Comedian Stephen Colbert and guest Ross Eisenbrey, vice president of the Economic Institute, discussed the growing use of unpaid internships as free labor on Tuesday's show. While Colbert treated the issue with his usual satirical approach, Eisenbrey pointed out the real problem of more and more companies exploiting interns as a way to not pay for a growing portion of their workforce.

"When people work for free employers get the idea that they don't have to pay for labor. If Stephen Colbert can get away with it, if everyone can get away with it, I won't pay all of the entry level labor. . . . We have bigger and bigger profits and more inequality than we've ever had in our experience... in the Gilded Age...."

The New York Times reported that the practice is clearly on the rise, although the exact numbers are hard to come by. Numerous reports of unpaid interns fighting back have surfaced in recent years, including a potential class action lawsuit at Hearst publications.

Many, if not most, of the newer unpaid internships are probably illegal:

“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 J. Leppink, the acting director of the department’s wage and hour division.

Ms. Leppink said many employers failed to pay even though their internships did not comply with the six federal legal criteria that must be satisfied for internships to be unpaid. Among those criteria are that the internship should be similar to the training given in a vocational school or academic institution, that the intern does not displace regular paid workers and that the employer “derives no immediate advantage” from the intern’s activities — in other words, it’s largely a benevolent contribution to the intern.

In a separate article, Eisenbrey pointed out that unpaid internships exacerbate class divisions and tend to exclude minorities:

Unpaid internships, in particular, exclude students from poorer families who can’t afford to work for nothing for a summer or a semester, especially after they graduate from college with tens of thousands of dollars of student loan debt. The children of affluent families, on the other hand, can afford to live in the most expensive cities in the U.S., such as New York and Washington, making contacts, building their resumes, and sometimes even learning skills, while their parents pay for their room and board, travel and entertainment. Before even taking into account the family connections that reserve some of the best opportunities for the sons and daughters of the affluent, the $4,000-$5,000 cost of, for example, moving to Washington and living for 10 weeks prevents almost any working class kid from taking an unpaid internship.

CBS' Sunday Morning, a show that used to have at least a veneer of social conscience, ran a "free market" biased piece on unpaid internships this week. Among the things they didn't mention: That unpaid internships are frequently illegal (and why), that schools actually charge the students for the academic credit (so you're not only working for free, you're paying for the privilege), and that we're seeing even more of a class stratification in influential fields like the media and public policy, because poor and working class kids can't really afford to take those high-status internships.

Maybe that's why one of the CBS interns who worked on the piece (for a $50 a week stipend - barely enough to cover subway fare) had this to say: "I was really surprised by the fact that so many people are against internships being unpaid. There were a lot of people that I found who were like, 'It's illegal. It's unfair.' I was so surprised that so many people were saying that," Berg said.

But instead, the piece turns into a bootstrap lecture where if you "think big" and "have the guts to start from the bottom," you can work for free, become a consultant and live happily ever after!

Ladies and gentlemen, your librul media!

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Regulators are starting to pay attention to the widespread practice of using unpaid interns as free labor. It's about time. In addition to being illegal, the practice also means that poorer students are shut out of career-track opportunities, leading to a concentration of the privileged and well-off in influential occupations like the media and public policy:

Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California and other states have begun investigations and fined employers. Last year, M. Patricia Smith, then New York’s labor commissioner, ordered investigations into several firms’ internships. Now, as the federal Labor Department’s top law enforcement official, she and the wage and hour division are stepping up enforcement nationwide.

Many regulators say that violations are widespread, but that it is unusually hard to mount a major enforcement effort because interns are often afraid to file complaints. Many fear they will become known as troublemakers in their chosen field, endangering their chances with a potential future employer.

The Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships.

“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 J. Leppink, the acting director of the department’s wage and hour division.

Ms. Leppink said many employers failed to pay even though their internships did not comply with the six federal legal criteria that must be satisfied for internships to be unpaid. Among those criteria are that the internship should be similar to the training given in a vocational school or academic institution, that the intern does not displace regular paid workers and that the employer “derives no immediate advantage” from the intern’s activities — in other words, it’s largely a benevolent contribution to the intern.

Robert Farley at Lawyers Guns & Money sums it up:

Good on ‘em. Let’s be clear; the unpaid internship effectively excludes a wide socioeconomic swath from gaining useful experience and making effective connections in business, government, and NGOs. For example, it was utterly impossible for me to even consider an unpaid internship as an undergraduate; paying the bills was difficult even with loans and full time work. Lots of young people lack significant parental support, and require minimum payment to have any hope of making ends meet. Moreover, even for those with support the “payment” for unpaid internships (connections, experience, and recommendations) often has no lasting effect on the intern’s job prospects. If you’ve ever wondered why DC NGOs and journalistic organizations are dominated by Ivy Leaguers, it ain’t just because they’re smart.