Obama Criminalized Unpaid Internships and Killed Jobs
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The Fiscal Times
June 19, 2013

In yet another blow to young people, a federal judge has made it nearly impossible for companies to take on unpaid interns. This flies in the face of President Obama’s incessant appeal for more job training.

Turns out, President Obama loves job training programs – but only the kind that increase our budget deficit. In other words, those provided by the federal government. The private sector kind, not so much.

In 2010 his Department of Labor came down hard on unpaid internships – the gigs that can help a young person get her foot in the door and learn about a company or an industry. The view was that kids were being exploited by greedy corporations, who were hiring interns to save money on regular employees. Because this White House can’t imagine a problem that a good dose of regulation won’t fix, the DOL set out new rules governing unpaid internships.

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The DOL mandated that the employer must derive no immediate advantage from the intern’s activities and that the opportunity will be strictly for the benefit of the intern.   They also demanded that the experience be given in an “educational environment,” that the intern must not displace regular employees, that the worker is not automatically hired and that both parties understand that no wages will be paid. It’s hard to imagine a set of rules more likely to shut down these opportunities.

Recently, the dictates of the DOL have been used to sue companies offering such internships. A Federal District Judge recently ruled that Fox Searchlight Pictures should have paid two interns, Eric Glatt and Alexander Footman, who worked on the movie “Black Swan,” because they did the work of regular employees. 


Judge Pauley ruled in favor of the interns, who sued Fox for wages they felt they had earned, arguing that the studio received the benefits of their work. So if they had torpedoed the picture – thrown molasses on the cameras or barricaded Natalie Portman in her dressing room, presumably Fox would have won the day.

The interns protested that they did basic chores that might otherwise have been done by employees. They took lunch orders, answered the phone and took out the trash – like the paid staff. What did they think? That they would receive cooking lessons or be asked to decode the human genome? 

The judge admitted that the two interns did benefit from the temporary gig; they were able to pad their resumes, receive job references and an “understanding of how a production office works.” But those benefits, he said, were “incidental to working in the office…and were not the result of internships structured to benefit them.” He decided that the internships did not foster “an educational environment.” What does that mean? There were no textbooks involved, no quizzes at the end of the day? 

The most irksome aspect of this case, and this decision, is that these two numbskulls signed up for this opportunity fully aware that they would not be paid. They made a choice; they are, in effect, consenting adults. If they were unhappy with that prospect, they should have never taken the job. The film industry is a beacon for young people; many would have killed for the chance to work on a set.

A recent survey conducted by BAFTA, Britain’s largest charity promoting films and video products, found that a meager 9 percent of young people in that field “believe they received excellent careers advice, while over a third say it was extremely unhelpful…For a quarter of this group, contact with people already working in their chosen industry was their most useful source of advice, compared to the general population, who found careers advisors at school, college or university most useful.”

Asked how young people could get into the business, one BAFTA professional said "Be prepared to put in your own time to gain experience. Volunteer – don't wait to be asked. Industry professionals are usually very responsive to someone who shows commitment and a willingness to learn.” 

There are certainly instances of employer abuse – especially among non-English-speaking maids or baby-sitters, for example. They sometimes need the authorities to inform them of their rights or to stand up to employers. But these two at Fox were highly educated young people – Glatt has an MBA from Case Western University.  Do they really need the federal government deciding what kind of deal they should strike with their bosses?

These regulations stem from a zealous Labor Department going all-in on protecting union jobs. The pitiful outcome of this case will be that fewer companies will offer internships. Already copy-cat suits are lining up

The Obama presidency has not been kind to those under 25. Youth unemployment in the U.S. is still high, several years into the recovery. Unemployment for those 16 to 19 is 24 percent. For people aged 20 to 24, unemployment is 14.4 percent. Stories abound of college grads being unable to find work, and about the deterioration of their long-term prospects from such inactivity.  Many would be rebooted by an unpaid internship.

The U.S. is not alone in this struggle; youth unemployment in some countries of Europe is alarming – 56 percent in Spain (where 40 percent are college grads) and 62 percent in Greece.  While those figures may exaggerate the issue, there are millions of twenty-somethings in Europe who can’t find work.

At a recent summit, the leaders of several countries agreed to draft plans encouraging companies to hire young people. The issue led former president Nicholas Sarkozy to shake up France’s ossified pro-union labor regulations, making it easier for companies to take on young people. Would that the Obama administration saw the problem the same way.

It is of course the very people that these two litigious fellows think they are helping that will be hurt by this outcome. Fox says they will appeal the decision. One can only hope so. One can also hope that these two nitwits find it challenging to land their next job.

After more than two decades on Wall Street as a top-ranked research analyst, Liz Peek became a columnist and political analyst. Aside from The Fiscal Times, she writes for FoxNews.com, The New York Sun and Women on the Web.