3 Charts That Show Why Hillary Clinton Wants to Increase Profit-Sharing
In a speech at the New School in New York City on Monday, presidential candidate Hillary Clinton called for building a “growth and fairness economy.”
“Hard-working Americans deserve to benefit from the record corporate earnings they helped produce,” she said, adding that "studies show profit-sharing that gives everyone a stake in a company’s success can boost productivity and put money directly into employees’ pockets.”
The philosophy behind Clinton’s proposals is sometimes called inclusive capitalism. Rather than focusing on higher tax rates for the rich, Clinton is proposing reforms that would change the incentives of the current economic system in hopes of making it more equitable. Unlike Vermont Senator Bernie Sanders, her presidential rival, and a self-described socialist, Clinton is looking to amend the rules of the game, not toss the board up into the air. The following charts help explain why she is promoting profit-sharing:
The percent of wealth controlled by the top one percent now hovers near 20 percent, double where it was in the 50s, 60s and 70s.
Skin in the game
Clinton says she would incentivize businesses to share profits through the tax code. By increasing profit sharing, the plan would give more employees a stake in the business’s growth and put that growth directly into employees' pockets.
An increase in the share of income lower level employees take home could decrease inequality, but it may not make up for the structural inequality created by improvements in technology, according to the National Bureau of Economic Research.
Defining issue of our time
Few deny that inequality has risen dramatically over the last thirty years, though its causes are disputed. Even low tax republicans like Jeb Bush and Marco Rubio are making it a central issue of their campaigns.