Grubstakers - Episode 38: The Walton Family (Part 1)

Episode Date: October 22, 2018

The Walton family is discussed in our 2 part special! We cover the union busting tactics employed by Walmart, how Sam Walton began this journey, and the people Wal-mart crushes along the way. Enjoy!

Hey everyone, thanks for checking out Grubstakers, the podcast about billionaires. This week we're going to be talking about Sam Walton and the Walmart Empire. Enjoy our part one where we discuss Sam Walton's life, the union busting practices of Walmart, and the modest half a million dollar loan that he received by marrying rich. All that and more this week on Grubstakers. I think we disproportionately stop whites too much. I taught those kids lessons on product development and marketing, and they taught me what it was like growing up feeling targeted for your race.

I am proud to be gay. I am proud to be a Republican. You know, I went to a tough school in Queens and they used to beat up the little Jewish boys. You know, I love having the support of real billionaires. In five, four, to Grubstickers. Sean P. McCarthy here, joined by... Yogi Poywold. Steve Jeffers. Andy Palmer. And this week, we've got a very special episode for you, a two-parter on the Walton family of Walmart.

Dos. You may notice the upbeat tunes. That is the Walmart theme. Oh, really? I didn't know they had a theme. i thought the theme involved spelling the name that's the chant yes it's like the difference between the boy scout motto and the boy scout slogan okay well and so basically when we talk about the walmart family we should take a note here that there are seven members of the walmart family on the forbes 400 that's the 400 richest people in the world.

And, you know, we'll talk about the founder of Walmart, Sam Walton, who's a bad, exploitive guy. But, I mean, he did something. So seven of the 400 richest people in the world just happened to be born into the world's largest supply chain based around turning Bengali children into tater tots. I mean, so it's like, it's just something where it's like, when we talk about the Walton family, we are talking about the world's wealthiest. Those are, by the way,

in the grocery section under Soylent Tots. Yeah, they say they're organic, but they're not organic. They're not free range either. When we talk about the Walton family, we are talking about the world's wealthiest welfare recipients i mean you know and then bernie sanders among others have gone through this they uh take x billion a year um making their employees get on food stamps and medicaid

they take uh several billion dollars in state and local tax abatements um and of course the the crime problem is something that we'll talk about either this week or next week. But essentially, like, they cut security costs to the bones and then they expect local police departments to subsidize their security.

So, you know, like, in Tulsa, Arizona, the police force will spend half of their time in a fucking Walmart, you know? Tulsa? Tulsa? That's what I said, right? Tulsa, Arizona? Oklahoma?

It's Oklahoma. Oh, okay. Well, you know, somewhere out there... You know, I do hate these welfare queens committing crimes in my country. If there's one thing I'm opposed to, it's cutting welfare for everybody. No, that's one thing I'm opposed to it's cutting welfare for everybody no that's one thing i'm for i'm in favor of um but so just like cut all of this a couple quick stats before we get

into this uh the walmart family collectively owns about half of the walmart stock i think a little more than half of the stock uh as we mentioned seven members on the forbes 400 uh wealthiest people in the world and um they have more wealth just between those seven members than the bottom 40% of all people in America. I think that might have even gone up since I looked at that stat, but it's at least the bottom almost half of the country has less wealth than these seven people. Are they the richest family in the world? Yes, they are the richest family in the world. What's the chance that any two of them fucked each other?

It's non-zero. That's a fair assessment. There's seven of them. They were raised in what I assume is a tower. Built of ivory. Yeah. There's a taboo with fraternizing with the servants.

They're watching that show like, you know, except for the part where they pay the debts, this is pretty realistic. But yes, Walmart has also been implicated in wage theft, among other things. And, of course, we'll get into the supply chain and all the horrific abuses that go into that. But I guess we should... It was born out of a very efficient technology they developed to make it easier for the Walton kids to fuck each other. Oh, really? Yeah.

Is that how they made that music? Yeah. That's their lovemaking music. When they're in their post-apocalyptic bunker. Yeah. Area 71. Well, it's time to repopulate. They can't control the music.

They're cursed to hear the music at all times in their head. But yeah, so this is a two-parter. We'll talk about this part today. We'll go through the biography of Sam Walton. Again, the founder, when we talk about the seven Waltons, these are his heirs. They just inherited what he built, essentially. So we'll talk about Sam Walton. We'll talk a bit about some of Walmart's abuses.

But we should start with the Grubstakers chant, because we can't begin an episode without the Grubstakers chant. Usually off mic. You think when they all fuck each other, it's a Super Sam? Well, they have to have a membership. But yes, Yogi's right. We've been doing the chant off mic, but I think we should bring the audience in. So give me a G. G. Give me an R. R. Give me a G. Give me an R.

Give me a U. Give me a B. Able to slur? That's our start. Alright, now everyone slit a part of your hand and put it in the middle. And then I'll bring in the sacrificial intern but yeah so if you're not aware like at the start of every walmart shift these poor uh

horrifically exploited and underpaid uh employees are forced to do this cult-like chant to the fucking big brother uh walmart where they spell out the name and they get all amped up and stuff. It's like, oh, yes. Are you excited to work 45 hours a week and have it appear as 40 hours on your paycheck? It's only a few groups that do this. It's Walmart, it's sports teams, and it's various cults around the world start their days with chants. Give me an H. Give me an E. Give me

an A. What's that spell? Heaven's Gate. Okay, I see that we're not giving 100%. Some of you have bags on your heads. That comes later. But so, yeah. So this episode, I think we will just kind of go through the biography of Mr. Sam Walton.

Sam Walton died in 1992. But he's the man who built Walmart so it's actually like essentially when we talk about any of the Walmart heirs you know the question of like what did they do to become billionaires is just the question of what did Sam Walton do like he did this and then he had

sex a couple times and then that's why they're billionaires and the product of that had sex with each other so much allegedly the original sam's club yeah um but so to start with the story of sam walton we'll just kind of go through this biographically and then we'll see how long this takes but essentially uh sam walton sam walton is born in 1918 on a farm in oklahoma and it's an interesting story where his father was like kind of a farmer but um he went into the farm loan business eventually oh really um yeah and and so sam walton writes an autobiography

in 19 it's published in 1992 he writes it like when they tell him his cancer came back and he's gonna die you know so but um i guess i'll just kind of quote a bit from sam walton i'm sure he wrote every word i'll quote a bit from sam walton here just because this is him talking about his father and what his dad did and these kinds of things uh dad never had the kind of ambition or confidence to build much of a business on his own, and he didn't believe in taking on debt. When I was growing up, he had all sorts of jobs. He was a banker and a farmer and a farm loan appraiser and an agent for both insurance and real estate. Early in the Depression, he was out of work.

I wonder what could have put him off from taking on debt. I also wonder how he could be a farm loan banker and not take on debt. You're right. But so for a few months early in the Great Depression, of course it's 1929 in the United States, he was out of work altogether for a few months. And eventually Sam Walton's father goes to work for Walton Mortgage Co., which was his brother's company. His brother had a company called Walton Mortgage Co., which was his brother's company.

His brother had a company called Walton Mortgage Co., which was an agent for Metropolitan Life Insurance, which was a big life insurance company at the time. So basically, again, quoting Sam Walton, dad became the guy who had to serve Metropolitan's old farm loans, most of which were in default because of the Great Depression. In 1929 and 1930 and 1931, he had to repossess hundreds of farms from wonderful people whose families had owned the land forever. I traveled

with him some, and it was tragic and really hard on Dad, too, but he tried to do it in a way that left these farmers with as much of their self-respect as he could. But, of course, not any of their farms. Right, right. Repossessing is the hardest part of my job. But, course, not any of their farms. Right, right. Repossessing is the hardest part of my job.

But yeah, so essentially Sam Walton's dad was a guy who foreclosed on hundreds of farmers during the Great Depression. Well, my great-grandfather would like to thank him for pushing him off his farm as humanely as possible. In many ways, Sam Walton's father the reason andy is on this podcast today and not churning butter somewhere in wisconsin or whatever kansas or iowa um but it's uh i mean it's it's an interesting thing where um like he kind of upplays you know poor upbringing and of course it was the

great depression so he had to move around a lot he had odd jobs he talks about he like they sold milk from their farm he sold magazine subscriptions he had a paper route but um all of this to get variable rate mortgages but of course like when you're the guy doing the foreclosing you are relatively privileged in the fact that it's like you know again his dad foreclosed on hundreds of properties and it's like who knows how many of those people had the entrepreneurial spirit to become sam walton but of course they got kicked off their fucking farm and many of them uh committed suicide there was even starvation in the united states leading up to fdr so i mean this is a horrific situation and you know it's nuts yeah i mean i do love how he turned like foreclosing on people into like his hardscrabble

upbringing oh yeah and then the other part of that quote is sam walton says all of this the foreclosures must have made an impression on me as a kid, although I don't ever remember saying anything to myself like, I'll never be poor. But that's the idea that it's like, you see this horrific foreclosure and stuff and you're like, oh, I should become the richest person in the world by exploiting all of my retail employees. Which we'll get to in a second here like you just see people like left on the streets with their belongings and sobbing and being like well that was their mistake i mean it is a great irony of sam walton's life is essentially he like saw the worst of pre-new deal capitalism while he was a child and then made it his life's mission to undo all of the changes meant to prevent what he saw when he was a child and then made it his life's mission to undo

all of the changes meant to prevent what he saw when he was a child he's like all right this is what happens to people at the bottom i'm it's it's a total social darwinist lens yeah no i mean entirely you know and it's like the these people who got foreclosed on it's they weren't bad farmers they weren't bad farmers. They weren't stupid people. Like he even said himself, they'd had the land and their families for generations. They just got swept up in larger economic trends completely beyond their control. And he just so happened to avoid those trends for most of his life. And he thinks he's a fucking hardscrabble person and that this is the way the world is.

I mean, he did create that music, though. That sweet, sweet music. That's what this was all about. I just get hard thinking about this song. Get your shit out on the curb now. He's standing outside, like, with a boom box. Yeah, we'll be taking these cows. Thank you.

But so, Sam Walton, he moves around a lot as a child. Interestingly enough, we have another Eagle Scout on the podcast today, in addition to Andy Palmer. Sam Walton becomes the youngest Eagle Scout

in Missouri history at the age of 13 in 1931. By doing this, he killed every other 12-year-old that was about to become an Eagle Scout. By the way, the way inside knowledge, the way that works is usually like the parents, overzealous parents just sign off on all the merit badges. Right, right. And they had to like implement a policy eventually where it's like parents cannot sign off on their own children's merit badges. Right, right. And they had to implement a policy eventually where it's like parents cannot sign off on their own children's merit badges. We don't have a very good record of Eagle Scouts. Hank Paulson was one.

Yeah. They all seem to not be eagles, if you ask me. Discovering a farmer's suicide merit badge. Yeah, I'll tell you, when I became an Eagle Scout, the hardest... Now, son, what kind of knot did he use? The hardest badge to earn was the foreclosure one, because it was just so hard on me.

Dragging that family out of their house in my brown shirt. Yeah, interestingly enough, all the uh young candidates for eagle scout couldn't be found at their farms anymore um but yeah so he would uh become the youngest eagle scout later he would become a distinguished eagle scout which we mentioned about hank paulson too it's for doing something in this case blatant wage theft right for decades um but yes he becomes a distinguished eagle scout later in his life um and so essentially he's able to attend the university of the family eventually

settles in missouri after bouncing around a fair bit during the depression uh he attends the university of missouri as an rotc uh cadet uh he graduates 1940 with a bachelor's in economics and um uh during this period uh right after he graduates in 1940 he gets a job as a manager management trainee at jc penny they pay like 75 a month at that time uh and he works there till 1942 where he kind of gets swept up in world war ii um but it is interesting So just to kind of mention here. Most of his duties were to report Japanese workers. Which he did

very successfully. Got a couple of badges out of it too. He led the morning. They introduced a new badge. Yeah, right. The eyes open badge. I was going to say he led the morning internment camp chants. Give me a D, E, P.

It's deportation. But so, oh yeah. So 1940, he's a management trainee for JCPenney and it's here that he meets his wife. And essentially the other reason he is able to become a billionaire is he marries rich. His wife, Helen, who is married to his whole life,

she recently passed away. But he's on leave. They're carrying the casket to, I guess, the Walton tomb. Right, right. And just in the background. But so... They met at JCPenney? No, so he's leaving...

He's on, like, I think, vacation in Oklahoma in the early 1940s. And he goes out bowling. And he meets his wife while bowling, and they would get married in 1943 and have their first son, who is still alive today and worth like $45 billion, in 1944.

That is the only way people fucked back then. So you go out to the alley and, you know. Yeah. Throw a couple of strikes. Yeah, you go to the back room, and once the once the pins start falling no one can hear that's right it's a pleasure and their first

son was named 710 split he takes her back to his place and then to seal the deal he's like hey do you want to hear this on a record player But so, yeah, so he meets his wife. They're married in 1943. And Helen's father, his wife's father, his father-in-law is a rich lawyer and businessman who would eventually give him the startup capital to start what would become Walmart. Friends and Family Trust, LLC. Yes, exactly. But so just like in World War IIi he has an irregular heartbeat is the way

it's reported so he says like he enlisted but they were like no irregular heartbeat will give you like part-time duties so we actually have a sound clip of what his heartbeat so it's irregular but you know what it's hot i hope you guys aren't sick of this because this is going to be a two-parter. Settling. But yeah, so he's deployed as an officer in Fort Douglas in Salt Lake City, Utah. So he's never deployed overseas. But from 42 to 45, basically he reaches the rank of captain.

He's in the Army Intelligence Corps. And he basically his job is to supervise security of aircraft plants and prisoner of war camps. So that's what he does for three years. And prisoner of war camps, you say. How many prisoners of war made it to the American homeland? Well, I'm sure there were some. I just love how his experience was supervisor of prison work.

Yes. It just kind of leads into what he ends up doing with this Walmart empire. He's like, oh, so they're all locked in and they can't leave and they have to do hard labor. We start the day with a chant.

This is how we should clean our stores. Walmart would be busted later for they were having illegal immigrants clean the stores and they were locking them in so from 9 9 p.m to 7 30 a.m these people would be locked in the store and forced to clean it and someone had to be like uh sam just because they're japanese doesn't mean they're illegal immigrants um but yes so 1945 he leaves the military and um uh basically what happens is uh he purchases a franchise that's actually still around today they're called the ben franklin stores i know those stores yeah yeah uh so at

this point they were called Five and Dime stores, but per inflation, you probably know them today as 99-cent stores. But yes, so he purchases... 99-cent and up stores. Yes. He purchases a Ben Franklin Five and Dime store franchise in Newport, Arkansas, shortly after he leaves the military in 1945. And he's able to do this with...

Are you saying his business career started with literally nickel and diamond people? I think that would be fair. So he's able to purchase this store because apparently he has... himself and his wife have about $5,000 saved up. And his father-in-law gives him a $20,000 loan, which in today's money is $225,000. What? So, you know, just like Bezos and his $300,000 loan,

Sam Walton gets a $225,000 loan to start him out. And that's the only parallel between the two. When you said that they had $5,000, $5,000 a piece or $5,000 total? $5,000 total. That's how much of their own money they put in. Even in today's dollars, that's still more than people, than the average household has saved up. Right. That's fucking nuts.

Well, so yeah. And so you get to this fat loan to start up. And then it's kind of an interesting consequence of the New Deal minimum wage law, because, of course, there was no minimum wage in the United States before Franklin Roosevelt signed it in. But there were these exceptions for agricultural workers and also for retail workers. So throughout the 40s, he starts in 45 and the 1950s, all the way up to 1961, there's no minimum wage for retail workers. So this is why, and then of course you have the post-World War II economic boom. So essentially he's able to get a pretty good thing going.

And I just want to quote from Nelson Lichtenstein, who wrote the book The Retail Revolution about Walmart. So Sam Walton wrote in his memoir, quote, no matter how you slice it in the retail business, payroll is one of the most crucial things you have to fight to maintain your profit margin. That was true then and it is still true today. And that's Sam Walton. And then Nelson goes on. By his own admission, Walton was, quote, a chintzy employer in the early years.

Since all retail clerks were exempt from the federal minimum wage law in the 1950s, Walton could pay as little as 50 cents an hour, which was a rock-bottom wage even for small-town Arkansas. When in 1955, Charlie Baum, the manager of Walton's Fayetteville, Ben Franklin, gave his, quote, girls, because most of retail workers were women at this point in time. True. He gave his girls a 25-cent-an cent an hour raise sam was immediately on the phone charlie we don't give raises of a quarter an hour we give them a nickel an hour and so basically he just paid

garbage wages even by the standard of the time it's also there was no minimum wage it's also worth noting that in his quote he says profit margin and so it kind of cuts to the um core of all those arguments that like oh if you raise the minimum wage it's going to raise prices and it's like well that's assuming that there's no profit margin like the profit margin is completely like you know kind of what the owners take home and so like if you raise the minimum wage no it's not going to immediately lead to a rise in prices first it's going to lower the profit margins for the owners which is why they're so against it because that's you know where capitalists get their money literally literally eh but so and we'll get back to the minimum wage thing because

of course kennedy signs a minimum wage for retail in 1961. And then Sam Walton gets in trouble for that, too. But so basically 1945 to 1950, he has this store and he's doing very well. But what happens is the landlord at the store actually sees that Sam Walton is doing so well that he's like, no, I'm not going to renew your lease. I'm just going to put my son in charge of the store. So, and this is, you know, like an early lesson in Sam Walton's business career. But basically in 1951, the landlord won't renew the lease. So what happens is in 1950, Sam Walton has to go get another store.

And actually his father-in-law helps him again and gives him or pays another $20,000 again $225,000 in today's money. His father-in-law gets him another store in Bentonville, Arkansas by putting in $225,000. These things everybody has access to. It sounds like a ridiculous loan but

the interest rate that Sam had to pay must have been astronomical. Being an untested businessman. Literally a little less than half a million dollars between the two loans. Yes. Yeah. So that's how much startup capital he was able to get just from his father-in-law. And so what happens is in 1950, yeah,

his father-in-law gets him a 99-year lease on another store because they learned their lesson with five-year leases. They don't mess around with those anymore. And he has to move out of the original store, and then the landlord puts his son in charge of it. But for about a year, he's running both stores, and this kind of gives him the idea to go out on an expansionary tear. Right, right.

And so what happens is they open their second store. After they move to this one, they open another one in Fayetteville, Arkansas in 1952. 1954, he opens a store with his brother Bud in a suburb of Kansas City, Missouri. And Bud Walton would also become a billionaire since deceased. But his brother Bud went in on like a lot of these early Walmarts with him. So, you know, they both became billionaires. But so essentially, by 1960, he had 15 stores and revenue of about $1.4 million. Wow.

By 1960. And again, you know, no minimum wage, a boom post-World War II economy. He benefited from a lot of these things. And are these are Walmarts he's starting? No, no, no. These are still Ben Franklin's. Excuse me. That's an important point, is that these are Ben Franklin five and dime franchise stores. So he's kind of like learning the retail business, but he opens the first Walmart in, I believe, 1962,

which we'll get to in a second. But so basically, I do just kind of want to get to essentially the minimum wage that we were talking about just earlier is 1961 uh jfk had a campaign promise to raise the minimum wage and apply it to retail workers i think it went up to like a dollar 15 or yeah a dollar 15 an hour was what jfk signed into law in 1951 uh interestingly enough the congress and i promise i will keep cuba an american protectorate and then you know once he couldn't get the one campaign promise he had to live around the other Interestingly enough, the Congress had... And I promise I will keep Cuba an American protectorate. And then, you know, once he couldn't get the one campaign promise, he had to live around the other.

As sure as my head is on my shoulders, retail workers deserve a fair wage. But so 1961, there's this minimum wage. And interestingly enough, Congress starts... What happened to Kennedy next will blow your mind. Congress granted an exclusion. So basically, small businesses with annual sales below a million dollars don't have to pay the minimum wage. They would later, in 65, that goes down to 250 000 but what

sam walton is able to do is uh incorporate his businesses as if each one is a is its own franchise so all of them are kicking back to them to him but he sets it up so every individual one reports its profits or revenue as less than a million a year and again this is 15 stores in 1960 and so all of them are saying like yeah we're making less than a million so this is how he's able to get around the minimum wage up until like 1968 or so i want to be clear small businesses are the basis of the american economy uh but so and then just like another so this goes until about 1968 and then actually a district attorney uh files legal action against sam walton because this is obviously illegal dodging of the minimum wage and i'll just kind of like quote a bit more from um uh nelson lichtenstein in his

book uh when i took a break from defending cops who kill people uh when the uh when the courts finally ruled that his decentralized ownership structure this is in the late 60s i believe around 68 uh was but a scheme to avoid the new wage and hour law walton no walton and most of his store managers were furious they hated the assistant district attorney from fort smith who pressed the case because as one manager put it quote now dingbats in the store would be making 1.15 an hour when a court order called for walton to issue checks to the clerks at his store at his stores for back pay including a double time penalty for what they had lost he told a meeting of his employees quote i'll fire anyone who cashes the check. Cooler had soon prevailed, but Walton's determination to hold the line on his labor costs had hardly

softened, nor had his contempt for the regulatory state and its laws. But so basically, he's like doing illegal wage theft and wage suppression and then he threatens to fire people who cash checks that he is ordered by the court to pay. And you know, you can just imagine this kind of like intimidation of your workforce. Again, you know, you have very little legal protection from the federal government and you might depend on this job or these sorts of things. So he's a lot of power over you um and so i guess we can kind of move on to the the first walmart opens 1962 in rogers arkansas the thing he comes up with is kmart is very popular at the time right so he avoids kmart whereas kmart and uh other type type of retailers that are similar to him, they won't really open a store in a town with less than 12,000 people or something.

So he focuses on all these markets that Kmart avoids. And from this, he's able to build up his own little logistics supply chain, which would ultimately defeat Kmart. But I guess we should maybe mention... uh that's the just in time system right so yes he like opens all these different stores um and part of it is like all of his stores are within a dave's a day's drive of his distribution centers um oh really yeah yeah so it's like yeah he sets up his own trucking service. All of his stores are located within a day's drive of regional Walmart warehouses.

Oh, and he also encourages, at this early point, he encourages managers to buy equity stakes in the stores so they have incentive for it to do well. Later, of course, today, Walmart runs everything out of the central office and managers have very little autonomy. But in these early days, it was kind of different. And this didn't happen right away, but he was one of the... Anyone with their inventory can understand when something was sold, like after the fact, at a meeting every month or so.

But he used the emerging barcode and centralized computing technology to look at what was being sold when and like incorporated just in time supply chain management in a way that a lot of retailers didn't weren't aware of one of the early mistakes he made though was that um they had a strict policy not to hit uh tour vans with famous comedians. Oh, really? And they later reformed that, to adapt with the times. But yes. Yeah, so he knew,

I think in general, one of his innovations was you don't just know what was sold, but you also know exactly when and during when it's being sold. So you can just get an hour's head start on the supply chain for that one item. Right. He was an early innovator as far as data collection and barcodes. He'd set up his own logistics network, which served small-town rural America,

which was completely avoided by Kmart and these kinds of competitors. So he was able to build up his own logistics operation, which would eventually become extremely efficient. Like a lot of the later, the much, much later like business reviews of his, there's tons of like Harvard Business Review articles about Walmart, obviously. And like a lot of people have the contention that it's not actually a retail company, it's a supply chain company. Right. And the retail is just It's a supply chain company. Right.

And the retail just sort of keeps the lights on. But the integration of supply chain logistics is what they're like the real sort of absolute advantage of Walmart. They use their supply chain logistics to move a guy named Oswald into Dallas, Texas. Exactly. supply chain logistics to move a guy named Oswald into Dallas, Texas. But so, yes, it's like, and then just like the other thing is in this period, again, he's like, he's a guy who gambled and won because he's heavily leveraged in this period, the 1960s. And so, you know, leverage, like if the economy turns bad, you're just fucked. So there's really things that are

outside of your control but he gambles on heavy leverage by his own admission in his um in his biography he was in the 60s quote him and his wife were in debt up to their eyeballs they were seven several million dollars in debt um and so because what they would do to open another store is they would just leverage the previous one you know so and then uh none of you wanted to beat daddy yes who wouldn't take on debt yes uh and so um uh none of the like traditional investment banks in the 60s will touch him because of this heavy debt. So what he actually does is he uses even more debt to buy up the National Bank in Rogers, Arkansas, which had about $29 million in deposits at the time.

So he buys a bank and then uses it to give himself even more debt from that bank. Hell yeah. Wow. But I guess, and then we kind of get into the 1970s where he goes public, but there were like a couple drops, I don't know about the um uh mainly about the unionization stuff because they kind of talk it sam walton like his successors uh despised unions and union membership and if you tried to

join a union he would fire you and again we've kind of talked about this on the podcast it is illegal to fire people for unionizing but uh kind of an interesting thing, I learned researching this, is that the penalty if you sue is... The labor laws are such that if a company fires a worker for organizing and the worker litigates it all the way through the courts, the worst that can happen to the company is that they have to hire the worker back. There's no additional penalty of any kind. You don't have fines that are imposed. So companies really are very easily able to fire workers when they try to organize. And Walmart has been very aggressive about doing

that, about keeping people out. They have a professional team of union busters that go from store to store whenever something threatens to do that. So that was Bob Ortega. He wrote the book in Sam We Trust. And there's a lot of interesting tidbits in there. But yes, so even in its earliest days, Walmart was aggressively anti-union. We've already mentioned about the wage theft stuff. But yeah, so they have these teams of people who would like anywhere they suspect a union activity, just go in and fire everybody. And this is also where Sam Walton comes up with the profit sharing scheme, which is like something they're kind of praised for. Sam was one of the pioneers in profit sharing. In the early days when the unions started trying to organize the stores,

Walton went into the stores and told the workers that he'd fire them if they tried to organize. And that was a pretty successful tactic. The workers didn't want to lose their jobs. And he hired this guy who as a professional union buster, and the guy said, look, you know, we can do this every time a store tries to organize. We can, you know, stomp them. But there's another way to approach this, and that's to make the workers feel that you're on their side.

Make them feel that you're all on the same team. And he suggested some different things that Walton wound up adopting. One of them was profit sharing. The other was the music. Well, yeah, so this theme is actually from, it's from Walmart's union busting training video. Which, do you want to go into that now? Yeah, so I guess just like one quick word on profit sharing.

Interestingly enough, if you look at the Walmart, like, associate documents or the stuff they give to employees, interesting thing they say about profit sharing is, first of all, Walmart reserves the right to cancel profit sharing at any time, which different from a pension, because at least like with a pension, you have to go through like bankruptcy courts to get it dislodged, which is still fucked up but profit sharing is like a way of them to like act like they give a shit with very little commitment on their part and certainly not the long-term kind of thing that you would have if you actually had to pay a pension but interestingly enough like i don't know the stats for what it was like uh in sam walton's day but today they still have this nominal profit sharing but because turnover at walmart is so, almost no employees get access to it. Oh, really? Like Walmart peaked in the 90s at about 70% annual workforce turnover.

70% of the fucking workforce was leaving every year. And now it's around 40%. So this is a huge turnover rate. And essentially it's like, I mean, Amazon does a similar thing. But if they want to get rid of you, they will give you terrible schedules. You know, you'll be working graveyard shift. They'll transfer you. They'll bust your hours.

They'll do whatever they have to. So it's like even if you get close to like access to this profit sharing goal, very few workers really do get anything from it. But, yeah, so there is this anti-union training video that uh walmart i think this one is like oh seven or oh nine or something in the early in 2000s it was definitely made after green screen technology uh it became accessible because several parts of the videos show employees supposedly in the stores but you can tell from the fuzziness outlining them that they're in front

of a green screen with a projected image of a produce aisle behind them. You've made a great choice to work for Walmart and we're glad you're here. Choice. But the reality is you're here. Choice! But the reality is, you're not the only one looking to get your foot in the door at Walmart.

You made a great choice to work at the one retail hiring in this entire rural area. Right, right. Now, you might have heard stories on the news, read about it in the paper, or seen it on the internet, but labor unions are really interested in Walmart and have spent millions of dollars specifically focused on us. Labor unions are investigating to find out who killed Kennedy. Now, I think you know by now that our company prefers to have open and direct communication with our associates. We don't think that a labor union is necessary here. And because our associates have said time after time that they don't want a union,

we usually don't spend a lot of time talking about them. But as a new member of our team, we do think you need to know this. In recent years, union organizers have spent a lot of time, effort, and money trying to convince Walmart associates to join a union, all without any success. Now, while they've been trying to convince associates to join their union, at the same time, they've been spending big money trying to hurt our business. And they've been telling customers not to shop in our stores and clubs. Now here's the kicker. I don't get it.

How would it make sense for associates to join any union that wants to damage our reputation and drive business away from our doors so associates don our doors. So it just doesn't make sense. Funny thing is, I always thought unions were kind of like clubs, you know, or charities that were out to help workers, right? Well, I found out that wasn't exactly the case. That's like a community college acting monologue. You know, unions damaged Walmart's reputation with those hundreds of Clean Water Act violations

where the unions were dumping all those chemicals directly into rivers because of... You see, unions get almost all of their money from monthly dues, initiation fees, and assessments against members. Because union membership has dropped over

the years to less than 8% of private employers, unions are fighting to survive. Well, that's true. It just doesn't mean what they think it does. You can understand their interest in Walmart. It is a business. I like their equivalent to, like, this always comes with, like, anti-union rhetoric,

is that, like, they're just trying to get money for their dues those fat cats in their like tiny union offices i like this idea of like unions uh damaging walmart's reputation so like jimmy hoffa disappeared because he like wanted to go to uh bangladesh and burn a factory jimmy hoffa destroyed all of the fire exits for the fucking factory where they make the Walmart garments. That's why they couldn't

find their body. It was overseas. Oh, and of course, great irony of this anti-union training video. All of the actors in it, union workers. SAG union workers.

Our philosophy is simple. We are pro-associates. Here, all associates are free to talk openly with their leaders. I'm completely comfortable sharing my ideas and concerns with my leaders, and I know that they really listen to what I have to say. By using the open door process, I'm free to just speak for myself. I speak on my own behalf. And frankly, I don't think Walmart associates should have to have someone to speak for them

it's just not that kind of place i went through this bullshit when i worked for this company um that i won't say their name but they were owned by the swiss postal service uh not related to their name um and we would have these like little events um they were called like training classes where they would sit us down with hr like groups of people from the company and we had to do like them for three weeks and they would just tell us like you know we just want to hear what you think about the job are you satisfied and they would like point to people and be like are you satisfied and even though it was a terrible job like i got pointed to and i was like yes i am completely satisfied with the

job i'm doing here yep you should have been like give me a w give me an a give me an l squiggly line one one other thing they said in in the thing i was in um at a company i won't name that is run by the swiss postal service um is that they're like you know you guys are lucky that we have these trainings because in Europe, because they have unions, they only have to do trainings where they learn practical job skills. Wow, really? What idiots.

I did like from that clip where you just played, every associate is free to talk to Walmart one-on-one. You know that uh fair negotiating position yeah where somebody making eleven dollars an hour is arguing with the largest private corporation in the world one-on-one all of it is just basically to obscure the fact that like the union like it's you would you do you want a collective voice yeah do you want do you want to take power?

Yes. No, actually, you shouldn't, because Walmart is your friend. Right. Yeah, well, time and again. We've successfully crushed unions, so obviously they aren't winning. I mean, how can an outsider really get to know what it's like to work at Walmart? These triple parentheses outsiders. I look at it this way. With what we have here, I'm not willing to trade it for a union

that doesn't know anything about me or my goals. My goals, working on the ground at Walmart. Yeah. My goals, working from 11 p.m. to 7 a.m. And then opening the store the next day. Yeah. Right. And, you know, we just mentioned, like, Walmart will give you these fucked up schedules and just completely mess with you and reassign you.

In some cases, like in the case of like district managers they want to get rid of, they'll just like say they have a family or whatever. They'll just assign them to a store on the other side of the country. Oh, really? So it's just like all this stuff. And they do this to force people to quit so they don't have to pay unemployment benefits. Right. But all of this stuff is exactly what a union will prevent. Because if you have workers who collectively bargain...

I can tell you that every job has its ups and downs, and a union can't change that fact. Literally, the mayor of Washington, D., just tweeted out, uh, last month that, they overrode the $15 minimum wage for restaurant workers in Washington DC. And she tweeted out quoting somebody saying, uh, uh, a higher wages won't end sexual harassment on the job. Wow.

This is like, this is like that Adolph Reed jr. Quote where like Hillary said, uh, we'll breaking up the big banks and racism. And he was like, well, no, but it won't cure sunspots either. It won't, you know, prevent premature balding. I mean, you could go down the list.

It's just a ridiculous argument. Wait, we're trying to cure sunspots? That's real hard. Those are huge magnetic storms. I'm paraphrasing him uh but yes so it's just like one of those ridiculous things and it's like and i guess we can just kind of before we get back to sam walton um the documentary wall street high cost of low walmart high cost of low prices talks about just how insanely anti-union Walmart is. So basically, they interview a manager, and he says that in one situation, some employee

typed up, I think it was key logged, he typed up on one of the computers, we need a union. He didn't distribute this material. He didn't do anything else. But because this was logged, this district manager immediately had to place a phone call to headquarters and later that day pick up executives from corporate office from the airport in their private jet because they had flown down there because any union activity is a huge red flag and walmart goes all out so what happens is like as soon as walmart thinks any store is unionizing they set up all of these spy cameras and technology to like monitor the movements of every single employee.

Any employee they think is a risk of unionization is going to be terminated or have their life fucked with or any of this. And it's also like a process to like isolate them from other employees. You know, so it's like divide and conquer. Exactly. Like so, you know, this guy is a union organizer and management has put a target on his back. So if you're talking to him, you're going to get fired too. You know?

This is what they listen to on the jet over. But just from the Walmart high cost and low prices documentary, they said that... This is just the spending that Walmart does to prevent unions. They spend $7,000 on anti-union camera packages per store. They spend $30,000 on an undercover spy van per store.

So it's like so funny, like we maybe next week we'll talk a bit more about the crime epidemic at Walmart, but like they, their security monitoring stuff is focused on preventing unions. So like there was a situation where it's very tragic a woman was murdered or she was abducted from a walmart parking lot and sexually assaulted and murdered it's horrible but the only reason there was a camera in that

walmart parking lot was to monitor for union activity and because there were no like unionization activities going on nobody was watching the camera so this camera records her getting abducted in the parking lot but nobody is fucking watching the thing because there's no union members nearby so they don't alert the police and then you know hours later she's driven off and killed so it's just so fucked up i mean like god i hate these people but they uh i will say at first i was wondering, how are you going to disguise a security truck in a Walmart parking lot? How are you going to distinguish it from all the minivans?

Then I realized, oh, you just make it look like a meth lab, and there's going to be eight of those. They just have several homeless people sleeping in there to make it blend into the Walmart parking lot. Put a ladder on it and some other equipment. It should be a truck, actually truck actually but yes they also spend 100 at least 100 000 a year on a 24-hour anti-union hotline so if you suspect unionization you're supposed to call these people and snitch on other workers they think do we have the number

for that let's call them up and uh they also spend at least $7 million on a rapid response team with Corporate Jet, which, as we mentioned, any store in all of their stores that they think is going to be unionization, they send all of these people on Corporate Jets there to develop an anti-union strategy, and all of this is to just prevent any store in the United States from becoming unionized, and so far they have successfully. I think they have like one store in Canada that's successfully unionized where labor laws are a little more in favor of unionization.

Yeah, they're on the front lines of like bourgeois control over labor policy. They're the largest employer. Yeah, they are the largest employer in the United States. And like another thing is like a lot of people talked about like why haven't wages been rising as we have this record low unemployment well part of

that is like it's a monopsony situation with labor where if there's a monopsony uh monopsony is like one buyer yeah one buyer so like a monopoly is one seller a monopsony is one buyer so if you're selling your labor and there's only one buyer in town the big Walmart that destroyed all the other mom-and-pop retail stores Right, there's only one buyer for your labor So they get to set the price of labor and they set it very low and this might be part of why we Haven't really seen a wage increase with our so-called record low unemployment Hey, let's wrap up the Sam Walton story. Yes. So we were at the 1970s where Sam Walton, you know, he buys up a bank to get like an even bigger infusion of capital. But what happens

is in 1970, he goes public for even more capital. So at 1970, he has about 32 stores. Uh, these are just in Oklahoma, Arkansas, and Missouri. This is where he's focused. And, uh, he gives up a 20% stake in the company for about $4 million in 1970. And then, you know, Walmart starts exploding because by the end of 71, there's 51 Walmarts generating annual revenue of $78 million. Um, and then in 1972, he decides to compete directly with Kmart for the first time. He opens a store in Hot Springs, Arkansas. He's able to beat Kmart on price.

Again, this is with like a huge investment and his logistics operations. And then 1972, he also is listed on the New York Stock Exchange for the first time. So by the 70s and even by the 60s he's already you know multi-millionaire and um it's it's interesting where like essentially like the 70s and 80s are dominated by this retail war between kmart and walmart um sam walton does step down for a bit in 1974 he's already like 65 he's a multiillionaire. So he retires and he wants to go play tennis and do quail hunting. Where like one of the more depressing things I read is that like he's such a workaholic that he didn't spend time with his wife. So even though she hated quail hunting, she would go with him just to spend time with him.

What a pathetic life. Yeah. I'm just imagining Sam Walton shooting a quail and being like, take that, Jack Kennedy. What a poor wife having to go on those fucking trips. Well, not poor. Yeah, fair. But yeah, so 1976, Kmart starts competing with Walmart where they start opening stores in Walmart areas. So it's kind of like a retail war breaks out.

But Walmart eventually wins that war. They really go through a boom time in the 1980s with the Reagan presidency. By 1979, he has 230 stores, gross revenue about a billion dollars a year. 1983, excuse me, he's 65 in 1983, so he was in his 50s when he retired for the first time. But he's a workaholic, so he can't stand it, so he comes back after two years. 1983, he's diagnosed with leukemia. He signs up for an experimental drug called interfernon, and his cancer goes into remission. You know, these things that everybody has access to, of course. Right, right.

So, 1983, he's age 65, diagnosed with leukemia. 1985, Forbes magazine lists him as the richest man in America. Oh. So, yeah. By the 80s, like, they're huge. They opened their 1,000th store in 1987. They passed Sears, which recently just went bankrupt. In 1991, they passed Sears.

And then in 1992, he dies of bone cancer. And news of his death was beamed via satellite into all of the Walmart stores. They're forced to look at his portrait all day. Give me an R Give me an I Give me a P What's that spell? They were actually when they were announced that

Everyone had to cry And if you were seen not crying You risked being executed By the Politburo But yeah so he dies 1992 at the time the richest man in america you know before bill gates and all that and it's just kind of interesting where um again the the seven walmart heirs who are on the forbes 400 richest list basically just inherited

everything he built and exploited um but there have been like changes where we mentioned, you know, store managers used to have like equity stakes and like Sam Walton was very much breathing down their necks to like cut labor costs and these sorts of things, prevent unionization. But they had a degree of autonomy that simply doesn't exist anymore where like now everything in all of these,

you know, thousand plus Walmart stores is run out of the central offices in bentonville arkansas and another thing that happens in 2007 walmart launches computerized scheduling systems where store managers used to write the schedules for their employers but now the central computer in bentonville arkansas writes your schedule and it's again one of those things where it's like it just gives insane schedules. It's a centrally planned corporation and to a degree it affected the retail

market because Walmart is seen as a price leader. They administer their prices accordingly and then little trade association meetings their competitors would follow suit to a degree right yeah and i mean like yeah both on prices and on wages yeah labor labor practices yeah yeah yeah and um you know and people talk about i guess like the walmart

effect was essentially like you know devastating rural america you can argue it might have been someone else who does it, but, you know, Walmart opens up. They put all... When did they adopt the computerized... Computerized schedules were 2007 because they used to have their store managers spending, you know, of course, several hours a week

putting a schedule together. And also there's like a human face on that. Like if you need time off for X, you can at least talk to your store manager. Right. Whereas now there's a fucking computer spitting out your schedule and it's just impossible to like plan anything or have for X, you can at least talk to your store manager. Right. Whereas now there's a fucking computer spitting out your schedule and it's just impossible to like plan anything

or have a life, you know? In the mid 90s, a lot of their competition was starting to feel the pressure. And I'm just looking at their stock price history. And in 19, it really explodes in about 1996 to 1997. It goes from about about 20 a share to about 50

really within like two years wow that's nuts yeah well another interesting thing that happens in the 90s and this is like the big uh innovation that comes after sam walton dies is they just stop sourcing any of their products from the United States. Because, you know, Sam Walton had a logistics chain, but he was still, you know, sourcing U.S.-made products. Whereas what happens in the 1990s, particularly China starts getting most favored nation status. They joined the World Trade Organization in 2001. And Walmart becomes a heavy importer.

I believe after China joins the WTO,mart triples their imports from china in just a few years and um it's just something where it's like the other part of the story is like we've talked about the destruction of retail wages but also manufacturing um the economist dean baker has this interesting stat that i just want to share with you in the three decades from 1970 to 2000 manufacturing employment in the United States only fell by 100,000, less than 1%. By contrast, we lost more than 3.4 million manufacturing jobs from the year 2000 to 2007,

and that's before the economic collapse of 08, which was more than 20% of total employment. So almost all of that, well, I mean, you can argue about what to attribute it to, but I think it's pretty obvious that China joins the WTO in 2001. They get permanent most favored nation status in 2000. And so Walmart essentially outsources almost all of their manufacturing to China and Bangladesh and Cambodia and such.

But it's just one of those things where it's like Walmart has had a lot of different bad effects that have been enabled by government policy. Certainly. So the labor relations number is 1-877-545-2267. Okay. And they ask you to enter your social security number when you call them. There's no reception up here. Okay, so it asked me the other two times I called to confirm this while Sean was talking. They asked you to give four numbers from your social security numbers so one two three four call failed so uh to wrap up this is kind of what walmart culture is now

regarding um sam walton at uh at the average annual meeting i was in an annual meeting a couple of years ago after Walnut died, at which one of the executives actually got down on one knee, and he talked to Mr. Sam up in heaven. And Mr. Sam up in heaven told him that he wanted all the workers to get up and sing, God bless America, and they did. You know, I didn't really believe the thing that, like, hardcore evangelistic Christianity was just worshiping America. But like after hearing that, it's like, oh yeah, that's exactly right. I also love that you're talking to someone who is in another plane of

existence, knows this supposedly knows a new level of secrets to the universe. And it's like, yeah, sing a song. Let's find the most dangerous Walmart parking lot in America and call the hotline and say there's a union meeting there. But yeah, I mean, so I guess like to kind of wrap up, you've heard the story today of Sam Walton and how he was able to build a billion dollar,

you know, become the richest man in America and leave his heirs with seven of them being on the Forbes 400 richest people in the world list. And next week, I think we'll talk a bit more about some of Walmart itself, its destructive practices, as far as, you know, crime and the supply chain in Bangladesh.

And we'll talk a little bit about those seven heirs. Who all fuck each other. Yes. And what they do with all of that money they've been given, they've spent less than 0.04% of their net worth on charity, which is abysmal. But I guess that's how you stay on the Forbes 400. And with that, this has been Grubstickers.

I'm Yogi Paliwal. I'm Steve Jeffffries i'm andy palmer i'm sean mccarthy uh stay tuned for more on the walton family next week thanks for listening Продолжение следует...