How can I find the element clicked on inside a jquery handler?

I'm trying to do a specific action on the clicked element if an argument is passed in the on click method in jquery. When I try to access "this" it's referencing the entire window instead of the clicked on element. How would I access the clicked on element in the handler?

Here's the code I'm using:

var myfunction = function(action) {
  var content;
  var $this = $(this);
if(action === "one") {
  $(".output").text("clicked on one");
  $this.addClass("one");
 } 
if(action === "two") {
 $(".output").text("clicked on two");
 $this.addClass("two");
  }
};
$("#button").on("click", function(event) {
 myfunction("one");
});

$("#button2").on("click", function(event) {
  myfunction("two");
});

I set up an example on jsbin here. Any help would be appreciated.