Shouldn’t the ‘minimum-wage’ include compensating unpaid interns?

Loaded with optimism and student loans, the law grad sees the advertisement that reads: Democratic member of the Senate Committee on the Judiciary seeks law clerk for Fall 2014, full time, unpaid.

Presuming that law grad did not have a trust fund or wealthy parents to subsidize the inflated cost of living for Washington, DC, working for the powerful on Capitol Hill would be outside consideration.

How in the world can those who tout raising the minimum wage get by without paying at least the minimum for assistance?

Before scratching your head too much, let’s look at the economic and legal dynamics involved in this

White House internship programme. 2011 Getty/McNamee.

conundrum.

During President Barak Obama’s 2014 State of the Union Address, he asked Congress to pass the Harkin and Miller bill and raise the federal minimum wage from $7.25 to $10.10 per hour. The President went one step further by unilaterally signing Executive Order 13659 which raises the wage of federally contracted workers to $10.10 per hour.

Perhaps it should be noted here that White House interns are not paid. Yet these are highly sought after positions that see young brains fulfilling a full time position for six months to a year.

According to a 2012 Intern Bridge survey, more than half of all post-undergrad and grad-school internships and traineeships are unpaid. Many students desperately really on these work related experiences to land higher paying career type jobs.

In the years since the 2007-08 Financial Crisis, unpaid internships and traineeships have become the new norm. Many companies were unable to pay new workers during the crisis and new workers were eager just to gain experience.

The wave of unpaid internships in the private sector came to a skidding halt in June 2013 when a federal district court in New York held in Glatt et al. v. Fox Searchlight Pictures, Inc. that the company had violated the Fair Labor Standards Act by not paying for “benefits received.”

The Department of Labor has developed a six-part test, based on Supreme Court case law relating to railroad company’s trainees, to determine whether for-profit companies must pay interns.

In short, in order for a private business to meet Labor’s standards, the internship must be wholly for the benefit of the intern and not the employer – that’s a pretty tough to satisfy.

According to The 2013 Student Survey, a graduate who had a paid internship experience makes a medium starting salary of $51,930, compared with $35,721 for those who had an unpaid internship experience.

Law firms are also willing to pay for new associate’s experiences and connections to judges and lawmakers through clerkships. Many firms will pay a 20% bonus on top of a starting salary.

President Obama announces a $10.10 hourly minimum wage
during the 2014 State of the Union Address. USAToday.

With some of the highest paid first-year associates earning just over $160,000, why are we worrying about the President and his Congressional cronies not paying their clerks?

Firstly, if it was the private sector, it would be illegal under the pay-for-benefits test.

Secondly, with the average law school debt in America hovering around $150,000, it is very difficult for a newly minted grad to go a year without a pay check, no matter how amazing the potential bonus, from the potential job, might be. Unless, of course that grad has the coveted silver-spoon in the mouth, in which case, even a minimum wage would be offensive to the privileged elite.

This is not a Democrat vs. Republican issue; instead, this is a remnant of the old Governmental privilege which must go away. Currently, only the better-off people in society get to undertake such unpaid positions. The less fortunate must take paid positions that don’t come with connections.

If the President and Congress want everyone to be paid a proper wage, then shouldn’t “everyone” include the currently unpaid staff?