The Cost of Free Labor

Internships have long been essential to landing a job. However, at least in advertising and most other facets of media, they have also long been unpaid. That might be about to change.

Earlier this month William H. Pauley III, a federal judge in New York, ruled in favor of a plucky intern who filed suit for working without pay. He ruled that unpaid internships are a violation of the Fair Labor Standards. A report by Cullen Setzer in Slate suggested that Pauley got it right. “The benefits of the intern economy don’t outweigh the pernicious costs: distorted wages, exploitation of interns, a race to the bottom of the wage scale, and an erosion of the law’s protections for workers.”

It has long been industry practice to hire interns without pay. However, I want to be clear that the ruling applies only to for-profit companies. Non-profits may still legally offer unpaid internships. The theory behind unpaid internships was that it offered the “educational experience” students needed to land their first job. In practice internships have become the old entry-level jobs – without pay.

Worse still, internships tend to privilege those who can afford to work for free over those who need income to survive. Those who need income lose out on the opportunities internships might provide. Yet, according to The Atlantic, even networking is looking less and less like a payoff especially in unpaid internships.

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Source: The Atlantic June 19, 2013

Let me add another wrinkle to this. Students generally have to pay for internship credits. Thus, if they need an internship to graduate and the internships available are unpaid, students get to pay to work. How crazy is that? The Wall Street Journal recently ran a piece talking about how some schools are now funding internships. Surely this is true. But, which school and who does it benefit? I suggest it generally benefits those students whom are already privileged; those who can afford a school that can afford to pay for internships.

Here’s the thing. Legally it matters little whether the internship is “for credit.” According to Jef Richards, JD, chair of Department of Advertising at Michigan State, “The determining factor tends to be the extent to which it is the intern is really benefiting.  If the employer benefits from the work of the intern, more than incidentally, it likely should be paid.” In other words, most of the internships that our students participate in are illegal, regardless of whether the student gets credit.

In the end, Judge Pauley ruled that unpaid internships are not only unfair – they are illegal. In essence his ruling strongly upholds the Fair Labor Standards. But who is watching the hen house? The government agency which enforces labor laws is the Department of Labor, which historically has not stepped up to enforce labor laws as they apply to internships. With this ruling that might be changing. And with more law suits pending, such as those against Condé Nast and Hearst, for-profit companies might begin to rethink their internship practices.

In the end, it seems that the price tag for an unpaid internship may not be free.

Jean

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