Cornell College economist outlines why U.S. inequality has widened since 1980

Dr. Todd (associate professor of economics and business at Cornell College) told an Iowa City Foreign Relations Council audience that income and wealth have become much more concentrated in the United States since about 1980 and that multiple, interacting forces explain the shift.

“We see that beginning in the early nineties the top 1% earns more income than the bottom 50% of Americans,” Todd said, describing long-term trends in U.S. income shares and Gini coefficients. He emphasized that much of recent change occurs at the very top of the distribution, not evenly across the population.

Todd presented three linked empirical facts: income inequality has risen since 1980, wealth concentration is extreme (he cited the top 1% increasing its share of U.S. wealth), and middle-class shares of national income have declined. He illustrated that productivity growth and wage growth diverged after 1980, arguing that workers’ pay no longer tracks productivity gains as it did earlier in the twentieth century.

Todd identified several drivers. First, he said the modern, ideas-intensive economy places a premium on education and human capital, so college-educated workers captured most wage growth. Second, platform- and technology-driven markets produce natural monopolies and winner-take-all outcomes: Todd pointed to large firms (Google, Microsoft, Apple, Amazon) that command dominant market positions and pay employees at a premium relative to similar jobs elsewhere. Third, he discussed the “economics of superstars,” in which a small number of individuals capture outsized rewards across entertainment, sports, finance and law.

He also linked family-structure changes to inequality: rising assortative mating (people with similar, higher education levels partnering together) and falling marriage rates among lower-educated adults, he said, have concentrated household incomes and reduced intergenerational mobility. Todd noted that the correlation between parental income and children’s access to higher education is strong in the United States.

On policy, Todd argued that U.S. tax progressivity has declined since the 1960s, blunting redistribution. “Outside of the top 1% we have something that looks very similar to a flat tax system now,” he said, adding that recent tax changes tend to concentrate benefits toward the highest earners.

Todd concluded that there is no single cause; instead, changes in technology, markets, family structures and political institutions have created reinforcing feedbacks that magnify inequality. He turned the floor to Dr. Augusto Lopez Claros for a global perspective.

The presentation ended without a formal vote or policy action; attendees were offered one audience question before the program closed.