Combat Inequality by Exempting Interns from the Minimum Wage

Instead of chasing counterproductive wage policies that compound inequality and kill jobs, our politicians should instead be looking to exempt internships from minimum wage requirements that leave internships accessible mostly to the rich and well-connected. 
Summer interns for the state of Maryland are well-equipped to pursue careers in government. Photo: Flickr/Jake Baker

A version of this article was originally published in the Washington Examiner. 

Politicians who want to more than double the federal minimum wage in the name of equality either fail to understand how raising the minimum wage not only would increase inequality by further entrenching the advantages of America’s privileged youth, or willingly choose to overlook that effect and risk plunging millions of young job seekers into unemployment just to improve their own chances at reelection. In the end, their intention is of little consequence—it’s a terrible idea either way. But, rather than kicking the disadvantaged in the shins, why not enact policy that could actually put them on better footing to compete with rich kids?  Instead of chasing counterproductive wage policies that compound inequality and kill jobs, our politicians should instead be looking to exempt internships from minimum wage requirements that leave internships accessible mostly to the rich and well-connected. 

The story of Kelsey Yin, who held a dozen positions — mostly unpaid internships — before her junior year of college and applied to two hundred Fortune 500 internships to secure three offers isn’t an outlier. The contemporary rat race is actually this insane and likely part of why half of American college students suffer from anxiety or depression. While Yin’s success is undoubtedly a product of her relentless focus and discipline, it’s also worth mentioning that Yin’s parents work in finance and media, and likely, to some extent, subsidized her studies abroad and unpaid fashion internship in Los Angeles. Thus, even though the internship system as a whole may be more or less “meritocratic” — none could say that Yin is unqualified or undeserving — that doesn’t mean the system isn’t massively geared towards those from privileged backgrounds. 

Over 70% of the internships that provide entry into America’s elite professional institutions are unpaid and usually located in expensive metropolises, with affluent families often subsidizing associated costs and lost income, if not covering them in their entirety. Though top blue-chip corporations do offer internships that include both wages and stipends, these opportunities are so highly competitive that successful entrants are already able to contribute a high level of value in their work and are often on trial for full-time employment at these firms. To be a competitive applicant for such programs, one must already have a significant degree of work experience, typically coming in the form of unpaid internships, a path that only the privileged can afford to walk. 

Thus, while less fortunate young Americans work low-skill, minimum-wage jobs to make ends meet, the privileged leverage their connections to get ahead; after all, in our modern, vibrant “meritocracy,” it’s all about who you know. 

Naturally, progressives want to close this divide by banning unpaid internships and funding more paid internships with grants — a popular solution among the intern-age youth of my generation. But increasing taxes on productive sectors to pay interns more than their labor is worth is a drag on the economy. Besides, such a fix ignores an important factor in why so many internships are often unpaid in the first place: Untrained, inexperienced students often provide less hourly value than the minimum wage, especially in “prestige” sectors like politics, journalism, and nonprofits, where “profit” margins are low to nonexistent and productivity is difficult to quantify. Minimum wage laws limit employers’ options, ultimately keeping them from paying these interns what they’re worth. Essentially, employers have to choose whether to pay their interns too much or not at all. Unfortunately, that’s a decision that’s all too easy to make when the quarterly numbers are due.

Raising the minimum wage would cost the nation 1.4 million jobs and would decrease the number of paid internship opportunities for less fortunate students. Exempting internships from the minimum wage, however, would allow employers to pay interns according to the value they add to their company and create more opportunities for all job seekers.

While by no means fully replacing the income from a job, a less than minimum wage internship still pays much better than an unpaid internship, and if even closely comparable to the minimum wage, could decrease the class divide by vastly increasing the availability of paid internships. This means not just more opportunities for middle and lower class students, but a larger and more competitive, more diverse talent pool for employers to hire from. Instead of paying interns nothing or severely limiting their number of paid internships, employers could afford to expand internship programs to meet their labor needs in a cost-effective way. If local restaurants pay $10 per hour but the restaurant association can now afford to pay $8 per hour, more students can afford to take an internship that leads to a job in restaurant management instead of bussing tables and struggling to find employment upon graduation. 

If we’re serious about reducing inequality of opportunity in our country, more than doubling the minimum wage isn’t an option. Instead of thinking of new ways to restrict employers’ and students’ options, we need to closely examine what factors are distorting opportunities and outcomes in the first place. In the case of internships, those first steps into the labor market that prime young Americans for their professional lives, it is clear that the minimum wage is a huge constraint. The minimum wage has severely cut the number of paid internships, limiting opportunities for Americans who cannot afford not to be paid for work. 

Exempting internships would not only insulate American youth from counterproductive minimum wage increases but would provide countless opportunities for professional advancement for less fortunate Americans. While federal regulations have the power to reduce the impact of negative externalities like lead poisoning and acid rain, most labor market interventions tend to benefit those already in positions of privilege and power. In the case of America’s youth, where labor laws benefit students of privilege, we must combat government-sponsored inequality by exempting interns from the minimum wage.

Kenneth Schrupp is editor in chief of The California Review and a Young Voices contributor writing on the intersection of business, politics, and media.