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Regulators Investigating Unpaid Internships
theodp writes "With job openings scarce for young people, the number of unpaid internships has climbed in recent years, leading federal and state regulators to worry that more employers are illegally using such internships for free labor. Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California, and other states have begun investigations and fined employers. 'If you're a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,' said the acting director of the US Deptartment of Labor's wage and hour division."
The free market's homeostatic mechanisms automatically set the level of these types of practices. I know everyone expects handouts these days, but when you let government start levying fines against competitive companies, you are actually punishing job creation. I can supersize with the liberal sentiment that wants to give everyone a raise but we should fear the day when there are government goons setting limits on my employer's rational self-interest.
So employers will now apply the obvious solution and pay them exactly the state's minimum wage if they're found to be violating the law with unpaid internships.
Some will get minimum wage other internships will just be done away with. Minimum wage has helped kill off low paid internships so as they get more experience they get paid more. You have two choices as a business hire someone for free or 10 bucks an hour depending on where you live. If this person knows nothing and needs to gain experience 10 bucks an hour is a lot for someone not putting out anything real for the company. You can't even guarantee that in 6 months, year or two years they are good enough to employ at a proper wage. If there wasn't a min wage for these interns then they could just get stipends and some small wage until they finish gaining experience. When your profits are already down and you can't be sure that the person you hire for 30, 50, 60K can do the job properly, you just won't hire anyone or create that job. You don't have the money to test or train anyone. Granted you can't be guaranteed a job for it to count as an internship by the government's standards, I think this idea is mislead.