What Happens When Your Employer Owns the Shop? Wages That Come Back

An employer opening a mine, mill or works in a place with no existing settlement has to solve the problem of where workers will live, and building housing is the direct answer. Beyond necessity, the arrangement offered advantages the company understood well. Housing tied to employment means losing a job means losing a home, which suppresses both turnover and industrial action decisively. A company shop captures a share of the wages back as revenue. Providing schools, churches and recreation shapes the workforce in ways the employer chooses and was frequently presented as benevolence, which in some cases it genuinely was. And controlling the whole settlement means controlling who enters it, which excluded union organisers and outside newspapers.

The features recur across countries and industries:

• •Housing rented from the employer, with tenancy conditional on employment
• •A company shop, frequently the only one within reach
• •Payment partly or wholly in tokens or credit redeemable only at that shop
• •Company-provided schooling, medical care and religious provision
• •Deductions for rent, goods and services taken directly from wages before payment
• •Restrictions on who could enter the settlement and what could be sold there

Paying workers in anything other than money was a specific abuse with a specific remedy. Payment in goods or in tokens redeemable only at the employer's shop allowed prices there to be set above the market, which reduced real wages invisibly and left workers with no way to shop elsewhere, and where deductions exceeded earnings it produced debt that could not be discharged. British legislation from 1831, strengthened repeatedly through the nineteenth century, required payment of wages in coin and prohibited conditions on where they were spent, and comparable laws followed elsewhere. Enforcement was difficult where the company controlled the settlement, and the practice persisted in isolated industries long after prohibition, particularly in mining regions in several countries.

A subset of these settlements were built deliberately as models of how workers should live, and their record is mixed. Several nineteenth century industrialists built villages with good housing, gardens, schools, libraries and no public house, financed from the business and intended to demonstrate that healthy workers were profitable ones, and examples in Britain include settlements that are now conservation areas and one that is a World Heritage Site. The housing was genuinely far better than the urban alternative. The same schemes regulated behaviour closely, with rules on drink, on religious observance and on conduct, and tenancy remained conditional on employment, so the improvement in conditions came with the same concentration of control. Assessing them requires holding both facts at once, which contemporary accounts and later ones frequently do not.

Most such settlements were wound down during the twentieth century for converging reasons. Motor transport let workers live elsewhere and commute, which removed the necessity that created them. Legislation on wages, tenancy and union access removed several of the advantages. Companies found the cost of maintaining housing and services unattractive once they were no longer generating returns, and many sold the housing to occupants or to local authorities. Where an industry closed, the settlement lost its reason to exist entirely, and a number are now abandoned or preserved as museums. The model has not disappeared, and comparable arrangements persist in remote resource extraction, in some agricultural labour, and in accommodation tied to employment in several sectors.

Building housing solved a real problem and delivered control, since a tenancy conditional on employment means losing a job costs a home, and a company shop recovers wages as revenue. Payment in tokens redeemable only there reduced real wages invisibly and was prohibited by legislation from 1831 onwards. Motor transport removed the necessity by letting workers commute.