It is remarkable that until this week, no American politician has had the guts or vision to speak out against one of the most destructive trends in our troubled labor market—the scourge of illegal unpaid internships. But thank goodness for Hillary Clinton, who, as reported by Politico, “spoke passionately about millennials, blasting businesses that take advantage of unpaid interns.”
The Fair Labor Standards Act makes most unpaid internships in for-profit businesses illegal because the so-called internships are usually nothing more than employment, with no special educational purpose or structure and no pay. The U.S. Department of Labor has made clear that interns must be paid at least the minimum wage unless the business that hires them meets six criteria:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
According to the National Journal, Clinton, who was addressing an audience at UCLA, “warned there is a “youth unemployment crisis” created by the weak economy they inherited, and stressed the need for more opportunities such as paid job training. She decried—to applause from the audience—businesses that have “taken advantage” of young people with unpaid internships.”
There is no doubt about the youth unemployment crisis, given that the unemployment rate is 21.4 percent for 16-19 year olds and 14.4 percent for workers aged 16-24. But there is a wage crisis as well. The weak economy that Clinton referred to is rewarding all kinds of work more poorly than it used to, and college graduates, who have taken on levels of debt unheard of a generation ago, are feeling real pain. More than 40 percent of recent college grads are underemployed (working in jobs that don’t require a college degree), and more than 20 percent are in low wage jobs.
The unpaid jobs Clinton decried are a special problem. An Accenture report suggests that five percent of last year’s college grads are working in unpaid internships, and I estimate that upwards of 500,000 college students are working without pay at any given time. This obviously contributes to declining wage offers for young people who manage to get paying jobs: When there’s a large pool of educated workers willing to work for nothing, employers know they can keep their salary offers low and still attract candidates.
Hillary Clinton is right to speak out against the exploitation of young workers. I was very encouraged to note that the president’s budget request for the Labor Department includes an additional 300 investigators in the Wage and Hour Administration, the agency that enforces the FLSA and the minimum wage requirement. I hope the Obama administration will take Clinton’s lead and use more of its enforcement resources to protect young workers from this widespread form of wage theft.