Unpaid internships


The website ‘Unfair Internships’ argues that unpaid internships are, well, unfair, campaigning for a US-style system, where:

There aren't many circumstances where you can have an internship [at a for-profit company] and not be paid and still be in compliance with the law” (Taken from a WSJ article, quoting a US Labour Department Official).

It is argued, on ‘Unfair Internships’, that unpaid internships violate a principle apparently at the “core of the capitalist system”, namely that “work should be compensated according to productivity”. The author of the blog even goes as far as to accuse the WSJ editorial staff of not understanding economics.

The basic principle alluded to is completely false. A wage is a price at which a worker is prepared to sell her/his labour, this price is defined as the equilibrium between what the employer is prepared to pay and the labourer is prepared to sell at. Expected productivity is one input into deciding how high a price the firm will pay for the worker’s labour, while the circumstances of the labourer and how much they value the possibility of working for the employer (experience, working environment etc.) also affect the wage. It can be assumed that a profit-maximising firm will pay as low a wage as the worker is prepared to work for, so an unpaid internship indicates that the worker values something – possibly the experience gained or the contacts made – about the work placement that cancels out their need for monetary compensation. Another ‘capitalist principle’ is that workers should be free to value their own labour; unpaid internships fit in with capitalist principles thus.

An objection to this view could be that would-be interns from families who cannot support an unpaid family member are discriminated against and will lose out to the rich, who can afford to forgo a wage for some months. This may be true, but it is equally unfair to expect companies to compensate for this, the likelihood is that if forced to pay interns, many such intern opportunities would disappear. There are many ways in which a rich background benefits those beginning a career, but forcing companies to pay interns a wage risks getting rid of such schemes altogether, definitely not beneficial to anyone.

If the campaigners for mandatory-wage internships want to reduce their perceived inequality here, they would do better to look at in a wider framework of government programs to encourage social mobility; to suggest that the burden of redistributionary measures should be carried by firms is likely to have the opposite effect.