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Internal revenue

17 June 2013 By Daniel Indiviglio

Interns are among the best things in life that should be free. A pair of recent U.S. court cases threatens that notion, however. Such unpaid positions generally provide value for employers and unskilled workers alike. Distorting apprenticeship economics could be costly.

Last week, a federal district judge in New York ruled that Fox Searchlight should have paid production interns on the Oscar-winning film “Black Swan.” A couple of days later, former interns sued Condé Nast, accusing the publisher of Vanity Fair and other magazines of paying them too little. These plaintiffs may be doing themselves more harm than good.

While minimum wage rules exist to protect workers, interns are a defensible exception. What the roles lack in hard currency, they more than make up for in experience. Working in film, fashion, publishing or even on Capitol Hill pays skills-learning, contact-making, academic credit-creating and résumé-building dividends. The transaction is also completely voluntary: students or recent graduates can seek paid internships or gainful employment elsewhere.

Without the option of bringing on free apprentices, many companies simply wouldn’t provide the opportunities. That would be especially damaging in a weak labor market, making work experience harder to come by when employers can least afford to train. For now, the laws of supply and demand seem to be working pretty efficiently when it comes to interns.

Lawmakers also can easily prevent abuse and embrace new ideas to enhance on-the-job learning. For example, in Germany, half the country’s young people pursue formally licensed, government-subsidized corporate training programs instead of liberal arts degrees. There would be hurdles to implementing such a program on a scale of the United States, as a Milken Institute paper this month notes, but it could be worth the effort to reduce the nation’s education costs and better prepare its workers.

Instead, the Fox ruling risks damaging the precept of unpaid trainees. That could leave students who might otherwise have matched up favorably against candidates with pricier degrees or higher-skilled foreign workers falling short. Many employers also might find they can get by without free interns. That would be a big price for all involved to pay.


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