Democrats who want to more than double the federal minimum wage are ignorant.
Perhaps they’ve failed to grasp how raising the minimum wage would increase inequality. It would do so by further entrenching the advantages of America’s privileged youth. Or maybe they’ve chosen to overlook that effect, plunging millions of young job seekers into unemployment just to placate the Democratic Party left. 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?
Why not exempt internships from minimum wage requirements altogether?
Over 70% of the internships that provide entry into America’s elite professional institutions are unpaid and usually located in expensive metropolises. That means affluent families often subsidize their children during internships. Though top blue-chip corporations do offer internships that include both wages and stipends, these opportunities are so highly competitive that successful entrants are often already on trial for full-time employment. Thus, while less fortunate young people 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, liberals 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: inexperienced students often provide less hourly value than the minimum wage, especially in sectors such as politics, journalism, and nonprofits. “Profit” margins in these realms tend to be low to nonexistent. Productivity is difficult to quantify. This means 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.
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 these jobs 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 diverse talent pool for employers. 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 will be able to take an internship that leads to a job in restaurant management.
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 employer and student options, we need to examine what factors are distorting opportunities and outcomes in the first place. In the case of internships, when it comes to those first steps into the labor market that prime young people for their professional lives, it is clear that a high minimum wage is a huge constraint.
Exempting internships would not only insulate youth from counterproductive minimum wage increases, it would provide countless opportunities for professional advancement for less fortunate people.
Kenneth Schrupp is a Young Voices contributor writing on the intersection of business, politics, and media. He’s a public affairs consultant and serves as editor in chief of the California Review, a classical liberal journal.
