Obama's War on College Students and Internships

One of the best ways for college students and grads to gain some real work experience at top notch companies is via internship programs. The Obama administration thinks otherwise and has launched a War on Interns making it illegal to work for free.

The labor market is still in recession, but for younger workers it feels more like a depression. In the last year, the unemployment rate among workers age 20 to 24 has risen to almost 16%, and among teenagers to 26%.

You might therefore expect a federal effort to encourage employers to give unskilled youngsters a chance. You would be wrong. The feds have instead decided to launch a campaign to crack down on unpaid internships that regulators claim violate minimum-wage laws.

How all of this helps young people who are trying to develop marketable skills is a mystery. While the Department of Labor may insist the world owes these kids a living, the truth is that many young workers are willing to trade free labor for a chance to demonstrate their skills and build a resume for the next job. Especially in a bad labor market, the choice college students face may be to work without pay, or hang by the beach.

Intern Scandal?

Please consider the Christian Science Monitor opinion on The real intern scandal: working without pay privileges the privileged

Internships are becoming a joke. Once a coveted form of apprenticeship, they’re now a cynical way for companies to trim labor costs.

During this great recession, more and more students and young people are accepting unpaid internships because there simply aren’t paying gigs available.

Some employers are taking advantage of this, deceiving young people and offering shallow experiences that won’t actually help them develop professional skills.

Now the Obama administration wants to crack down on these abusive practices.

“If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” a Labor Department official told The New York Times this week.

Such accountability is welcome, but there’s a deeper issue at stake: the way internships today privilege the privileged.

It seems the more competitive the field, the higher the entry fee. Aspiring lawyers and doctors who weren’t born into wealth are cornered into immense debt situations, making the idea of pro bono work unrealistic to many even if that’s why they started. Writers and filmmakers, among other artists and performers, are looking at enormous entry fees that might require years of low or unpaid work.

f you can’t afford not to have an internship, and you can’t afford not to have a job, you do both – and the stakes are high on either end because if either operation fails you are left in the lurch with no safety net.

The author, Danielle Connor, harps for two full pages about how unjust internship programs are yet concludes ...

"If it weren’t for my unpaid internships I highly doubt I would be in a position today to make my living as a freelance writer, producer, and campaign consultant. It was the internships that qualified me for my first couple important entry-level jobs in the nonprofit world, which have given me the skills and experience to do what I want now."

Getting It Correct

For a different viewpoint please consider War on internships: Should unpaid internships be regulated? by Jeffrey A. Tucker, also on the Christian Science Monitor.

Since at least the 12th century until very recently, entry into a profession has come via an apprenticeship, or, in the American terminology, a formal internship. A young person comes to work with people experienced in a trade, usually in exchange for office space, housing, tools to use, but little or no monetary compensation. Everyone wins: the employer gets to scope out a potential hire, and the intern gains priceless experience and a later job offer, new contacts, or a letter of recommendation.

What is the alternative? It is the completely la-la-land view, emerging sometime after World War II, that a student can sit at a desk listening for 16 to 20 years and thereby be prepared to call down immediately a substantial salary from a firm by virtue of the great value he or she provides.

This assumption is preposterous, but it is one around which the state-controlled system is structured. It is unviable for employers and highly misleading for students. Employers often report the silly scene of new graduates who waltz into businesses and demand a large salary with nothing but a certification from an artificial environment, sans work ethic or real-world skills.

It would be one thing if an employer could forgo housing and other benefits and just pay a really low salary to first-time employees. But that is not the case today. The state and its heavy hand have seriously restricted the right of employers to negotiate salaries. The government provides a canned model of employment — wages, benefits, working hours — that it applies in every situation, even those where it cannot possibly be fruitful, which is especially with applicants right out of school.

Look at the unemployment rate among 20-somethings — now at 25 percent and rising. It is more than twice the national average, and this is for a reason. The costs of hiring far outstrip the value of new workers to firms. During a recession, these marginal workers are avoided.

There must be some solution that the market provides, if only for young people to not be completely shut out of the division of labor. The rise of the internship is the market's finding the workaround to government regulations, evidence of the tendency of liberty to grow up like grass in the cracks of sidewalks.

Who loses if this crackdown succeeds? The same groups that are winning under the present increase in internships: young people and their employers and would-be employers. There can be no other way that this plays itself out. This is the state mowing down the grass that is growing in the cracks of its sidewalks and then spraying Roundup to prevent any more from growing.

It's a heck of a time to be doing this too: just as young people are having more trouble than ever in getting a foothold in the workplace.

The debate is over and the winner is clear. Jeffrey Tucker trounces Danielle Connor in a complete rout from start to finish. Unfortunately, President Obama is listening to socialists and union advocates who want no good deed to go unpunished.

As a result please expect fewer internships programs, fewer opportunities for student and grads to learn job skills they need, and expect the unemployment rate for grads to remain at exceptionally high levels.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.





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