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Friday, June 9, 2023

How the Minimum Wage Forced Me into an Unpaid Internship

I wasn’t able to find a paid position for my first co-op term, so I had to accept an unpaid internship. Years later, I finally realized why.

Image Credit: nasiklababan - Pixabay

They say there’s two things you learn in a co-op program. What you love to do, and what you don’t love to do. In my co-op experience, I learned almost exclusively the latter.

My first placement was particularly brutal. I was a freshman Chemical Engineering student and didn’t have much work experience, so just finding a job was difficult. It wasn’t until a week after the co-op term had officially started that I landed a placement. The position involved helping out with a student design team at the university that built experimental eco-friendly vehicles. It was an unpaid position and wasn’t really in my area of interest, but I was desperate, so I took the job.

The following four months were some of the most frustrating of my life.

I wasn’t remotely qualified for any of the mechanical or electrical work the team did. I had never been much of a car person and they didn’t have much time to train me. This led to quite a few awkward situations where they needed something done and I was available yet completely incapable of helping.

I was better at the administrative side of things, but the expectations of me on that front were not communicated particularly well, and my superiors—who were mostly masters students—didn’t do a great job of giving me the knowledge and tools I needed to succeed. To be honest, I wasted a lot of time that summer.

I eventually made it through, and I at least had the comfort of knowing that no one was out any money for all those wasted hours. Still, it was hardly what I wanted out of a co-op term, and the fact that I got no money out of it only added insult to injury. I learned what I really didn’t want to spend my life doing, and that’s about it.

The Hidden Culprit

Years later, after discovering FEE and the Mises Institute and becoming enamored with economics, I thought back on that summer and realized something. The fact that I had to take an unpaid internship was probably a direct result of the minimum wage.

How so? Because the minimum wage prevented me from getting a paid position in the weeks leading up to my moment of desperation, which I almost certainly could have gotten if I had been allowed to accept a lower pay.

In a counterfactual world without the minimum wage, there would have been probably dozens more paid jobs to apply for in the lead up to the co-op term. They would pay a bit less, of course, but at least the opportunities would exist. More experienced students would go for the higher paying roles, and less experienced students such as myself would have been able to take the lower paying jobs. I wouldn’t have been forced to take an unpaid internship because there would have been more than enough paid jobs to go around.

But what actually happened is that the inexperienced students had to compete with the upper-years for high paying positions. When many of us inevitably lost that competition, we had no choice but to accept unpaid internships or else go unemployed for that co-op term. Low-paying opportunities were never available to us because the government wouldn’t allow them.

The Jobs That Were Never Allowed to Be

We don’t normally think of the minimum wage as a prohibition, but that’s precisely what it is. “The minimum wage law provides no jobs,” the economist Murray Rothbard once noted. “It only outlaws them; and outlawed jobs are the inevitable result.”

It’s tempting to think that wages can just be increased through legislation. But that’s not how the world works. Employers will only pay as much as a worker is productive. If a low-skilled worker isn’t all that productive, and a minimum wage law requires the employer to pay more than the value the worker produces, the worker simply won’t be hired. The low-paying job that would otherwise exist is prohibited because it doesn’t pay enough. Rather than getting the minimum wage, the worker is pushed out of a job altogether.

“You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less,” Henry Hazlitt wrote in Economics in One Lesson. “You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn.” That’s exactly what happened to me on that co-op term. I was deprived of the right to earn a modest income, and the result was that I earned nothing.

This is detrimental for both employers and workers. It clearly hurts employers who want to hire cheap labor, but it also hurts workers like me who would like to take those jobs. Sure, it’s no fun accepting a low wage position, but I’d rather that than not be paid at all. And for many young workers, those are the only realistic alternatives.

This is creating a massive problem for young people. As a direct result of the minimum wage, they are being forced to either take unpaid internships or just spend months at home job searching. If you are a young person desperately looking for a paid position and unable to find one, this is a big reason why. Countless entry-level positions are forbidden because of this rule, even though many young workers would gladly take them.

To sum up, you do not help a worker when you take away their best options. You only make their life harder. The minimum wage is a prohibition that mostly hurts workers, especially those who lack experience or connections and have fewer skills. It takes people facing a bad situation—a low paying job—and makes it worse by taking even that opportunity away from them, leaving them with nothing but unpaid internships and unemployment. That’s what happened to me, and that’s what is happening to thousands of young people every day.

It’s too late to change my co-op experience. But it’s not too late for the next generation.

This article was adapted from an issue of the FEE Daily email newsletter. Click here to sign up and get free-market news and analysis like this in your inbox every weekday.


  • Patrick Carroll is the Managing Editor at the Foundation for Economic Education.