As a follow-up to the NYT article, the Wall Street Journal posted an opinion piece: what’s wrong with working for free? How unexpected of them.
What amazes me is the basic misunderstanding of economics. The idea that work should be compensated in proportion to productivity is not a socialist principle, it is at the core of capitalism. The more productive you are, the greater pay, goes the principle. If a company benefits from the work of an employee (intern), that means the employee (intern) should to be paid.
Then why aren’t they?
Because the interns have no other choice. It is not because their work is not worthy. It is not an economic decision, it is a power decision. Because the employers can.
The reason why a company pays an employee is, at the core, not because of regulation. It’s to attract the best and the brightest. Higher pay, higher talent (remember that when you hire unpaid interns). In this context, companies refuse to pay certain employees by calling them interns because they consider these employees interchangeable – not because they do not contribute to the bottom line. Young entrants in the labor market are isolated and have very little bargaining power. They compete against each other, as they should, but should be protected by minimal regulation to restrict abuse. And this is what the minimum wage laws and Fair Labor Standards Act are for.
But in a country where bankers can run their companies and the national economy into a wall and still be generously compensated (in performance bonuses, no less!), it may be a principle difficult to understand.
Update (April 29): The Adam Smith Blog helps me to refine the mechanisms through which wages are decided, but fails to demonstrate that unfair internships are fair.