Thank God It’s Monday

The origin story of WeWork, the co-working company, might be as big a part of its image as the office space it rents out. Its co-founder and CEO Adam Neumann was raised on a kibbutz, an Israeli cooperative built in the mold of the early twentieth-century socialist Zionists who sought a “conquest of labor” (kibbush avodah) in establishing a homeland for Jews in Palestine. Speaking at a tech conference in New York in 2015, Neumann reflected fondly on his childhood, going to school, eating dinner, and doing homework with the same kids each day. But there was a flaw.

“In a kibbutz everyone makes the same amount of money,” Neumann lamented. “I always remember thinking that it’s not fair that someone’s effort is not being rewarded based on what he puts in.” In starting WeWork, Neumann—a tall thirty-six-year-old, usually sporting a blazer thrown over a WeWork T-shirt—set out to correct the imbalance. He calls his company “a capitalistic kibbutz: On the one hand, community. On the other hand, you eat what you kill.”

Since opening up shop in 2010, Neumann has certainly been eating well. In the wake of the housing crisis, he and his co-founder, Miguel McKelvey, have built WeWork into a company worth tens of billions by following a simple business model: buy large chunks of space in huge metropolitan office buildings, deck them out with desks, walls, and kegs, and then sublet to freelancers, mid-sized companies, and start-up founders at a premium on month-to-month contracts. Don’t sell space, though; sell community, in the form of single-origin coffee and craft beer, a company-wide social networking app, and an office environment that plays as hard as it works. WeWork doesn’t have tenants. It has “members,” of WeWork and of the WeGeneration.

The average WeWork member—a millennial, to be sure—is an almost Platonic ideal of what the journalist Paul Mason describes in his book Postcapitalism: A Guide to Our Future as “the T-shirted techno-bourgeoisie . . . their information stored in the Cloud and their ultra-liberal attitudes to sexuality, ecology and philanthropy.” They represent a “new normal” of office life and life in general: where work and play are increasingly indistinguishable, and both hinge on access to vast networks and limitless streams of information.

WeWork’s network-first approach to work is reflected in its cosmopolitan, creative-class aesthetic. Locations around the world are virtually identical, from San Francisco to the Negev: they all feature the same oak floors, clean lines, and hand-worn metal and wood furniture. Walls throughout the building are plastered with multi-colored, productivity-themed aphorisms like “Hustle” and “Thank God It’s Monday.”

Reverence for hard work is not simply a decorative gimmick, but core to the WeWork philosophy. The imperative to hustle reflects the way the founders see (and wish to shape) the future of work. Meanwhile, WeWork’s popularity is driven—in part—by the increasing atomization of labor, across income brackets. By offering workers an alternative to days spent alone behind a computer, Neumann and McKelvey discovered they could turn a profit by exploiting one of the defining features of work’s so-called future: isolation.

Sharing looks a lot like paying rent

Despite the fact that WeWork has been around for six years and is currently valued at $16 billion, the company is still commonly referred to as a “start-up,” a misidentification the founders are keen to perpetuate. To hear Neumann tell it, WeWork is disrupting work itself, revolutionizing the economy by applying a sharing economy ethos to drab office life. “We are a community of creators,” he told Bloomberg when asked about the company in May 2015. “We create an environment for entrepreneurs and freelancers and we leverage technology to connect people. . . . It’s a new way of working. Just like Uber is the sharing economy for cars . . . we’re the sharing economy for space.”

But sharing, in WeWork’s vision, looks a lot like paying rent. Joining the WeGeneration doesn’t come cheap. A $45 “We Membership” buys access to WeWork’s online community and the ability to work at a location anywhere in the world for two days a month. Dedicated desks in Manhattan range anywhere from $450 to $800, with single occupancy private offices stretching up to $2,100 per month. By square footage, space tends to be more expensive than that in the surrounding neighborhood. Aside from the beer and office services (one year of Amazon Web Services credits, discounted payment processing, lunch delivery, and so on), the price point is said to derive from all the immaterial benefits of being surrounded by young, driven professionals who “do what they love”—a slogan stamped on the coffee cups that line each floor. In April 2016 WeWork opened its flagship WeLive location on Wall Street, offering fully furnished, dorm-like accommodations complete with extracurriculars like yoga, “family dinners,” and building-wide karaoke. Another WeLive, in the D.C. suburb of Arlington, Virginia, opened shortly thereafter. Members—at work, home, and play—can now lead their whole lives within the WeWork bubble, so long as they can cough up a few grand a month.

Company founders have repeatedly denied that their brainchild is in the real-estate business—in large part through clever branding. Senior staff hold titles like “Head of Community,” and Neumann seldom makes it through an interview or press event without rattling off stories about his childhood in Israel, first years in New York, failed early business ventures, or relationship with his muse-turned-wife. Such tales, too, are why investors and consumers both treat WeWork more like a unicorn than a multinational corporation.

If there is sharing happening, it’s between WeWork and major developers. According to WeWork Real Estate Head Mark Lapidus, the company has built close relationships over the years with real-estate giants like Rudin Management and Boston Properties to negotiate favorable leasing terms. Lapidus calls their landlords “partners,” and notes that “60 percent of our deals probably come through either landlords with existing relationships, where we have other locations, or landlord referrals, or just landlords reaching out to us and saying, ‘Hey, before I put this on the market. . . .’”

Do what you love—or else

What happens inside the walls of WeWork is as old-fashioned as the process through which the company acquires its space. Referring to employees as family members has a long tradition in the corporate world as a means to rebuff organizing drives and calls for higher wages. In the case of WeWork, talking points about community and family have come in handy when deflecting the many labor complaints it has fielded over the last several years.

Posted in Uncategorized | Tagged | Comments Off

How Real Estate Segregated America

In a year of many anniversaries, two in particular stand out with respect to the housing crisis facing the United States today. The first is the passage of Title VIII of the 1968 Civil Rights Act, more commonly known as the Fair Housing Act. In some ways, the legislation bitterly acknowledged the role of housing discrimination in keeping African Americans in a subordinate social position. Excluding Black people from white neighborhoods, while simultaneously disinvesting in Black communities, has kept them out of the best-funded schools and highest-paying jobs. Housing discrimination was a linchpin of Black inequality in American society, and the Fair Housing Act held out the promise of undoing it by banning racial discrimination in the renting, financing, and selling of housing.

The second anniversary is that of the 2008 financial crisis—perhaps the starkest sign of the palpable failure of the Fair Housing Act to fulfill its mandate. Not only did the crisis wipe out decades’ worth of hard-won financial gains for African Americans, but it stole their homes as well. In 2010 almost half a million African Americans were at risk of foreclosure, and by 2014 more than 240,000 had lost their homes. This historic collapse in Black homeownership is an important part of why the wealth gap between Black and white Americans is larger today than it has been in decades. In 2007, right before the crash, the median white family had eight times the wealth of the median Black family. By 2013, that figure had risen to eleven times, and it has tapered off only slightly since.

The subprime mortgage crisis, and the wider housing and economic crisis it produced, was the culmination of a long period of predatory inclusion of African Americans in the housing market, which can be traced back to the era of housing and credit reform in the late 1960s and 1970s. After decades of exclusion, African Americans were finally promised access to the robust housing market that had fueled the ascension of the white middle class in the second half of the twentieth century. Instead, they were subjected to rapacious lending and real-estate practices that extended familiar patterns of discrimination. As the early-2000s housing bubble was peaking, African Americans were 50 percent more likely than their white peers to receive a subprime loan. Those loans, it is widely understood today, were more expensive and carried higher interest rates. The terms of these loans increased the probability of their failure, and their concentration in Black neighborhoods promised not just to ruin an individual’s credit but to undermine the stability of entire communities. The real-estate industry created the idea that Black homeowners posed a risk to the housing market and then profited from financial tools promoted as mitigating that risk.

In the aftermath of the predictable failure of those loans, banks and other mortgage lenders today are using this failure as an excuse to revert back to the exclusionary practices that gave rise to exploitative lending in the first place. This has included the resumption of the use of land-installment contracts, requiring “owners” to pay property taxes, make substantial repairs, and pay usurious interest rates while having no equity in the property. There has also been the revival of rent-to-own schemes that lure poor and working-class people into making expensive payments for substandard properties when they no longer qualify for mortgage loans of any type.

How could “fair housing” fail so spectacularly, forty years after it was signed into law?

Recent scholarship, including lawyer and social scientist Richard Rothstein’s much-heralded book The Color of Law: A Forgotten History of How Our Government Segregated America, has helped to shine a light on the nefarious role played by the government in locking African Americans into substandard housing and under-resourced public services from the early twentieth century on. Rothstein and others, however, fail to answer the question of why this discrimination persists long after the federal government formally renounced its own policies promoting segregation. A common explanation points to the continued resistance of white residents, renters, and owners to the presence of Black people in their communities. White violence and resistance is certainly part of the explanation, but lacks the institutional underpinnings that were so critical to understanding the role of the state in the formative years of residential segregation.

For a fuller picture, we need to look to the one factor that has remained a constant even as administrations, policies, and public attitudes have changed. We need to look at the public-private partnerships that have sutured the federal government to the real-estate industry.

When the Fair Housing Act was passed in 1968, it confronted a history of exploitation and segregation that had physically degraded the communities that African Americans lived in. Black neighborhoods had suffered decades of disinvestment and institutional neglect, yet realtors continued to charge African Americans inflated prices for inferior or substandard properties, knowing they had nowhere else to go. By the 1970s, the landscape of foreclosed and abandoned properties and burned-out hulls of urban residences served as the visual markers of what was popularly described as an “urban crisis.”

Fifty years after the passage of “fair housing,” racial discrimination remains embedded in the operations of the American housing market. The federal government’s failure to enforce its own laws against racial discrimination is a reflection of its institutional racism but not an explanation. One explanation for the failure of federal housing policies to actually produce “fair” housing is found in the state’s continued reliance on the private sector as the sole provider of housing in the United States. The federal government long ago abdicated the responsibility of directly producing affordable housing, instead outsourcing the task to private developers—while continuing to provide vast amounts of assistance in the form of guarantees, subsidies, and tax relief. As a result, it has absorbed the real-estate and banking industries’ historic embrace of racial discrimination.

Indeed, the real-estate industry grew in tandem with and helped to popularize racist, even eugenic ideas about African Americans, including the notions that Black residents negatively impact property values, are undesirable neighbors, and pose an existential risk to communities and neighborhoods. As early as the 1920s, the National Association of Real Estate Boards had threatened professional discipline against any agent who disrupted segregated neighborhood racial patterns.

As the government got more involved in regulating and subsidizing housing, these ideas translated directly into policy. The notorious redlining maps issued by the federal Home Owners’ Loan Corporation in the 1930s, to take one early example, were based on existing maps used by local banks and brokers. It’s not hard to see why: starting in this period, real-estate executives were recruited to develop government housing policies because of their former roles within the private sector. Over time, the real-estate industry, in turn, would seek out former government employees for their valuable connections to the state. With this “revolving door” in place, public and private networks formed an insular feedback loop mostly concerned with maintaining a brisk housing market. The real-estate industry flexed its enormous influence over national policy again and again over the following decades, including when it vociferously—and successfully—lobbied to hobble public housing in the 1940s and 1950s.

But the modern iteration of this destructive public-private apparatus was born with the Housing and Urban Development (HUD) Act of 1968. While the Fair Housing Act is widely recognized as a landmark in U.S. policy, the accompanying HUD Act is virtually unknown today despite its equally seismic shift in American housing policy.

The HUD Act was passed in August 1968, four months after Johnson signed the Fair Housing Act into law. It was a historic piece of legislation that decisively shifted the responsibility to provide housing for poor and working-class people from the federal government to the private sector.

In the years of urban uprisings that roiled the mid-1960s, poor and substandard housing was repeatedly listed as a catalyst of Black rage. For example, a report on the causes of the Black rebellion in Philadelphia in 1964 found that 100 percent of rat bites reported in the city (and the resulting deaths) happened in segregated Black neighborhoods. From lead poisoning to a lack of indoor plumbing to general dilapidation, urban housing occupied by African Americans was overwhelmingly in substandard condition.

The poor quality of Black housing was driven by three factors. It was typically older and used, having filtered down to African Americans who were the newest arrivals in Northern cities. Its already distressed condition was then exacerbated by residential segregation that led to overcrowding, as Black residents were hemmed into a few clustered neighborhoods. Finally, the lack of housing choices available to African Americans removed the pressure from landlords to improve the quality of housing. African Am

Posted in Uncategorized | Tagged , | Comments Off