July 2021

A once-in-a-century pandemic has sparked an unprecedented crisis. With over 167 million cases and 3.5 million deaths recorded worldwide and entire economies in turmoil, the fallout has been felt by all—but unevenly so. Public attention has rightfully focused on curbing COVID-19’s spread and alleviating economic hardship.

But lurking behind the headlines of vaccines and new variants are predatory financial investors whose work has placed many workers at risk and exploited those very vulnerabilities to profit from the pandemic.

In a recent article in American Behavioral Scientist, we examine how the rise of U.S. “shadow banks”—less regulated, private credit intermediaries such as private equity, venture capital, and hedge fund firms—has impacted the course of hardship and inequality during the crisis. These shadow banks play an instrumental role in how executives manage companies, which has important ramifications for societal responses to crises, the wellbeing and livelihoods of workers, and inequality throughout the labor market.

Although many studies have shown that inequalities have widened in many ways ever since the outbreak of the COVID-19 pandemic, much of the discussion has focused on objective measures, such as numbers of confirmed cases and deaths, access to healthcare and medical treatment, or unemployment/poverty. Less attention has been paid to inequality consequences in connection with subjective experience.

Objectively, studies have shown that chances of physical as well as economic survival are not evenly distributed across class, racial and ethnic groups, as well as residential areas and regions, with the disadvantaged vulnerable to more severe consequences. Subjectively, however, it is unclear whether disadvantaged population groups also bear more psychological burdens.