Today, Explained - Elon's company town

Episode Date: January 2, 2025

The world's richest man is developing a company town outside Austin, Texas. Like the industrialists who came before him, Elon Musk may learn it’s hard to create (and sustain) a utopia. This episode was produced by Victoria Chamberlin, edited by Matt Collette, fact-checked by Laura Bullard, engineered by Patrick Boyd and Andrea Kristinsdottir, and hosted by Noel King. Transcript at vox.com/today-explained-podcast Support Today, Explained by becoming a Vox Member today: http://www.vox.com/members An aerial view of Elon Musk's Snailbrook community in Bastrop County, Texas. Photo by Brandon Bell/Getty Images. Learn more about your ad choices. Visit podcastchoices.com/adchoices

If you open your Maps app and you type in Snailbrook, Texas, you will get nothing but a prompt. Do you maybe want Scenicbrook, Texas or Springbrook, Texas? Snailbrook is not a town just yet. It is currently under construction outside of Austin. The builder, one Elon Musk, says Snailbrook will be a company town for employees of his boring company and ex and etc. He has plans for it to be, quote, utopian, which I mean, it's got a long way to go. It's got a lot of rough edges and it's definitely nothing that you would call like a utopia. So far, it's just 15 trailers. Coming up on Today Explained, Elon Musk takes us back to the days of the company town,

whether we care to go or not. I don't see the draw personally to wanting to go out in the middle of nowhere and then live in a tiny trailer. The all-new FanDuel Sportsbook and Casino is bringing you more action than ever. Want more ways to follow your faves? Check out our new player prop tracking with real-time notifications. Or have out more ways to customize your casino page with our new favorite and recently played games tabs.

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Sherwood News who recently took a trip to Texas. So Elon Musk, you know, leader of like six businesses, has been steadily moving those businesses to Texas over the past few years. I'm excited to announce that we're moving our headquarters to Austin, Texas. The Boring Company has 20 jobs open in the Austin area. It's hiring for everything from engineers to accountants to crane operators. Musk has officially decided to move the X headquarters from San Francisco to Central Texas. Of course, several of his companies already have buildings here in Central Texas. It turns out that he wasn't really moving it to Austin, Texas. He was moving it to the county of Bastrop, this rural area in Central Texas. It's about 45 minutes outside Austin, give or take, on the traffic.

And now he's been building this company town next to SpaceX and next to Boring Company and next to X. It's called Snail Brook, kind of in the middle of nowhere. It's supposed to be this sort of live-work utopia. We're going to create an ecological paradise here on the Colorado River. It's going to be great. It's got like a center of commerce and, you know, different businesses and things like that, different attractions for the workers. So I decided to go down there and check it out. Is Snailbrook living up to Elon Musk's vision for it? Absolutely not. I mean, it's got a long way to go. When you get to Snailbrook, when you drive either from Austin or from Bastrop Town, all of

a sudden you start seeing these giant buildings. And these are factories for Elon Musk's companies. There's the SpaceX Starlink facility, which is going to be over a million square feet. There's these metal buildings for the Boring Company. And then behind the Boring Company, behind this chain link fence that's obscured by these green slats, that's where the entire residence of the town is so far. There you'll find, you know, 15 or so gray and tan trailers, a little pool, a gym, and it's mostly empty most of the time. Then there's the like the center of commerce. Then there's the center of commerce. It's called Hyperloop Plaza. That's got two different giant metal buildings, kind of like you'd house livestock in.

One of them is where the stores are. That's where the boring bodega is. I described it as sort of a tiny Whole Foods. You could get drinks with adaptogens or the olive oil that everyone uses on Instagram. The squeeze bottle ones? The squeeze bottle ones. So there's also a pickleball court and a playground. It also appears to be residential grade playground stuff, so something you'd buy at Walmart or Target. It's always broken, the locals were telling me. Like when I was there, a ladder going up one of the structures had been broken, and they put a piece, a two by four on it to kind of keep it together. There was a bolt coming out

of another one, so it was like really shaky. You could shake the whole thing, and you know, and you'd get sunburned because there's no sunshade. There's a candy shop for some reason, in addition to the bodega, like as if you needed more snacks, his and hers barber shop. But I tried to get my hair cut, but it wasn't open any of the times I was there. And I tried to make an appointment online and it said they were not available. They're also building a pottery studio. This is an approximation of what I guess he thinks a town is like. There's going to be a doctor's office there, entertainment area,

which is really just a couple of TVs and some Nintendo Wii's. And, you know, I just went and hung out in there. Are there people there? So not many, especially in the morning. Not many people. It gets a little bit like slightly more trafficked around lunch and after work. As far as, you know, signs of life, not too many, at least not yet. Is the idea that the town is under construction, we're still building it,

but at some point people will move there, like, what is the actual plan to populate this place? I mean, it's always hard to tell. You know, Elon Musk and his companies would not talk to me. SpaceX declined to comment, and then Boring Company and X didn't respond to comments. Presumably, they are going to eventually build those 110 single family homes that are not trailers. But in the meantime, I've found other plans that show they're going to build another 20 homes, but those look like they're going to be trailers as well. You know, something you could throw up very quickly, that isn't very permanent, that's cheap and easy. You know, he's also building a school there. There's a Montessori

school that they finally got permits to open at long last. And, you know, originally they said they were going to accept 50 students. They're only accepting 16. So like, this is supposed to eventually be a place where the people who work at his companies can also live and go out with their kids and send their kids to school and, you know, go get a beer afterwards or go to the food truck or go to maybe a restaurant or get primary care. But it's very much a work in progress. And these things sort of take time, but Elon Musk has more money than God. And, you know, he started this back in around 2021. You know, if he wanted to, he could put up some houses. You know, what was so interesting to me is I'm looking across from this broken playground, you know, with the two by four sistered against the ladder to keep it, you know, to keep your kids from falling through. And across the way, you see the Starlink facility where they're manufacturing satellites that go into outer space and that allow people around the world to get, you know, high speed Internet access. And to the other side of the playground is the Boring Company, which is supposed to like, you know, it's tunneling company that hopes to do nothing less than, quote, solve traffic and transform cities. So you've got these really like, big ideas, big things happening. And, you know, and then just like a really rink-a-dink underbaked town.

There is a long and very interesting history of company towns in America. I remember reporting from Oneida, the silverware maker, a few years back. And what I recall were that there were these nice little houses that in the 40s and 50s and 60s, the employees had owned, I believe. They either got them at a really good price or been given them. The 110 homes that Elon is building here, is he incentivizing his workers by selling them at a good price? Like what is the advantage to living there? So we don't know yet. He hasn't built them. He hasn't said. We know that the trailers rent for about $800 a month, which is less than the median rent in the area. But it's also a lot less than you would get if you were paying the median rent in the area. If you paid the median rent in the area, but it's also a lot less than you would get if you were paying the median rent in the area. If you paid the median rent, you would get a nice house and not

just a two-bedroom trailer with not much else. So we don't know. I also visited some other company towns, including Endicott, New York, which was founded in the early 1900s for a shoe factory. And there they built these like really nice, big houses for the workers there. And the workers could buy those houses at cost. And, you know, they made thousands of these. And it was really like a pretty successful company town. And partly, I think that's because the workers were able to have and keep housing, you know, regardless of whether they worked at the shoe company. And a lot of those houses are still up to this day. And I think, you know, have just like stayed in families for generations and have been really been important for, you know, the ongoing success of that town. So we don't know what Elon Musk would do with these 110 homes, whether he would sell them, whether what price

they would be. But as it stands, you could pay a little bit less for the trailers, but you're also getting a lot less than you would in the rest of the area. So these days, in this economy, one can own and run a company and not build a town for the company. It's pretty common. Does building a town for Boring and Tesla and X, does building a town like Snailbrook figure into Elon Musk's business goals? So one of the reasons why he's building this town, I believe, is because he wants to be able to attract and retain good workers, right? You can't uproot your whole family and have them move across the country from California for nothing. It's one thing if you're saying you're going to Austin, which has a lot of cultural cachet and, you know, it's a known entity. It's another thing entirely if you're saying, let's go to this farmland in the middle of nowhere. So he's wanting to have draws, you know,

okay, we have inexpensive housing or we have this great Montess school, or X, Y, and Z. So I think part of that is to get people to work at his companies. Part of it might be just burnishing his own ego, you know, having your own town is a pretty big deal. Presumably, someday, if this town does develop more, he could incorporate it. And then, you know, the laws would be more on their side. But as it is, I mean, the regulation, everyone told me that the regulations in Bastrop County are pretty lax. So, you know, he moved there because the regulations were less tough and stringent than they were in California. But even though they're lax in Bastrop County, he's still run up against them. Like, he's always fighting with the county because they're not like doing things in the correct order or not getting the correct permits, that sort of thing. Or, you know, or dumping storm wastewater in the wrong place. That's, you know, that sort of thing. So even in this lenient environment, they've run up against the regulation. Do you think that Snailbrook has the potential of becoming a thriving town?

As it stands, I wouldn't move to Snailbrook. Bastrop, the town, is lovely. It's got all of this sort of like Old West charm. It's a small town outside of Austin that's lively and fun. So Bastrop town, I would consider moving to. I don't see the draw personally to wanting to go out in the middle of nowhere and then live in a tiny trailer. I actually talked to one of Elon Musk's neighbors. It's this man who moved there about 10 years ago, and he has got a nice house on 10 acres. And since then, Elon Musk has moved in and bought property basically on three sides of him. And, you know, he had this like, it's up on a hill. He's got this great view.

But where he used to look at cows, he's now looking at SpaceX's Starlink facility, this big white monolith of a building. And, you know, where you used to hear birds, you just hear constant beeping. I was interviewing him on the patio outside of his house and it was just incessant beep, beep, beep. So in a way, it's like the worst of all worlds.

It's like it's rural, but without the rural beauty if you're living in Snailbrook. And then it's absolutely not Austin, Texas, and it's not a quaint, charming downtown like Bastrop Town is. Ronnie Mola of Sherwood News. Coming up, 16 tons and what do you get? The second half of the show, of course. Support for Today Explained comes from Noom. Noom wants to remind you that the end of the year is on the horizon. And so if you made a New Year's resolution back in, you know, Jan, like, it's crunch time, they say. And yes, maybe you cheated. Maybe you lost track.

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fulfillment. The episode is out now. Search and follow Stay Tuned with Preet wherever you get your podcasts. This is Today Explained. So I'm Price Fishback. I am a Regents Professor and APS Professor of Economics at the University of Arizona. And you have some amount of specialty, I'm told, in company towns? I do. I wrote a dissertation and a bunch of articles about company towns and company housing and violent strikes and all sorts of things like that.

Why were the heads of companies creating towns for their employees in the first place? Well, so there was a really nice article written in the Bureau of Labor Statistics Bulletin back in 1919 by a guy named Leifer Magnuson. And so he'd done a survey of about 213 companies that had towns. And so one of the major reasons they had, and what he talks about in the article, is isolation. You're just out in the middle of nowhere. And if you're out in the middle of nowhere, there's nobody else that's going to really come and build something. And if they do come and build something like build housing or create a store, then they're going to have pretty much monopoly. And then you're going to run into problems where they're going to charge high prices and high rents. And now you have to pay higher wages to get people to come. And so it's kind of made sense to vertically integrate the whole thing. And just you're out in the middle of nowhere, you need housing, you need these come. And so, you know, it's kind of made sense to vertically integrate the whole thing and just, you know, you're out in the middle of nowhere, you need housing, you need these things. And so let's just build it and bring them there. It's a lot of power for the company. Yes, it can be. And if the company is just trying to do the right thing and build housing so that they

can get employees there, okay. So how did things go right and how did things go wrong with the initial company towns? So you have all sorts of different types of employers. Some of them are very community minded and things like that. And they have other guys just trying to make money. And so the range of conditions in company towns was pretty wide. A lot of times they're trying to get started. So if they're trying to hire 100 employees or 200 employees, they need to build housing

pretty quickly. And so it's usually pretty much the housing looks pretty much the same. They try to design the towns and things like that. And then they try to improve things. The good employers try to put in things like YMCAs and swimming pools, and they have a baseball team and things along those lines. But they're also providing the sewers and the store and the housing. And also, a lot of times, they're providing the security as well. Are there any American towns that started as company towns, but we don't know that? There are actually quite a few.

Because usually what happens is the town starts out as a company town. And then, say, what happens is another mine moves in nearby, or maybe three or four mines move in nearby, and then what happens is you develop an independent town in and amongst all the company towns, and so that allows you to expand. And so probably a number of towns in West Virginia that weren't too deep into the mountains actually became independent towns, actually building off of the fact that there were several company towns around. And once you get that kind of situation, the company often sells off the housing. There are a couple of perils here. The company has a lot of power. The town is often isolated.

In early American company towns, what sorts of negative consequences did we see? Well, I think one of the biggest problems is that the possibilities of labor strife go up. Oh, yeah. And one of the reasons is, if you just think about it, normally if you're mad at your grocer, you're mad at your grocer, but that doesn't influence your attitude towards your employer or your landlord or something like that. But if your landlord, your grocer, and everybody else, and the policemen are all hired by the company, and also the hospital or the medical doctors and stuff, well then, if you're mad at one, you're mad at everybody. Most of the towns actually didn't have bad

experiences necessarily, but you do get situations where things just really go badly. Leadlow situation in Colorado in 1913 and 1914 was an example where Standard Oil owned the town. It was a coal mining town and things. And they actually was a pretty nice town, actually, if you look at it. They had a lot of nice amenities and things along those lines because usually big companies actually provided better amenities. And then they had a strike. And after about six weeks, the company wanted to bring in other workers, which meant that they pushed workers out of their houses. And so that's always a really bad situation, as you can imagine. And then you have like pickets and people protesting and stuff. And you could be there and you could have a car backfire and all of a sudden people start shooting.

And then it goes really badly from there. And so then they had a situation where eventually they called in the troops. And the troops, they actually ended up attacking a mining tent town and like 13 women and children died in a fire. I mean, it was just horrible. That was known as the Leadlow Massacre. So that's kind of like the worst thing that can possibly happen. What are some examples of when it goes right and what tend to be the circumstances when it goes right? I think the key to the circumstances goes right is what tend to be the circumstances when it goes right? I think the key to the circumstances goes right is that the employer is a good employer.

And I think that happens in a lot of different cases. They actually, you know, they're paying wages, above market wages. One of the things that the employers liked about having the company town is that they thought they would get more stable employees. They attracted more married families and things like that. And so if you can get away from a kind of a bad situation where everybody's a bachelor and they're moving around all the time, that's usually, you can find those kinds of towns and they have really lousy housing. But the ones that are relatively permanent sometimes lasted 50, 60, 70 years, just depended on how long the mine would last or how long the relationship would last. And Oneida worked well because, you know,

it's kind of like it was a religious group and they were all pretty similar. So the more similar they were, the more likely they were to agree on everything that was going on. And I think the owners were the leaders. As a matter of fact, the CEO probably was hired by a lot of the people who were employees of the town. It sort of seems at this point that company towns in 2024 couldn't really be that successful. But maybe I'm wrong. It seems like we have more choices now. We

have cars now. So even if you're out in the boonies, you can drive to the city for work. Is this a thing, independently of what's happening in Texas, which we'll talk about in a minute, is this a thing that still happens? Oh, I think so, to some degree. I mean, so you have mining towns, you still have mining operations here in Arizona and in other places, right? And so they're opening up new mines and redoing old mines and stuff. And a lot of the towns around Southern Arizona,

for example, they grew up relatively close to the mine, but weren't necessarily part of the mine itself, right? And Tucson is close enough that you could commute from Tucson, commute from Nogales and other kinds of places. And so having the automobile really helps. And then on top of that, I mean, particularly for something like SpaceX, where it's a lot of engineers and things, a lot of them probably can just zoom in or wherever and come in occasionally. It just depends on what they're actually producing on the site and what kind of skills those people need.

Now, let me ask you a question. Elon Musk, a lot of what Elon Musk does is interesting for various reasons. He does seem to have an enormous ego. And so the idea that he's building a company town seems somewhat about the company and the need to do it and somewhat about him. Does a company town need a charismatic founder? I don't think it needs one. I mean, I think the better company towns, Rockefeller and Standard Oil and the steel companies and the number of coal companies, they had owners who were very religious, right? And they felt like they were building a

community and all sorts of things. And then, you know, it really hurt the reputations when you had these labor strife and things like that. But a lot of them felt like they were making their workers better off. They were paying above normal wages. Their rents were typically low in these places. And so you do have like these charismatic people or people who believe that they're doing good things and they're helping their workers and doing things along those lines. And so I can see how Musk would kind of like to do that kind of thing. He seems to like to dabble in everything. I wish he'd just make better batteries so we can improve. Now, our reporter in the first half of the show, Ronnie Mola, tells us that at the moment,

Snailbrook is not particularly impressive, not a particularly impressive place, but it's early stages. When you look at what Elon Musk does and is, do you think that he could make this into something? Well, certainly. I mean, if he's really planning on having SpaceX be there for quite some time, I imagine they're going to build good quality housing. And these days, you can build good quality housing in nice neighborhoods and have it be variable as well.

It depends on who he's trying to house and how expensive it is. And one of the questions, is he building the housing and going to sell it, or is he going to build it and have people rent it. And then once the community is close enough to Austin that all sorts of other things are going on, then you'd sell the housing to people because that's typically what happens in those kinds of settings. Well, I think that the company town was really important for developing areas that were relatively isolated. And then what happens is in a number of places where the activity actually expands and you have the same kind of things around it or you have complementary industries that develop, then what happens is the company town becomes a thriving town that's independent.

They sell off the housing and everything goes along. So I think that's a feature of it. It's not how every place developed, but it's certainly how isolated places developed, I think. Price Fishback. He's a professor at the University of Arizona. Victoria Chamberlain produced today's show. Matthew Collette edited. Patrick Boyd and Andrea Christen's daughter are our engineers.

And Laura Bullard is our fact checker. I'm Noelle King. It's Today Explained. you