A New York City rally to raise the minimum wage at Herald Square, Manhattan, Oct. 24, 2013. Credit: The All-Nite Images/cc by 2.0

By Bryant Harris
WASHINGTON, Jan 15 2014 (IPS)

Seventy-five economists, including seven Nobel Prize laureates, sent an open letter to President Barack Obama and the U.S. Congress on Tuesday, urging them to raise the federal minimum wage.

The same day, the president formally endorsed legislation that would incrementally raise the minimum wage to 10.10 dollars by 2016."When you’re cutting the pay for people at the bottom by one third, you shouldn’t be that surprised that you’re not making progress on poverty.” -- Jason Furman

“I think the fact that you see such a broad based list of economists there means that the economic case for raising the minimum wage is really mainstream and increasingly the consensus view of the economics profession,” Jason Furman, chair of the White House’s Council of Economic Advisers, told a panel at the Economic Policy Institute (EPI), a Washington-based think tank.

Labour rights advocates are also backing the proposal. “We call on Congress to enact a jobs bill, invest in our future, raise the minimum wage to $10.10, and devote its full attention to restoring full employment and raising wages,” writes Richard Trumka, the president of the AFL-CIO, a federation of unions.

The proposed legislation would raise the minimum wage by 95 cents per year over the next three years. This would increase the earnings of full-time minimum-wage workers from 15,000 dollars to 21,000 dollars per year.

Additionally, the bill would also seek to raise the minimum wage for tipped workers by 70 percent. Sen. Tom Harkin, one of the proposal’s co-sponsors, says the tipped minimum wage has not increased in 20 years.

Harkin argues that the fall in minimum wage is related to public policy that no longer guarantees an equal opportunity for low-income citizens.

“We used to agree that if you worked hard and played by the rules you could have a good economic stake in our society,” he said at Tuesday’s panel discussion. “But in recent years it’s been alarming to see how these fundamental principles and values are being degraded in our public policies.”

The bill’s other sponsor, Rep. George Miller, partially attributed the relative fall in wages to corporate labour practices.

“Those in the corporate world, some of the largest corporations in the world, decided that they’re just going to take more,” he said Tuesday. “They’ve assembled enough poor workers to make themselves rich.”

Senate Democrats intend to introduce the bill later this month.

The White House’s Furman contends that the proposed legislation would lift 1.6 million people out of poverty, while 8.6 million would witness a wage hike. Lawrence Mishel, the EPI’s president, estimates that as many as 27 million people will benefit from the proposal.

Depoliticising the minimum wage?

By many analyses, the United States is vastly overdue for an increase in its minimum wage. Furman and other economists note that when inflation is taken into account, today’s minimum wage is below where it was in 1950.

“The minimum wage was on an upward trend and reached its peak in 1968 and has fallen by one-third since,” Furman says.

“If you look at the poverty rate and don’t take into account public policy, it’s actually gone up since 1967. When you’re cutting the pay for people at the bottom by one third, you shouldn’t be that surprised that you’re not making progress on poverty.”

Part of the reason for this tardiness clearly comes down to political wrangling. The Harkin-Miller bill would thus also link and “index” future wage increases to inflation, taking the decision-making process out of the polarised confines of the U.S. Congress.

“When our bill is fully implemented, the minimum wage will no longer be at poverty wage,” Harkin explained. “The other thing is indexing, so it can’t fall down below that [poverty level] again.”

Yet business interests have long rallied against this idea.

“Indexing the minimum wage to inflation means that employers will likely be faced with automatically increasing labour costs without an automatic increase in revenues or profits,” Randy Johnson, a senior vice-president at the U.S. Chamber of Commerce, the country’s largest business lobby group, told IPS.

Conservatives also contend that increasing the minimum wage would lead to an increase in unemployment. As businesses incur higher labour costs, they say, they will inevitably be less likely to hire.

Labour groups argue that employers will be able to compensate for higher wages because of increases in worker productivity. “If it [the minimum wage] had kept up with productivity growth [since 1969] it would be $18.72,” writes Trumka in an analysis sent to IPS.

The Chamber of Commerce also raises concerns about a spike in unemployment. “While raising the minimum wage may help some low wage workers who retain their jobs,” Johnson says, “it will lead to less job creation and higher unemployment that falls disproportionately on the weakest segments of society, those with few skills and lower training.”

Furman, however, asserts that “the vast bulk of studies find that minimum wage has zero effect on unemployment.” In fact, he suggests that a higher wage would have an opposite effect, helping to “attract, motivate, and retain workers.”

Pressure building

Despite this, most Congressional Republicans will likely oppose the proposal, particularly in the heavily conservative House of Representatives. Miller admits to heavy Republican opposition, but notes that some Republicans have indicated that they may be able to find a way to commit to the bill.

While Democrats are willing to negotiate with Republicans on the bill, they remain adamant about a commitment to 10.10 dollars an hour. Harkin says this is a “bottom line”.

“If we had kept up the minimum wage from 1968, it’d be about 10.75 dollars an hour,” he says. “So to somehow bring it below that and lock in a sub-par minimum wage for the future is just not acceptable.”

Harkin also believes that an election year is the most appropriate time to fight for minimum wage legislation. He notes that public pressure leading up to the 1996 elections prompted Republicans to vote in favour of increasing the minimum wage.

“The American people are calling on us to do this clearly and unequivocally, and pressure will build,” he says.

A strike by fast-food workers for higher wages in New York City's Union Square in August 2013. Credit: The All-Nite Images/ CC by 2.0

By Ramy Srour
WASHINGTON, Dec 11 2013 (IPS)

In the midst of a nationwide movement for policymakers to raise minimum wages for millions of workers in the United States, experts here continue to debate the advantages and drawbacks of raising the federal rate.

The push for higher minimum wages has gained momentum in recent weeks, particularly with strikes by low-wage restaurant workers last Thursday in more than 100 cities. President Barack Obama also joined the debate, delivering a landmark speech condemning income inequality and the “race to the bottom” where businesses try to “pay the lowest wages” possible.

Obama’s renewed call coincided with a letter by 53 members of Congress calling on McDonald’s and other employers in the fast-food sector to raise pay for their employees. “Put[ting] more money in the hands of consumers…can help strengthen our economy,” the lawmakers noted.

But while higher minimum wages are widely believed to have a positive effect on social conditions, particularly by easing poverty among the most vulnerable sectors of society, economists maintain varying views on the issue.

“We’re all looking for ways to help low-income people get ahead, and that’s a very important goal,” Jonathan Meer, an assistant professor at Texas A&M University and an expert on economic public policy, told IPS. “But the real question is, what’s the right way to do it?”"Raising minimum wages is not going to reverse inequality, but it does help [in] mitigating it."
-- Sylvia Allegretto

So far, he said, most people have proposed minimum wage increases because “it’s the easy fall-back to say, ‘Let’s just pay people more.’ But research shows that increasing minimum wages actually reduces job growth. Simply put: people never get hired.”

This is a phenomenon economists call “disemployment” or “job loss” – that is, when employers don’t lay off workers but simply stop hiring new ones while decreasing the hours of those who are already employed. Opponents of raising the minimum wage say doing so leads to an overall lower level of employed individuals and slower job growth.

Gathering momentum

In his speech, Obama stressed that “inequality…hurts us all,” especially when “middle-class families can no longer afford to buy the goods and services that businesses are selling.” In the United States, he continued, “success has never been about survival of the fittest [but one] where we’re all better off.”

Despite strong opposition from many sectors of American society, including businesses and policymakers, some states have already started moving toward the president’s vision.

According to the most recent statistics from the U.S. Department of Labour, 19 states plus the District of Columbia have a minimum wage that is higher than the federally mandated threshold of 7.25 dollars per hour. Washington state leads the country at 9.19 dollars per hour, while several others have proposals to raise some of these rates even higher.

Others have recently raised their minimum wage, including California, Connecticut, New Jersey and New York. But experts say it is too early to establish whether these moves have had a sizable positive impact on low-income workers, and those who subscribe to the view that higher minimum wages could increase unemployment have used statistical evidence to prove their point.

But Meer said this view may be too simplistic and that it ignores the larger trends that often hide behind the numbers.

When trying to understand the relationship between minimum wage and employment, he said policymakers need to look at “the rate of job creation and job disruption.” When employers stop expanding their workforce, you get to job disruption, which is when employers stop hiring new workers because of the higher costs associated with their wages.

It is a larger trend that “goes beyond simple numbers, with more and more people living on government subsidies,” Meer said. And it is usually very “difficult to see in the conventional data.”

Meanwhile, other economists consider the link between minimum wages and employment levels to be weak, and claims of higher wages leading to job loss simply “scare tactics”. What is really at stake, they say, are the poorest sections of society.

“The biggest problem is that low-wage workers are falling further and further behind, and there’s a need to pull [them] up above the poverty line,” Sylvia Allegretto, the co-chair of the Centre on Wage and Employment Dynamics at the University of California, Berkeley, and a research associate at the Economic Policy Institute here, told IPS.

Minimum wages, then, become more than simply a way to increase or decrease unemployment and instead are about inequality itself.

Inequality vs. employment

In the United States, recent figures suggest that the wealthiest 10 percent of the population earn an average yearly income of over a million dollars, while the remaining 90 percent brings in just over 30,000 dollars. One tenth of the population controls two-thirds of the country’s economic wealth.

“Raising minimum wages is not going to reverse inequality,” Allegretto warned. “But it does help [in] mitigating it.”

She noted that a raising wage is likely to have very few negative effects, and would most likely benefit those at the very bottom of the wage scale. At the same time, the Berkeley economist recognised that there may be some disemployment risks, though she says these are largely negligible.

“Even granting that there may be some small disemployment effects to higher wages, the benefits far outweigh the costs,” she said.

Workers that keep their jobs end up having a higher income and are better off even if their hours are cut, she continued, because “higher wages help mitigate the fewer hours.”

But even if workers manage to mitigate the effects of fewer hours, critics of minimum wage laws note that the real problem is with those who fail to get hired. The divergence in the debate seems to hinge on the purpose of a minimum wage. For some, it’s about mitigating inequality. For others, it’s a matter of avoiding unemployment.

Mekhredze Telman (left) pushes Amanda Arthur's (right) cart of dry and canned goods at Tukwila Pantry, Tukwila, Washington on Oct. 20, 2011. The pantry provides monthly food bank services to individuals and families in need. Credit: USDA/cc by 2.0

By Ramy Srour
WASHINGTON, Nov 1 2013 (IPS)

U.S. state legislators and corporate lobbies have engaged in an unprecedented attack on minimum wages that has lowered U.S. labour standards, according to new research released Thursday.

The report by the Economic Policy Institute (EPI), a think tank here, is the first of its kind, providing a comprehensive overview of all legislation enacted over the past two years across all 50 U.S. states.“This is a remarkable indictment of how the economy is not working for everybody.” -- Ross Eisenbrey of EPI

According to EPI researchers, some of the country’s largest corporate lobbies have engaged in an intense attack on U.S. labour standards and workplace protections, including minimum wage laws, the amount of paid sick leave offered, and even child labour protections.

“What is particularly important about this new report is that it emphasises the recent legislative developments at the state and local levels, which unfortunately have been largely ignored,” Jon Schmitt, a senior economist at the Centre for Economic and Policy Research (CEPR), an economic research institute here, told IPS.

“That means that the discussion of economic and political inequality also needs to move to the local level,” he said.

EPI says such legislative attacks have seriously undermined the ability of average U.S. citizens to achieve economic prosperity.

“What is clear from the report is that attacks on labour unions are part of a larger attempt by trade associations and corporate lobbies … to fundamentally change the labour situation in America,” Gordon Lafer, an EPI research associate and an associate professor at the University of Oregon, said at the report’s launch here on Thursday.

Despite the country’s general economic growth, EPI notes that more and more people in the United States are struggling to earn a living wage.

“According to our statistics, from 1983 to 2010 the bottom 60 percent of Americans actually lost wealth, despite the fact that the overall U.S. economy has grown over this same time period,” Ross Eisenbrey, the EPI’s vice-president, said Thursday. “This is a remarkable indictment of how the economy is not working for everybody.”

Although most attacks on labour standards come through state legislatures, the report notes that the momentum behind this large legislative movement has been driven primarily by powerful national corporate lobbies “that aim to lower wages and labour standards across the country.”

Wage theft

Indeed, one of the striking features of the report is the way it sets the local data into the larger national context.

Today, one out of five U.S. citizens is getting paid less than the federally mandated minimum wage. According to recent polls, workers in the U.S. are also increasingly dissatisfied with their current standards of living.

As many as seven in every 10 are saying that the economy is getting worse, and average confidence in the economy has reached its lowest point since November 2011, according to recent polls by Gallup.

On top of that, several U.S. states have already acted in one way or another by taking measures aimed at cutting minimum wage laws, considered some of the last bastions of low-wage worker protections in the country.

In 2011, for instance, New Hampshire legislators repealed the state’s minimum wage, mandating that only the federal minimum wage should be heeded. South Dakota recently abrogated the minimum wage for much of its summer tourism industry.

And while federal minimum wage standards are still in place, these recent trends suggest that the corporate influence at the state level is growing steadily.

While minimum wage restrictions are starting to take their toll on the average worker, the report also notes that many workers are not even able to recover those wages they have actually earned. Their failure to get paid – or what the report calls “wage theft” – refers to those widespread instances in which workers see parts of their paycheques being illegally withheld by their employers.

According to a 2009 survey by the National Employment Law Project, a labour advocacy group, as many as 64 percent of low-wage workers in the United States have seen portions of their paycheques stolen by their employers.

“The problem with alarming issues such as wage theft is that it’s actually very difficult to provide accurate evidence,” the CEPR’s Schmitt says. “Employers say that they’re eventually going to give that money back, but there’s no way of actually monitoring that.”

Advantage: employers

And as workers struggle to obtain those wages legitimately owed to them, national labour regulations seem to be increasingly tilting to the advantage of employers.

Some states have tackled the growing problem of wage theft by requiring employers to keep detailed pay records, or by passing legislation that enables state authorities to inspect these records. But according to the EPI, business lobbies have worked hard to block the enforcement of these efforts, in some cases by challenging the constitutionality itself of wage-theft laws.

In 2010, Florida’s Miami-Dade County enacted the first wage-theft law in the country. Lacking a department of labour since 2002, the state charged its Department of Small Business Administration with the law’s enforcement.

During its first year, the new law enabled the collection of nearly two million dollars’ worth of illegally withheld pay.

But as other counties sought to follow suit with their own wage-theft laws, business lobbies engaged in extensive legal battles aimed at curbing such laws. In 2011, Palm Beach County, another Florida county, tried to enact a wage-theft law similar to Miami-Dade’s, but business lobbies successfully blocked it by arguing that it would only add a costly new bureaucracy.

“The very little enforcement of wage-theft allegations has only contributed to emboldening employers across the country,” Schmitt says. “Right now, they feel they can take more risks and take advantage of their employees, without fear of retaliation.”

A homeless man looks from his makeshift playground shelter on Third Street in Detroit, Michigan. Credit: Jeffrey Smith/cc by 2.0

By Cydney Hargis
WASHINGTON, Jul 24 2013 (IPS)

President Barack Obama is vowing to spend his remaining time in office encouraging bipartisan efforts to strengthen the U.S. middle class by ensuring it is open to those from all backgrounds.

“Thanks to the grit and resilience of the American people, we’ve cleared away the rubble from the financial crisis and begun to lay a new foundation for a stronger, more durable economic growth,” the president said in a major address Wednesday. “We are not a people who allow chance of birth to decide life’s winners and losers.”“In the civil rights movement, some blacks would refer to whites as allies, but in this fight for America’s soul and dignity and economic fairness, there are no allies. We are all in this thing.” -- Congressman Keith Ellison

Yet a new analysis is suggesting that a half-century after the apex of the U.S. civil rights movement, relatively little progress has been made in education, poverty and wages.

“The outlook of young people today would be so much different if they knew that when they finished high school or college, they could get a job,” Algernon Austin, director of the Race, Ethnicity and the Economy Programme at the Economic Policy Institute, a Washington think tank, said at a symposium this week.

“For young people of colour in particular, when they face such high levels of unemployment, it increases their changes of getting tangled in the criminal justice system.”

According to a new EPI study, from the 1960s until today, African American unemployment has been 2.0 to 2.5 times the white unemployment rate. In 2012, the black unemployment rate was 14 percent, 2.1 times what it was for whites and higher than the average national unemployment rate of 13.1 percent during the recession.

“We have to go from protest to action to outcome,” Ernest Green, a former assistant secretary of labour, told IPS. “What the [EPI] is doing is important – it’s obvious that in this atmosphere, no one person or organisation can carry the full load.”

Even when the national unemployment rate has been low, the rate for African Americans has remained high, according to the study. In 2000, for instance, when the national unemployment rate was at four percent and the white unemployment rate was 3.1 percent, the unemployment rate for non-Hispanic blacks was 7.6 percent.

The study’s release was timed to coincide with the March on Washington for Jobs and Freedom, a touchstone 1963 event that brought hundreds of thousands of demonstrators to Washington to urge equal civil and economic rights for African Americans. At the event, the civil rights leader Martin Luther King, Jr., gave his famed “I Have a Dream” speech.

“We are celebrating the 50th anniversary of the March on Washington for Jobs and Freedom, as we should be, and yet we have a racial wealth gap that’s growing,” Clarence Lang, a professor of African and African American studies at the University of Kansas, said at Monday’s symposium.

“We also have an unemployment rate that is catastrophic – if it characterised the majority of the country, we would declare a national disaster.”

Racial profiling

According to the EPI researchers, the lowest black poverty rate on record was 22.5 percent in 2000, meaning that nearly a quarter of the African American population was still living at or below the poverty line. When the economic downturn began in December 2007, that rate rose to 27.6 percent, while the white poverty rate was only 9.8 percent.

Currently, federal policies aren’t doing enough to stem these figures, the report suggests.

In order to lift a family out of poverty, a full-time worker would have to be paid a minimum wage of 13 dollars an hour, experts have said. Yet the current minimum wage, after adjusting for inflation, is 7.25 dollars per hour.

Education has long been highlighted as one of the top ways to combat the high black unemployment and poverty rates, although the EPI study outlines several problems with this approach. During the 1960s, for instance, more than three-quarters of black children attended majority-black schools, while today almost the exact same proportion attends majority non-white schools.

Segregated schools have long been found to lack equal resources as schools with majority white students, which the EPI suggests violates the U.S. belief in equal opportunity.

According to William Spriggs, the chief economist at AFL-CIO, one of the country’s largest labour unions, education is only one of the solutions to this problem.

He cited the recent U.S. court case in which a neighbourhood watch member shot and killed a black teenager in Florida and was acquitted, arguably largely due to a law allowing the use of deadly force if one feels threatened, as an example of the race culture that  still exists.

“What people need to understand about the [Trayvon] Martin case is what that jury was saying about young black men,” Spriggs said. “Do you really have to ask why young black men are having a hard time getting jobs? In the African American community, yes, education is important, but there is a lot more going on.”

According to Lang, one of the key problems being little discussed in the public debate today is the general notion that a black youth walking around at night is “up to no good”.

“If we want to talk about what the key issue is, we have to talk about [racial profiling],” Lang told IPS. “It affects job prospects, it affects families and, indeed, it affects someone’s ability to walk around minding his or her own business and not being harassed.”

Such profiling, critics say, re-introduces a divisiveness that many saw as being weakened during the March on Washington and related awareness-raising of the 1960s.

“We are at a moment when there are no allies, there is just ‘us’,” Keith Ellison, a member of the U.S. Congress, said Monday. “In the civil rights movement, some blacks would refer to whites as allies, but in this fight for America’s soul and dignity and economic fairness, there are no allies. We are all in this thing.”

Walmart has been criticised for years for paying its employees and suppliers notably low rates. Credit: Brent Hellickson/cc by 2.0

By Cydney Hargis
WASHINGTON, Jul 19 2013 (IPS)

Proponents of a proposed higher “living wage” requirement for workers at large retailers here in Washington are stepping up their campaign, urging the city’s mayor to sign pending legislation into law.

Dozens of other U.S. cities have enacted similar laws, which increase minimum wages at those businesses covered by the legislation by around 50 percent. Yet the legal battle here has garnered national attention because it appears to be aimed at one company in particular – Walmart.“We want him [Mayor Gray] to remember that he was elected by the citizens and not by Walmart." -- Reverend Graylan Hagler of Faith Strategies

“We will give the mayor our support if he has the backbone to sign the bill,” Reverend Graylan Hagler, president of Faith Strategies, a religious group here that has led demonstrations in support of the living wage bill this week, told IPS.

“To cave in to the threat of this corporation is to send a mixed message to the public that somehow corporations can come in and damage our sense of self-respect.”

Walmart, which has been criticised for years for paying its employees and suppliers notably low rates, had previously announced plans to build six stores in the Washington area, its first stores in the city. But it also warned that it would halt those plans on at least three stores (three others are under construction) if the living wage legislation were passed.

“This is a difficult decision for us – and unfortunate now for most D.C. residents – but the council has forced our hand,” Walmart spokesperson Steve Restivo said in a statement.

Last week, the Washington city council passed the so-called Large Retailer Accountability Act, and sent it on to Mayor Vincent Gray. The bill requires all indoor stores of 75,000 square feet or larger, and with a parent company that has a gross revenue of at least one billion dollars, to pay their employees a minimum of 12.50 dollars an hour, minus benefits.

After the vote, Walmart made its threat to pull out of the area. 

“With the passage of the Large Retailer Accountability Act, any future plans for retail expansion in the city must be revisited,” stated a letter from the company.

“Arbitrary conditions that subject our stores to rules that other employers, including countless competitors, are not equally subjected to unfairly distort the marketplace and are cause of grave concern.”

Since the vote, several other large retail stores that may be affected by the law – including Autozone, Lowe’s, Home Depot, Macy’s, Target and Walgreens – joined Walmart in opposition to the act.

In 2012, Walmart was sued by three female workers in Tennessee on behalf of female employees in four other southern states, claiming that the company pays women less than men and blocks promotions for female workers. The case was eventually thrown out by the Supreme Court.

Citizen values

The wage fight in Washington is part of a longstanding, and still building, push-and-pull in the United States.

The city of Chicago approved a similar bill seven years ago, and the city alderman who sponsored the bill, Joe Moore, said Walmart made the same kinds of threats – refusing to open stores while the legislation was even being considered. Then-mayor Richard Daley ultimately vetoed the legislation and Walmart subsequently opened several stores in the city.

New York State, too, raised its minimum wage in March, but only after the state allowed tax subsidies to stores that hire seasonal employees, including Walmart.

Here in Washington, the fight now is to try to ascertain what the residents – and voters – of the city may want.

“We want him (Mayor Gray) to remember that he was elected by the citizens and not by Walmart,” Hagler told IPS. “I think the mayor is smart enough and analytical enough to come around and do the right thing.”

Yet according to a poll carried out by Walmart, some 73 percent of DC residents in areas supposedly getting a store said they were in favour of Walmart.

For his part, Mayor Gray has previously promised his home ward hundreds of new jobs, with a new Walmart store in that area offering an obvious anchor for this pledge. According to many analysts, including Hagler, the mayor is now hesitant to take those jobs away.

“I’ve got to look at the full impact of the (living wage) bill,” Gray told reporters recently. “Everybody has looked at it from the perspective of Walmart, but it’s bigger than Walmart.”

Corporate bullying

According to some analysts, the impacts of a living wage are less dramatic for either side of this equation than is currently being admitted.

A study done by the Labor Center at the University of California at Berkley, for instance, found that if Walmart raised its minimum wage to 12 dollars an hour, and wanted to retain its profit margin, retail prices would only rise by around 1.1 percent.

“The notion that this (living wage law) is going to undermine Walmart’s business is so dramatically absurd,” David Cooper, an economic analyst for the Economic Policy Institute, a liberal Washington think tank, told IPS.

Walmart has a history of driving out small regional competitors and undercutting their prices, while paying their workers so little that they can barely survive without public assistance, according to Cooper.

“DC has been a thriving and growing location for business, and Walmart would do great business even if they have to pay their workers more,” he says. “It would be a shame for the mayor to cave to what amounts to corporate bullying.”

Up to 1 million unpaid internships are offered each year. Credit: Joel Gillman/CC by 2.0

By Cydney Hargis
WASHINGTON, Jun 15 2013 (IPS)

A landmark court decision this week has challenged the controversial existence of unpaid internships, highlighting calls for greater clarity on the legal definition of an internship.

The judge, William Pauley, ruled that Fox Searchlight Pictures, a movie studio, violated U.S. and New York minimum wage laws by not paying two of its interns during the production of a 2010 movie, “Black Swan”.

“Just like someone that has an entry-level position, interns receive benefits and contacts, but they don’t get paid,” Maurice Pianko, director and lead attorney of Intern Justice, an advocacy group, told IPS. “Just because somebody is receiving experience doesn’t mean they shouldn’t get paid.”

In the “Black Swan” case, plaintiff Eric Glatt, a law student and former accounting intern during the movie’s production, called unpaid internships “a form of institutionalised wage theft”.

According to a report by the National Association of Colleges and Employers, 55 percent of the class of 2012 in the United States had an internship sometime during their time at school, and 47 percent of those were unpaid."Just because somebody is receiving experience doesn't mean they shouldn't get paid."
-- Maurice Pianko

Up to 1 million unpaid internships are offered each year, according to estimates by Ross Eisenbrey, vice-president of the Economic Policy Institute, a Washington think tank. Further, he said the number of unpaid positions has increased in the aftermath of the 2008 economic downturn.

Eisenbrey also blamed unpaid internships for bringing down overall wages.

“The return on a college investment has fallen,” he recently told the media. “Students are facing higher and higher debt burdens, and the reaction of employers is to make matters worse for them by hiring more and more people without paying them.”

Benefiting the intern

Under the Fair Labour Standards Act, the U.S. Department of Labour has outlined six criteria for a position to be considered an internship and thus be legally unpaid in the private sector.

Among them are requirements that the experience must be for the benefit of the intern and the employer cannot derive any immediate advantage from the intern’s work.

If the six criteria are not met, interns must be paid according the minimum wage or more. This week, Pauley ruled that the “Black Swan” interns did not receive any training similar to that of an educational setting, one of the criteria given by the Department of Labour.

“The benefits they may have received – such as knowledge of how a production or accounting office functions or references for future jobs – are the results of simply having worked as any other employee works,” the judge stated in the ruling.

20th Century Fox, the parent company of Fox Searchlight Pictures, issued a statement expressing its disappointment with the ruling, calling it “erroneous” and saying it would appeal.

“I hope this sends a shockwave through employers who think, ‘If I call someone an intern, I don’t have to pay them,'” Glatt said.

Corporate liability

Last month, another federal judge in New York declined to allow a class action lawsuit proceed against the Hearst Corporation, a publisher, challenging unpaid internships at Harper’s Bazaar, one of the publisher’s magazines.

In that case, Diana Wang, a former Harper’s Bazaar intern, filed the lawsuit on behalf of all Hearst Corporation interns. But a judge denied the class action status because Wang couldn’t prove that all Hearst interns had faced similar conditions.

On Thursday, two previous magazine interns filed a lawsuit against another U.S. publisher, Conde Nast Publications, for failing to pay them minimum wage. The lawsuit is currently waiting to receive class action status.

For some advocates of changes to U.S. labour policy regarding internships, the overall goal needs to be to turn those unpaid positions into entry-level positions.

“Employers need workers to help them produce that product,” Intern Justice’s Pianko said. “What that means is that if there are no interns, those positions will be transitioned into paid entry-level positions.”

Still, others say achieving this goal would be very difficult. Brantley Davis, of the advocacy group Coalition for the Future American Worker, estimated that eliminating unpaid internships stands just a 10 percent chance.

“Experience is experience,” he told IPS, “and you need it for the workforce.”

In 2010, federal and state labour official did indeed move to crack down on illegal internships. But at the time, few plaintiffs came forward.

That now appears to be changing. Over the past two years, six lawsuits have been filed demanding minimum wage compensation for activities performed as interns.

According to Pianko, “All we need is one former unpaid intern to come forward and they [corporations] could be facing a four-, five- or six-figure liability.”