Many firms offer unpaid internships. Bell’s Professional Management Program (PMP) exploits 70 free interns a year. I say exploit primarily because ‘to employ’ would be grammatically incorrect. 90% of unpaid internships are forms of exploitation, according to one lawyer. Firms take advantage of a competitive hiring environment by offering brand value to interns instead of monetary value. This is improper.
To use brand value as payment is readily done. The most prestigious firms in the finance and consulting industries do not have the highest pay. This is the justified result of a market economy: in top firms, the supply exceeds demand, pushing wages down. Furthermore “producer surplus” is accrued to the employee as he is willing to work for even less: the employee may have justified a lower immediate compensation for the present value of future value derived from an improved résumé.
At Bell, the supply-demand dynamics are vastly in the employer’s favour. Out of 2,000 applicants, Bell accepts 70. For economically optimal results, Bell should lower prices further – i.e. ask interns to pay to work at Bell headquarters. Indeed, this abstraction provesthat a pure economic consideration is inadequate for finding an equitable solution. To have employees pay the employer is ethically unacceptable.
That Bell can find free labour reflects our society’s mishaps. To work a McJob, or anything blue collar is stigmatized. White collar jobs are overvalued. Entering barcodes into a spreadsheet is considered a résumé-worthy (“improved departmental efficiency by 36%”) whereas entering barcodes into a cash register is considered failure. An inseparable stigma exists in post-secondary education as well, where the negative wage indeed exists – but that is a debate for another day.
A similar dilemma applies to volunteerism. Volunteering at a Kumon, a for-profit company, as I did, to amass the 40 high-school community-service hours is similarly misguided.
Policy Considerations
The laws that govern unpaid-internships require companies to derive no value from the free intern. A company’s role is to maximize shareholder returns. Any activity undertaken must therefore benefit the company. So unpaid-internships should not exist. The current laws beat around the bush. According to one lawyer, 90% of young people working for free should be paid, by law. The government’s role is to solve imperfections of the market, so it should illegalize unpaid internships.
Candidate interns are implored to correct the market imperfection themselves. Although the résumé has its place, in no circumstance is a name more important than the job description. In a perfect market economy, individuals are compensated for their worth. Less minimum wage and unionization, the Canadian wage market is largely unregulated. Therefore, a zero-wage job implies the worth of the intern’s job is low. Interns should consider a paid (high-worth) job, even if it isn’t at a desk.
http://www.cbc.ca/news/canada/british-columbia/story/2013/06/21/bc-unpaid-interns.html