How Hillary Clinton can tackle income inequality—without upsetting her rich friends

April 13, 2015, 8:01 PM UTC
Hillary Clinton delivers remarks during the 2015 Toner Prize for Excellence in Political Reporting award in Washington
Former U.S. Secretary of State Hillary Clinton delivers remarks during the 2015 Toner Prize for Excellence in Political Reporting award in Washington March 23, 2015. REUTERS/Joshua Roberts - RTR4UKB6
Photograph by Joshua Roberts — Reuters

How does Hillary Clinton tackle her party’s chief economic concern—income inequality—when she’s making $200,000-a-pop speeches to Wall Street donors? Those checks can make it awkward (to say the least) to point fingers at the usual suspects.

Answer: Make the case for giving labor more muscle.

As Clinton’s economic plan starts to take shape in the coming days and weeks, watch for her to propose pro-labor ideas, such as encouraging employee profit-sharing, and making it easier for the nation’s declining unions to organize.

Earlier this year, I attended a roundtable at the ground-zero of Hillary-think, Washington’s Center for American Progress, which was founded by Clinton’s current campaign chief John Podesta and is run by Neera Tanden, Clinton’s policy director during her 2008 bid. The conversation astutely avoided Obama-style “fat cat” rhetoric in favor of more high-minded “inclusive prosperity” prescriptions. But that doesn’t mean some of her policies will be any less painful for management.

The brains behind a report released that day—authors Lawrence H. Summers, former Bill Clinton Treasury Secretary and Obama economic adviser, and British shadow chancellor of the exchequer Ed Balls—propose strengthening union organizers’ hands at the National Labor Relations Board.

Business leaders who already complain that Obama has put his thumb on pro-union scales at the NLRB won’t be happy.

Politically, though, it’s a position that enables Clinton to set herself apart from emerging Republican presidential candidates, who blame Big Labor for destroying the fiscal health of states, cities and industries such as the auto sector. Wisconsin Gov. Scott Walker’s victories over public sector unions propelled him to the top tier of GOP presidential nominees. But the Summers-Balls report condemns Wisconsin, Michigan and Indiana for passing laws restricting collective bargaining by public employees—and blames right-to-work states for weakening workers’ abilities to secure higher wages.

Clinton was a favorite of big business in her primary campaign against Barack Obama. In fact, Fortune‘s July 2007 cover story, “Business Loves Hillary!” found that she was supported by more than 150 top executives. That business-friendly reputation—combined with more recent revelations of big corporate donations to the Clinton Foundation—has drawn the suspicion of the party’s pro-union left wing.

Moreover, the centrist businesspeople who support her tend to be avid free traders, angering union leaders by embracing trade agreements like those now under negotiation with Asia and the European Union. And unions remain upset over NAFTA, the free trade deal brokered by President Bill Clinton.

Promoting unions as part of “inclusive capitalism” may buy back some of that good will, as could supporting a hike in the minimum wage (Summers and Balls propose $10.10, with automatic cost-of-living hikes to avoid routine political battles) and giving workers more rights at franchises like McDonalds.

Other policies supported by Summers and Balls fall under the category of “nudging” corporate management, so they’re less likely to prompt business objections. Rather than being a multi-millionaire who condemns big CEO salaries and Wall Street bonuses, watch for Clinton to borrow these recommendations to spread the wealth. Summers and Balls propose using tax incentives for profit-sharing plans and ESOPS, and encourage companies to build education plans for employees—all guided by a new “Office of Inclusive Capitalism” at the Commerce Department.

By focusing on bottom-up-rhetoric, Hillary Clinton can avoid blame-the-rich tirades against her long list of business-leader friends. She can continue to mine her ties to powerful Wall Street figures like Goldman Sachs CEO Lloyd Blankfein and Morgan Stanley vice chair Tom Nides.

More importantly, she doesn’t have to try so hard to imitate the populist anti-big business rhetoric of that progressive favorite, Massachusetts Senator Elizabeth Warren, who wants to do things like break up America’s largest banks.

And, as we’ve seen, traveling down the populist road for a Clinton can be—well—awkward. “Don’t let anyone tell you that it’s corporations and businesses that create jobs,” Clinton proclaimed on the midterm campaign trail last year—that is, before she had to backpedal.

Read More

LeadershipBroadsheetDiversity and InclusionCareersVenture Capital