Ivy Leaguers’ Career Path Slammed Shut by Obama: Amity Shlaes
Commentary by Amity Shlaes
April 6 (Bloomberg) -- The U.S. Labor Department announced it will investigate unpaid internships at private-sector companies to clamp down on firms violating wage laws.
“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,” said Nancy Leppink, deputy administrator of the department’s wage and hour division, according to a story in the New York Times.
The administration’s crackdown on unpaid internships is likely to encourage states such as California, Oregon and New York that are already probing possible violations of labor laws regarding companies’ internship programs. More important, other states may now start looking into the matter, too.
It’s easy to view the action as the inevitable mischief of Democrats, irritating but not fatal. Such an attitude, however, overlooks what a blow this policy can represent to young people trying to establish careers.
Back in our parents’ or grandparents’ days, interns were mostly thought of as physicians-in-training. Eventually, an internship came to mean an initial training experience, perhaps unpaid, for people on the cusp of entering the workforce. This stepping stone to a hoped-for paid job became commonplace in many industries and a rite of passage for the college set, especially Ivy Leaguers.
These temporary positions became popular partly due to prosperity. During the past half century, many U.S. college students enjoyed the luxury of trying out different fields whereas previous generations had to make career choices quickly.
Heavy Burdens
Unpaid internships also became more prevalent as the burdens on U.S. employers accumulated. Those burdens start with payroll taxes, which have increased to levels never anticipated by the authors of Social Security or Medicare. Then add mandates such as the new health-care taxes, which Barack Obama described as a “moral imperative” a few days ago.
On top of all that is the proliferation of labor laws. Employers know they must follow the rules laid out in Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act of 2008.
One result has been a greater hesitation to hire full-time workers. Employers have responded by filling jobs with machines, or outsourcing work abroad. Another response, logically enough, has been to postpone hiring by using interns. Sure, there are other explanations -- older people want to help those just starting out, or do a favor for someone.
Smothering Opportunities
All that notwithstanding, lefty labor lawyers are correct: Companies mainly hire interns because they provide cheap or free labor and because they’re easier to lay off.
What about interns themselves? They take the positions, sometimes serially, because they see the door to the professional labor market closing and want to get their foot in before being shut out altogether. Their internship is their hope.
Declaring open season on internships will smother whatever chance there was of private employers making room for these positions. What chief executive will want to authorize an unpaid-intern program if there’s even a remote chance the action might trigger an investigation by a federal or state labor lawyer?
Presumably the government’s goal is to get businesses to start paying their interns. Don’t look for that to happen in this economy. Instead, companies will fire them.
Forked Tongue
It’s ironic that while Leppink’s office was stomping down on interns, Labor Secretary Hilda Solis was encouraging employers to hire youngsters by talking up the administration’s $1.2 billion summer jobs program.
A broader, more troubling version of the internship story is playing out in industries such as construction. There, too, the Obama administration has sent a signal to the private sector: employers with federal funding for their projects are expected to pay generous wages and benefits.
Since doing so is expensive, employers will tend to seek the most productive workers for those pricey jobs. Who’s most like to lose out? Young or minority workers, who often lack the training or experience to make them productive. This policy has been around since the Davis-Bacon Act was signed by Herbert Hoover. But back then, the entire federal government was only 5 percent of the economy, far less than now.
President Obama and his team cannot be totally unaware of the future employment opportunities -- white collar or blue collar -- that they are stifling. Our leaders make it clear that they see their job is to lead the nation in sacrificing economic growth in the name of that “moral imperative” the president mentioned.
When it comes to applying that rule to youth employment, the administration can pat itself on the back: another job well done.
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