and Telluride, CO, faced a problem. Though they were often part-timers from the two coasts and other major cities who spent only weeks at a time in the two ski resort towns, their presence had priced out the very people they needed to run the towns and local businesses.

Ski resorts need mountains, and mountains limit the amount of nearby buildable land, much of which in these western areas is owned by state and federal government and officially designated as parks or wilderness areas. Sprawl, therefore, is generally out of the question. The choicest lots or houses are bought up by the wealthy vacationers, which naturally drives up prices. Residential land becomes expensive, the builders charge high prices and average wage earners have no place to go.

How do we accommodate our workforce? was the key question posed by the celebrated Aspen Institute at a 1974 conference. The participants came to the conclusion that the only effective solution was to establish a separate, secondary housing market specifically keyed to local wages of the workforce. This included everyone from ski instructors and resort workers to local business employees and municipal workers, police, firefighters and teachers. To keep this market separate and affordable over the long term, the Aspen City Council adopted deed restrictions that mandated how residents lived in the community, not own another property, and work full-time. The income level was capped for the resident and the profit was capped for the owner at three percent per annum. The house could only be sold under these same restrictions.

On Labor Day weekend of 1978, 37 individuals and families moved into Midland Park Place Condominiums at the base of Smuggler Mountain, with stunning views of Aspen Mountain, Pitkin County’s first government-built employee-housing project. It was so popular that admission was by lottery. To this day, workforce housing remains a prime county focus and on the city council’s stated ten-point priority list. The Aspen/Pitkin County Housing Authority currently oversees 2,800 sales and rental units throughout the area.

This initiative is generally considered the birth of modern workforce housing, and perhaps even the first use of the term. As a concept, though, workforce housing has gone through a number of incarnations and its antecedents reach far back into American history.

From Man Camp to Company Town
The first American workforce housing came in the form of lumber and mining “man camps,” often makeshift wooden shacks built out of necessity by owners to give laborers a place to live in the middle of wilderness or barren countryside. Some of what we now refer to as “ghost towns” of the Old West evolved from such camps.

Industrial development in the second half of the 19th century made possible somewhat more substantial and permanent workforce housing. For example, by 1880, the expansion of the coastal railroad and techniques for producing ice for refrigeration tremendously expanded the Gulf Coast seafood market. This was still a seasonal industry, so processing plant owners built rows of clapboard houses for their workers, such as those built by the Peerless Oyster Company of Bay St. Louis, MS.

In 1914, President Woodrow Wilson signed the Alaska Railroad Act, which created the Alaskan Engineering Commission to design and build the railroad. When it became known, hundreds of hopeful workers set up tents at the mouth of Ship Creek. The commission surveyed the site, marked out a town and sold home sites to the railroad workers. As more workers came, the town was expanded. “The camp at Ship Creek” was no longer an adequate name for the workforce town, so it was changed to Anchorage. Soon the commission moved there from Seward, giving the town a solid economic base.

By the beginning of the 20th century, there were an estimated 2,500 “company towns” in the United States, many established in connection with mines, logging operations, textile mills and factories.

A notorious feature of many industrial coal and mill towns was the company store, and coal barons often carefully calibrated rent and store prices against wages so that a worker essentially became indentured to the company. Most people of a certain age remember the lyrics to Tennessee Ernie Ford’s folksong, “Sixteen Tons:”

“You load sixteen tons, what do you get?

Another day older and deeper in debt.

Saint Peter don’t you call me ‘cause I can’t go;

I owe my soul to the company store.”

Not all company towns were exploitative, or at least didn’t appear to be. In 1884, on 4,000 acres 13 miles south of Chicago’s then-city limits, industrialist George Pullman opened an architecturally distinctive company town for the 6,000 workers and families of the Pullman Palace Car Company that supplied sleeping cars for the American railway network. Most of the residences were row houses and featured indoor plumbing, gas and sewers, brick construction and front and back yards, raising the town of Pullman far above the standards of the day.

In Pullman, despite the typically paternalistic management that sought to oversee and control all aspects of its workers’ lives, including church attendance, things went well until the Panic of 1893, when the American economy slowed dramatically and the demand for Pullman’s railway cars dropped off. In response, and in an effort to maintain shareholder dividends, Pullman cut wages without lowering rents or store prices. On June 28, 1894, the American Railway Union under the leadership of Eugene V. Debs struck the Pullman Company. Within days, 125,000 railway workers around the nation refused to handle Pullman cars. The Pullman strike lasted two months and was one of the first major American labor actions, leading to arrests, trials and ultimately, labor reform. The town of Pullman survived (it is now incorporated into the city of Chicago) though it lost its aura as a workforce housing nirvana and bitterness took root.

George Pullman died of a heart attack only three years after the strike. Among the provisions in his will, two stand out: One was a bequest to establish the Pullman Free School of Manual Training for the children of his employees of the Pullman Palace Car Company and the residents of the neighboring Roseland community. A second decreed he be buried in a lead-lined mahogany casket sealed in concrete so that none of those employees could dig up and desecrate his body.

Across the country, the company town era had a mixed record. Milton Hershey’s town built in 1900 to support his chocolate factory employees reflected his utopian vision of a worker’s paradise. But when he attempted to regulate their lives and resisted the formation of a union, they went on strike in 1937, souring the image of “the Sweetest Place on Earth.”

German immigrant Henry Steinway built a piano factory and workforce village in Astoria, Queens, to keep Manhattan labor agitators away from his employees. While the town has now merged into the surrounding borough, the Steinway factory remains.

Brooklyn Bridge designer John Roebling and his son Washington weren’t interested in controlling the lives of his wire manufacturing workforce, which is probably why the company town Washington built in 1904 south of Trenton, NJ, was a success. And Scotia, developed in northern California in the 1880s by the Pacific Lumber Company, thrived for more than a century before tenants were given the opportunity in 2014 to buy homes and become a self-governing municipality.

From World War II Through the Seventies
Though many of the former company towns remain – such as Dundalk in Baltimore, MD, originally built to house employees of Bethlehem Steel – they are no longer workforce housing as corporations have shed both their benevolence and paternalism, unable to afford such comprehensive involvement with the lives of workers and their families. And with few exceptions like Aspen, says Stockton Williams, executive director of the Terwilliger Center for Housing at the Urban Land Institute in Washington, DC, “separate, deed-restricted workforce housing has seen hard times and has never scaled very far.” In 2006, Palm Beach County, FL, passed a controversial rule requiring a portion of all new construction be set aside with long-term price controls for the workforce. When the Florida building boom fizzled two years later, so did the workforce housing mandate.

Williams sees a confluence of factors that have contributed to the current workforce housing challenge, all having their origin in the late 1960s and early 1970s. For starters, the definition of workforce needing housing has evolved and expanded over the years. It began with those needed for a particular factory, mine or logging operation. Then it was police, firefighters, teachers and other municipal employees. Now it can encompass anyone who works in a given area who is neither below the poverty line nor able to reasonably afford prevailing rents or home prices. The generally accepted parameters are 61 to 120 percent of Area Median Income (AMI). In what Williams calls “global superstar cities,” such as San Francisco, it can go up to 150 percent.

In the 1950s, a combination of the GI Bill and large areas of available suburban land made middle-class homeownership near work realistic for millions of Americans. “We didn’t have a workforce housing problem per se when we could sprawl our way from suburb to suburb to as much middle-class housing as there was demand for,” Williams observes. Many of these 1950s developments have been absorbed into greater metropolitan areas.

“But the post-war model no longer applies,” he says. “And since then, no one has come up with a coherent, comprehensive plan or serious efforts to serve the workforce or much advocacy to create or preserve workforce housing.”

He sees two key reasons for this.

“Going back several decades, wages have grown more slowly than rents and housing prices. And second, since around 1970, regulation – including zoning procedures, fees and frequent neighborhood opposition to development – have contributed to a much more expensive cost to produce. Land prices have also been a contributing factor, with growing demand concentrated in the urban centers. At a certain point, we rediscovered a lot of appeal in agglomeration and clustering in urban centers. This has led to a pricing-out effect for an array of jobs.”

The Current Challenge
Unlike low-income housing, there are few subsidies available for workforce housing. Only in the past ten years or so, says Williams, has attention been directed to the larger effects of the workforce housing shortfall. “We are only at the beginning of realizing the down-the-line implications of the housing imbalance in terms of environment, economic consequences and social consequences of spending hours commuting each day.”

He doesn’t see government subsidies as a necessary solution to the problem, though a form of tax credits could make a difference, “since there is compelling evidence from LIHTC. When he was running for president in 2000, George W. Bush proposed a home ownership tax credit. It got a little bit of traction at the time but didn’t get enacted.” Oregon Democratic senator and ranking member of the Senate Finance Committee Ron Wyden has proposed a rental tax credit.

Since “all housing issues start with local land use decisions,” what Williams would like to see is “a much more rational regulatory environment for development at the state and local levels. This is the one action that would make the most difference quickly and unshackle local capacity.” He is wary of “the veto power of homeowners and NIMBYism, which was typically suburban but is now increasing in cities. A lot of this is changing local psychology. We need to put real political will into education and articulating the benefits to the community and individual homeowners, showing them that workforce housing actually improves their environment and well-being.”

It is a historical fact that as middle-income workers are forced out of cities, the resulting concentrations of wealthy and poor residents lead to deteriorating conditions and social unrest. This was a finding of the 1968 Kerner “Report of the National Advisory Commission on Civil Disorders.”

“This is a rare instance in which economists across the political spectrum agree,” Williams states.

Then there is the issue of preserving existing affordable housing stocks. “We actually have a substantial supply of existing workforce housing already built and occupied that is in grave danger of converting to a higher price point or falling into obsolescence. So we are trying to define and support workforce housing preservation equity funds that would unlock capital and provide economic opportunities for both social impact and regular investors.”

Inclusionary zoning has helped in many jurisdictions, though critics complain that it can make individual properties less valuable. One solution to this is offsetting incentives, such as tax abatements, or higher density awards, particularly around transportation hubs, which cost the municipality nothing.

Just as workforce housing solutions of the past often had a dark side, one of the dark sides of the present situation, according to Williams, is that “in a lot of locales, this is costing us talent retention.” There is, however, reason for some hope.

“Lately, we’re seeing more creativity and effort from cities and counties than in any time in history; they’re really trying. But we need to do ten or 20 different things to confront the challenge. As we’ve seen from the past, no one size fits all.”