Here’s an illustration of why unfair internships thrive as potential employees are weakened. From The Daily Princetonian:
The recession is also boosting the applicant pool at FG Companies, a small boutique investment bank in New York that only offers unpaid internships, said Kai Chan GS ’04, an associate at the firm. “[The downturn] is great for guys like us, honestly, because we’re finding a lot of people who are saying, ‘Yeah, we’re happy to work for you for free,’ ” Chan said. “I noticed last year when we did interviews and said, ‘Just to be clear, this is an unpaid internship,’ some people were wavering,” Chan explained. “This year, when I explicitly start off the interview saying it’s an unpaid internship, they’re fine with that, and just say, ‘Let’s proceed.’ ”
This is the reason why unfair internships are illegal: because they are the consequence of the weak negotiation position of potential interns – exploitive, in other words. Those have no choice but to lower and lower their requirements to even gain experience. The good news is that there is a solution: collective action through legislation. And it already happened: unfair internships are illegal.