The Paradox of the Unpaid Internship

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Unpaid internships: Good for the economy, bad for low-wage workers, and a wonderful gift to students at a terrible price

615 unpaid intern retuers.jpg
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Are the vast majority of unpaid internships illegal? A raft of lawsuits brought by unpaid interns claiming minimum-wage violations against big media companies this year might answer the question. In the first settlement among these cases, Charlie Rose's production company agreed to pay back wages of $110-per-week to nearly 200 former interns.

The ethics of unpaid internships are as murky as the economics are clear. Hundreds of thousands of young (and not so young) Americans are willing to work for nothing in exchange for the experience to take part in the daily thrum of a company. And I trust you'll conceal your shock to learn that some businesses will not refuse young workers at the price of $0.00 per hour.

We might conclude our analysis right there -- indeed, some people do -- but the morality of unpaid internships is not as pat as that evergreen excuse, "... but we can pay you with experience!" There is a law in this country that says that internships must resemble an education and that interns cannot work in the place of paid employees, nor be of "immediate benefit" to an employer. If you have ever held an unpaid internship, you know just how routinely flouted that rule is.

Last year, we hosted a reader-editor debate about the morality and economics of unpaid internships. The upshot of our drawn-out back-and-forth polemic: It's complicated!

Is it true that unpaid internships offer invaluable experience that can be worth more than a college education? Yes.

Is it true that unpaid internships offer advantages to higher-income students who can afford to work for free, implicitly locking out low-income youths from important opportunities? Yes.

Is it true that life is unfair and low-income people are priced out of all sorts of educational opportunities, like tutors and expensive private schools, which are perfectly legal? Yes.

Is it true that interns are doing the work of low-wage workers? Yes.

Is it true that the Labor Department has the power to enforce laws that would find hundreds of thousands of unpaid internships to be illegal because interns are doing the work of low-wage workers? Yes.

Is it true that if the Labor Department cracked down on these internships and forced companies to pay the minimum wage, there would be fewer unpaid internships and students would be deprived of an invaluable experience that, as we established, can be worth more than a college education? Yes.

So, as you can see, the answer is fairly straightforward. Unpaid internships: Good for many students, but bad for some students, good for the economy, but bad for low-wage workers, but good for early-career mobility, but bad for social equality, and illegal, but widely accepted, so practically legal.

I hope the next class action lawsuit goes to trial. It'll take a judge to sort this stuff out.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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