Free Labor: I Can't Afford to Work!

Recent college graduates are really hurting in this current recession. According to anecdotal reports from across the media, young people are having a hard time getting any kind of job. Young people are being forced to compete with older, more experienced workers who have lost their jobs during this recession.

An interesting development related to this phenomenon is the rise of the "unpaid internship." The New York Times business section reported on this in yesterday's edition. The report includes a few personal stories from young college students who have worked in these unpaid internships and it's worth reading just to get a picture of what the job market is like for recent college graduates right now. However, a few things jumped out at me.

The first is this:

In 2008, the National Association of Colleges and Employers found that 83 percent of graduating students had held internships, up from 9 percent in 1992. This means hundreds of thousands of students hold internships each year; some experts estimate that one-fourth to one-half are unpaid.

This is a pretty huge and, in my eyes, significant change to the American labor market. We now have hundreds of thousands of people performing work for free. As the article points out, much of this is clerical or blue-collar labor. In other words, hundreds of thousands of jobs have been eliminated thanks to the proliferation of the unpaid internship. This didn't happen overnight however, this is a product of the past two decades of economic transformation.

The second is this:

Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California and other states have begun investigations and fined employers.

That's right - many of these unpaid internships are wholly illegal. Unpaid internships are meant to be educational. Employers who take on unpaid interns just so they can get clerical or blue-collar work done without having to pay somebody are in violation of the law. However, if the anecdotes in this article are any indication - this practice is quite widespread. There are six legal criteria that a internship must meet for it to be legally unpaid.

I also thought it was interesting that one student mentioned this practice was particularly widespread in the music and film industries. It makes some sense as it's reminiscent of an apprenticeship program but I also think it explains some of the inefficiencies and lack of professionalism in those industries.

All in all, students who are graduating today face a much tougher economic climate than previous generations. In order to succeed in many professional fields one must be willing to work for free for an extended period of time. Many students, those with families to support or a lack of financial reserves, are simply incapable of making this sacrifice - setting them back even further compared to their peers. I believe the inefficiencies of this system, which benefits established wealth and which removes hundreds of thousands of employment possibilities from the labor force, will manifest themselves in the future and further erode the U.S. economy.

Thoughts?