The following is adapted from “Disinherited: How Washington Is Betraying America’s Young” (Encounter Books; May 2015).
Many Washington politicians seem unable to realize the economic tradeoffs that would result from raising the federal minimum wage. Yet they understand the negative consequences they would feel if they were forced to pay their office interns the minimum wage. Reasonable people might assume that legislators who support raising the federal minimum wage would pay their employees the current minimum wage of $7.25 or their proposed level of $10.10. But, once again, our leaders in Washington are telling Americans to do as they say, not as they do.
Rep. Al Green (D—Texas), sponsor of the Original Living Wage Act of 2015, does not pay his interns. He believes that people should earn a living wage, except for people on his staff. His bill, which has 16 Democratic co-sponsors, requires that the federal minimum wage “shall be the minimum hourly wage sufficient for a person working for such wage for 40 hours per week, 52 weeks per year, to earn an annual income in an amount that is 15 percent higher than the Federal poverty threshold for a family of 4, with two children under the age of 18, and living in any of the 48 contiguous States.”
Similarly, White House interns are not paid, even though President Obama wants to raise the hourly minimum wage to $10.10 and his Labor Department virtually bans unpaid internships at for-profit companies.
In the 113th Congress, Sen. Tom Harkin (D—Iowa) and Rep. George Miller (D—California), who have both since retired, sponsored legislation to increase the federal minimum wage and tipped minimum wage. Surprisingly, neither Harkin nor Miller paid their congressional interns, nor did 96 percent of the 200 cosponsors of the bill. No surprise—there appears to be a high level of hypocrisy in congressional offices.
Interns Earn Work Experience
President Obama and members of Congress would most likely defend their actions by claiming that the benefits they offer to interns justify the lack of pay. A White House or a congressional internship is a ticket to a better job in the future. Clearly, this is what the young people who take the internships believe, or they would not have applied for the highly competitive positions.
Internships and entry-level jobs provide real-world experience, which leads to stronger résumés and better jobs in the future. Students can also try out different workplaces to see what sort of work best suits their skills and interests.
“My first internship wasn’t particularly exciting—working at the city and helping with random projects, so it wasn’t too structured,” millennial Katya Margolin told us. “But it was professional experience, an opportunity to see the real world and learn to interact with older professionals. My second internship was the following summer, before my senior year, and it was fantastic. I loved the subject and the experience, and I executed a project of my own that was intellectually and creatively fulfilling to me, and I did very well. To this day, I still seek a job that will give me the feeling and fulfillment that project gave me.”
No one forces students into unpaid internships. Quite the opposite—unpaid internships on Capitol Hill are difficult to obtain. Interns come to the Hill to learn and gain experience. They are making investments in education that will pay off in their future careers. Requiring employers to pay artificially high wages, above the value that employees provide, limits options for young people to make investments in their future.
Minimum-Wage Laws Reduce Employment
Higher minimum-wage supporters in Washington could also argue that if they were forced to pay their interns, they would not be able to hire as many young people. How can they fail to realize that businesses will face these same disincentives if they are forced to pay more?
The government allows members of Congress, along with other Washington agencies and nonprofits, to offer unpaid internships, but it prohibits for-profit corporations from doing so unless they meet stringent, unworkable requirements. Under guidelines published by the Labor Department in 2010, a private-sector internship can be unpaid if it is deemed “educational,” whatever that means. It must benefit the intern, who must not displace regular staff. The employer cannot benefit from the intern’s presence. These requirements do not lead to meaningful internships. Employers have to pay thousands of dollars for what are effectively training programs, or students have to pay colleges to participate in unpaid internships.
These guidelines have resulted in lawsuits filed against companies offering worthwhile internships in in-demand fields. CBS and “The Late Show with David Letterman,” for instance, had a class-action complaint from previous interns filed against them in September 2014.
The plaintiffs are seeking all the compensation they would have earned if their internships had been paid, plus interest and legal costs. These interns knew that the internships were unpaid before they accepted the offers—they were applying for them to gain valuable experience in the highly competitive television industry. Opening up companies to potential lawsuits such as this one does nothing to promote hands-on work experience for young people.
Requiring College Credit for Internships Makes Them Cost Money
Some critics of unpaid internships support a mandate requiring internships to be accompanied by college credit. One problem with this, though, is that interns frequently must pay tuition to get college credit—a worse solution than an unpaid internship alone. At George Washington University in Washington DC, a student could pay up to $12,175 in tuition just to be in a position to accept an unpaid internship offer. For a public four-year college, the average tuition cost of an unpaid internship is more than $2,000 before financial aid. Why not let students participate in unpaid internships and use their money to learn calculus, statistics, or computer programming? We should praise young people who want to spend their summers as unpaid interns, not punish them. They realize that they have something to learn that cannot be taught at college.
The negative consequences of prohibitions against unpaid internships are real. Students lose the chance to combine part-time paid work with an internship, and they miss the opportunity to see a workplace up close and make valuable contacts that might lead to a permanent job. Take Sammy Page (not his real name), a philosophy major at a top university who plays the guitar and violin, composes, has his own band, and wants a career in the music business. After submitting countless applications, Sammy was overjoyed when he was offered an unpaid internship with a major New York City record company.
But the company said he had to receive academic credit from his university for them to offer him the internship. Sammy’s university, like many others, does not grant credit for summer internships. His dean offered to write to the record company, saying the school supported the internship. That offer was not enough for the record company to comply with government regulations.
The record company suggested that Sammy enroll in a community college that would grant him course credit for the summer. Sammy would have been required to pay money, which he does not have, to do this. Instead of gaining valuable career experience, he was left playing his violin on the streets of New York City and studying recording techniques on his computer.
Unpaid Internships Make Interns Money Later
These limitations will continue to affect Sammy far into the future. After spending a summer out of work, he may face hurdles to landing a job in the music industry. The ban on unpaid internships harms job prospects. Economists ran an experiment in which they created 9,400 fake résumés and sent them to employers in the fields of banking, finance, insurance, management, marketing, and sales. They found that internship experience on the résumé has a greater effect on hiring than does the applicant’s academic major. A student was more likely to get a job in banking if he had interned at a bank than if he majored in a related field, such as finance. That is because the employer saw the internship as a measure of interest and experience.
Auburn University’s Richard Seals, one of the study’s authors, told the Wall Street Journal, “There is a huge return, even years later, to internships.” That is why young people compete to get them rather than taking a summer off or relaxing on weekdays during the school year.
It is unacceptable that the government has exempted itself and its supporters from the very rules it forces others to follow. Washington understands basic economics when the negative consequences of laws and regulations affect its own. If members of Congress and President Obama would apply to the country as a whole the same reasoning they use when making decisions that affect their staffs and families, many destructive economic policies would not be voted into law.