Labor Law Reduces Employees' Freedoms Too

I get tired of the perception that labor law is universally beneficial to people selling their labor, and that these laws are solely intended to reduce the ability of rapacious employers to exploit powerless workers.  It confuses people to no end when I say that minimum wage laws prevent workers from selling their labor for less than the minimum wage, and is therefore a restriction on every worker's freedom.  Supporters of the law say, that's can't be right, it simply must be helping all workers.

But I think anyone who has gone through the experience lately of trying to help their teen get a summer job knows this is not the case.  My son would gladly work for free or below minimum wage at any number of jobs to get experience.  Unfortunately, he must be paid the same minimum wage as someone with years of experience, and many large corporate chains have simply banned hiring of kids under 18 to avoid liability and labor law hassles associated with hiring teens.  The result is an astronomical unemployment rate for teens.

So here is another example, with the Feds cracking down on unpaid internships.  This is simply crazy.  The government has got to realize that there are useful and valuable things one can trade his labor for (e.g. experience, training) that can't be measured in money.

Of course, you know who is the greatest violator of these internship rules?  The organization that requires the longest hours for the least pay (well under minimum wage) for a huge portion of its staff?  Why, its the US Congress, but of course they exempt themselves from these laws.

UpdateFrom a commenter on Stossel's blog:

Maggie Hanson:

I have an unemployed friend trying to land work in a new field where she has no experience. She's up against experienced applicants. I suggested she offer her services for free as an intern for 3 months in exchange for learning on the job and a letter of recommendation. She told me she didn't think that was legal. I'm appalled to learn she is right! Yet how else is she going to get experience? She can't afford school. Internships are a free education.

  • Gil

    Why would someone getting a minimum wage have 'years of experience'. Minimum wage jobs, surprise, surprise, are level-entry jobs. Is a private in the army for years on end more valuable than a new recruit? Then again saying "there much unemployment in teens" as bad as saying the "the unemployment in pre-teens is virtually 100%"? Is the ultimate problem the West cannot pay the wages they used to and it's belt-tightening time and the minimum wages is cramping everyone's style.

  • We have this exact problem at one of our businesses. We have foreign students (who aren't allowed to take jobs on their visas) literally begging us for internships so they can get experience... but the State of California is cracking down and it's not worth the risk.

  • scottmcg

    We have the situation here in Oz that teens (well anyone actually) can only be employed for a minimum of three hours per shift/day. So kids are getting sacked from after school employment, because there is only 1.5 hours of work to do (our shops mostly shut about 5pm unlike the US). They want the work, the employer wants to employ them, but the Government demands that they be paid for work they don't do.
    Go figure...

  • DrTorch

    So you're saying that progressives' policies actually make things worse for the people they claim to help?

    *gasp*

    That just can't be right!

  • anon

    scottmg, Evil Red Scandi (evil, indeed, but not very red),

    You are all lying, greedy capitalists -- are your sure you don't work for an insurance company or a bank?

    If you would pay everyone that applies for a job a living wage of $20/hour, 35 hours/week, with at least 4 paid sick days per month plus personal days and vacation, poor people would have more money to spend, which would stimulate our economy and create jobs.

    (Yes, I'm applying for a cabinet position in the current administration. Do I sound qualified?)

  • me

    Anon, you don't go far enough.

    Obviously, inequality is a big problem in America today, and with typical salaries marginalized by bailouts, it is time to move to Capitalism 2.0.

    Every resident will get a salarly of $1,000,000 per year, directly from the IRS, of which 50% will be withheld upfront for taxes. Clearly, with most people earning more than today, total fairness in distribution and higher per-capita tax revenues, we expect to see great economic improvement on all fronts.

  • Gary Poteat

    When I started working (40 years ago), North Carolina had a "reduced" minimum wage for teenagers ($1.40 vs $1.90--if I remember correctly). You were only allowed to work 20 hours/week, but I commonly worked 40 hours/week (especially in the summer).
    No one was taking advantage of me. I got job experience, learned how hard physicial labor was and decided to get a good education so I wouldn't be luging 40lb cases of dog food out to stock shelves for the rest of my life.
    Trying to protect everyone from life (as the current admin. seem to want to do)is the greatest disservice that can be done to teens. Let them face the fact that life isn't fair, work is hard, and an education is important (but without hard work doesn't mean much)when they are young enough to use this info to plan what they want to do.
    My belief is that, in the near future, reality is going to come back--with a vengence. The Nanny State is going to be shown to be impotent against the facts of life (such as, you can't live beyond you means forever). Won't be fun but to tell the truth, life (mostly) isn't intended to be fun. You have to learn to enjoy doing what must be done to eat, pay for shelter and buy clothes. I think our young folk are going to learn a lot of lessons, real quick, when the world goes back to being a tough place with no guarantees for anyone. (pardon my poor spelling, I am totally spell-check dependant now).

  • Ron H.

    No one has mentioned the unions. We puzzle over who can possibly benefit from Fed action cracking down on unpaid internships; and the answer is... the unions.

    Unions want to reduce competition from unpaid interns and low wage workers, hence this current action and higher minimum wages are to their benefit. Seen in this light it all makes perfect sense.

    The current administration owes a great deal to union support, and is paying a debt.

    What could be simpler?

  • DrTorch

    "Internships are a free education."

    I think this is another piece of the puzzle. If you start undermining the professional educators' monopoly on the marketplace, you really open up a can of worms.

    Is it a coincidence that professional educators vote predominantly Dem?

  • Gil, you typed, "Why would someone getting a minimum wage, have ‘years of experience’?"
    How did you get that impression?
    The point is that people with no or little experience are hirable at less than minimum wage, but that is not allowable.
    That low wage level would only last a short time. The worker would gain experience & get raises & be more employable for higher wages.

  • Dr. T

    Funny, back in the 1970s college students on federal "work-study" programs were exempt from minimum wage laws. I got $1.75/hr for scrubbing pots in the cafeteria.

    The reason for the crackdown on unpaid internships is not protection of young workers. It is to reduce the scale of the barter economy. When a company offers experience to an unskilled worker who offers some useful labor in return, that unpaid transaction generates no tax revenues for the federal government. Naturally, our ever-growing, always greedier government cannot tolerate such situations. Hence, the new law.

  • Methinks

    Dr. T makes a good point. Of course, when taxes become almost confiscatory (and they will), these barter relationships will become a lot less formal and more prevalent and impossible to detect without employing a secret police. That's the next step. Imagine Obama making the case for a secret police to ferret out "exploitation". Imagine the vast majority of the population opposing this and then imagine the American Nomenklatura in congress cramming it down their throats anyway. Oh wait...I guess that last part you no longer have to imagine.

    Anyway, this is meant to help nobody. Not even in theory. This is just a consolidation of power under a central authority. Americans need to wake up and realize that this is not the first time this has happened in history, it CAN happen here, "it" IS happening here and it's all going to start rolling downhill toward the abyss very quickly. Those of us who have immigrated here from such septic abysses have warned you.

  • Not Sure

    "Trying to protect everyone from life (as the current admin. seem to want to do)is the greatest disservice that can be done to teens." - Gary Poteat

    Disservice to teens is just the price to be paid to help insure that increasing numbers of people become dependent on the government.

  • Ron H.

    I can see the resumes of newly minted graduates now:

    "I have never worked a lick in my life, and have absolutely no job skills, but I'm sure I would be a great asset to your company because I am just so damned smart, as evidenced by this shiny new diploma I have. I am a quick learner, and it shouldn't cost you much, nor should it take very many years, to bring my value as an employee up to nearly the level of my pay."

  • Ron H.

    Dr.T. , you said:

    "When a company offers experience to an unskilled worker who offers some useful labor in return, that unpaid transaction generates no tax revenues for the federal government."

    That's true, except that the useful labor, if it increases company earnings, will increase taxes. A paid employee would be a deduction from company earnings, but would pay tax on his own earnings, so I'm not sure it makes a lot of difference in actual taxes collected.

    The skills learned by the unpaid intern, on the other hand, would likely make them more valuable, more highly paid when they did start working, and therefore more highly taxed

  • Methinks

    Ron H.,

    The reason I think you're wrong and Dr. T. is right is because you assume the thugs in government are capable of understanding such subtleties.

    Ultimately, I think this is all about control - which is all the government is about. The more control the politicians have, the higher the price they fetch for relief from strangling control.

    It's ever so easy to hold a gun to people's heads. It's ever so much more difficult to actually do anything of value.

  • caseyboy

    Ron H., Please understand that there are great disparities between what a company might pay taxes given our progressive based tax system versus what a minimum wage earner might pay. We still have something called the Earned Income Tax Credit. The minimum wage is the construct of the labor unions many of which have contracts that incorporate minimum wage into their pay raise formulas. Minimum wage goes up, union pay goes up. It is the democrats way of giving unions a wage increase. And, once they get "Card Check" in place there will be more union worker votes for the dem's to buy (oh that's harsh I meant to help). When there are more people taking from the government that are capable of giving to the government where do you think the money will come from to continue the handouts?

  • "Is a private in the army for years on end more valuable than a new recruit?"

    Quite possibly, yes. In the old days, a man might remain a private all his military career. Most didn't aspire to leadership, their job was to be a spearman, pikeman, etc. They were very skilled at what they did, and not educated enough to do much else.

    One legitimate criticism of our modern military is that it puts too much emphasis on promotion because it has become just another career path with our cultural emphasis on personal success, often at the expense of the organization.

    On the other hand, the military has also been a jobs program for many decades, teaching a small core section of the citizenry a lot of skills. Pushing guys to do a term and then get out seems counter-intuitive and is against the stated retention goals, but it's also a way of having a LOT of trained people whom you may call upon in an emergency without paying them in the meantime.

    But more to the topic at hand, yes, a worker with years of work experience in an entry-level job is often worth more than a youth with no job experience. Merely the experience of having had to show up regularly, keep the complaining to a minimum, and put in consistent effort to keep a job is valuable experience in itself, not to mention the older person probably has mouths to feed which tends to steady one down and encourage stability. A smart kid might make up for this with brilliance, but it's unlikely because we're not talking about knowledge workers.

    Many entry-level jobs can still benefit from some common sense and active thinking: I don't know how many times I've seen people carrying stuff twice as far as necessary, or who can't manage to use leverage efficicently. But this kind of knowledge seems to come more from general experience than any kind of training or education.

  • sethstorm


    I get tired of the perception that labor law is universally beneficial to people selling their labor, and that these laws are solely intended to reduce the ability of rapacious employers to exploit powerless workers.

    The problem is that it is true. Businesses do not hesitate to lord over people.

    Compared to the business, the individual has far lesser freedoms. They can't use scale in their favor versus the businesses that can and do use it against individuals.


    Dr. T makes a good point. Of course, when taxes become almost confiscatory (and they will), these barter relationships will become a lot less formal and more prevalent and impossible to detect without employing a secret police.

    Or citizens willing to report people, allowing the law to work.

  • sethstorm


    The problem is that it is true. Businesses do not hesitate to lord over people.

    If you want an obvious example of it, see Mr. Blankenship's time w/ Massey Energy Co.

  • Not Sure

    "Compared to the business, the individual has far lesser freedoms. They can’t use scale in their favor versus the businesses that can and do use it against individuals." - sethstorm

    Ultimately, individuals have the upper hand. Businesses cannot force people to work for them- if the conditions of employment are so oppressive, those job openings will go unfilled.

    Anyone who takes a job or stays in one where the business "lords over them" has made a calculated decision that being lorded over is preferrable to not having that job, and they are able to rethink that position anytime they like.

  • Methinks

    Or citizens willing to report people, allowing the law to work.

    Sethstorm, how can you be this dense? This is exactly how the secret police worked in the Soviet Union. You couldn't trust your neighbours. You weren't sure you could trust your family. Do you have any idea how living in this kind of fear irreparably destroys not only the fabric of society and the normal bonds of family?

    The regime relies on useful idiots like you. Wake up.

  • Touch Wood

    I think the real scam is companies trying to skirt paying wage taxes by claiming interns are 'independent contractors'. Net effect is often a take-home pay for the intern that's below minimum wage, and an employer dodging their SS/Medicare/Medicaid tax obligations. Whether you have an ethical issue with it or not, paying sub-minimum wage and misrepresenting a structured, supervised job as an independent contractor opportunity are illegal.

  • sethstorm


    I think the real scam is companies trying to skirt paying wage taxes by claiming interns are ‘independent contractors’. Net effect is often a take-home pay for the intern that’s below minimum wage, and an employer dodging their SS/Medicare/Medicaid tax obligations. Whether you have an ethical issue with it or not, paying sub-minimum wage and misrepresenting a structured, supervised job as an independent contractor opportunity are illegal.


    Sethstorm, how can you be this dense? This is exactly how the secret police worked in the Soviet Union. You couldn’t trust your neighbours. You weren’t sure you could trust your family. Do you have any idea how living in this kind of fear irreparably destroys not only the fabric of society and the normal bonds of family?

    Businesses do the same thing with prospective and current employees(such as with otherwise legal off hours behavior, looking at people's social networking profiles[sometimes asking friends to get around privacy blocks] without asking the person first, HR asking people to dig dirt on others to get around a legal protection, as well as the espionage involved in labor relations), and there's no problem because there's the ability (however far away from being a real possibility) to choose someone else? Just because it's done in the private sector doesn't make it any cleaner of a practice. For that, both types of entities have to clean up their act - the private sector as well as the government.

    Otherwise, you're only cleaning up half the mess by only pointing at government.

    They may not be the KGB, or the Stasi, but they certainly can add the same feeling that the government gives. Doubly so in a bad economy where they have that much more ability to get away w/ it. Your life isn't directly threatened, but those private entities can certainly make you wish you were dead.


    Ultimately, individuals have the upper hand. Businesses cannot force people to work for them- if the conditions of employment are so oppressive, those job openings will go unfilled.

    They can if they know they're the only employer for a large distance or serves an otherwise passed-over group of people. While they can't directly threaten them with poverty, they can make it a near certain outcome due to the lack of choice and ability to move. That's what's called a captive audience - they have the freedom to move, but exercising it is near-impossible(but still by far a greater freedom than the Soviet system).


    Anyone who takes a job or stays in one where the business “lords over them” has made a calculated decision that being lorded over is preferable to not having that job, and they are able to rethink that position anytime they like.

    The problem is that the entity they choose to work for knows the lack of choice and lack of ability to move. Their freedom isn't taken away, it's that they cannot exercise it for fear of retribution.

  • Not Sure

    "The problem is that the entity they choose to work for knows the lack of choice and lack of ability to move. Their freedom isn’t taken away, it’s that they cannot exercise it for fear of retribution."

    I was taught a useful lesson by my parents when I was young- life isn't fair, and the world doesn't owe you a living. Sure, it sucks when you can't find work and have to relocate- been there, done that, thankyouverymuch.

    So what do you do? Take responsibility for fixing things in your life, or whine because it's so *hard* and that bully company is so *mean*? People walk here from Guatemala to find work, for crying out loud. They seem to have figured a way, so it's not that unthinkable after all, is it, really?

  • Methinks

    Sethstorm,

    You're not seriously equating companies making decisions about existing and potential employees based on what said employees WILLINGLY publish on PUBLIC websites and government abusing private relationships to haul people into court, are you?

    Yes, you are. You are a useful idiot, indeed.

  • sethstorm


    You’re not seriously equating companies making decisions about existing and potential employees based on what said employees WILLINGLY publish on PUBLIC websites and government abusing private relationships to haul people into court, are you?

    I draw the line when you've made some effort to make information private, and they try to find a way around it. Either they ask you for permission directly (and without any threat/promise of adverse action if you deny it) for said private information or they don't get the information. That is, the same standard that is asked of the government is also asked of the private sector. Or is it private inquisition for thee, but not for me?

    If it is out there without any indication that you want said information private, it is indeed fair game.

    Of course, would you like it if the individual could reciprocate by gathering similar information about the entity interrogating them? Generally that kind of inquiry hits a stone wall or sends the individual a lawsuit. I'm not talking about careful research, but dirt that generally does not want to be found but would be of use ( e.g. A contractor wanting to determine if someone is on their "Do not work for" list or an organization that gets away with legal technicalities against their employees).

  • Not Sure

    "Either they ask you for permission directly (and without any threat/promise of adverse action if you deny it) for said private information or they don’t get the information. That is, the same standard that is asked of the government is also asked of the private sector."

    What is the nature of this information, for which permission is requested by the government to access (without any threat/promise of adverse action if you deny it) of which you speak?

    Clearly, not anything like that "requested" by a census taker:

    "Whoever, being over eighteen years of age, refuses or willfully neglects, when requested by the Secretary, or by any other authorized officer or employee of the Department of Commerce or bureau or agency thereof acting under the instructions of the Secretary or authorized officer, to answer, to the best of his knowledge, any of the questions on any schedule submitted to him in connection with any census or survey provided for by subchapters I, II, IV, and V of chapter 5 of this title, applying to himself or to the family to which he belongs or is related, or to the farm or farms of which he or his family is the occupant, shall be fined not more than $100."

    Must be something else, I guess.

    But then, *everybody* knows how much more reasonable the government is to deal with when you don't do what they want you to than private businesses are. Right?

  • spencer

    There you go again, saying the minimum wage causes teens to lose their jobs.

    But the BLS data shows that since 2007 when the last round of increases in the minimum wage began teen minimum wage employment rose from 373,000 to 818,000 in 2009, or 119%. Over the same time employment of teens making more than the minimum wage fell 41%.

    Care to make some feeble attempt to explain why the data completely disagrees with your high school economics. Of course, while you are at it you can also tell us why some miracle prevented the Great Recession from impacting teen employment since you seem to think that the entire rise in the teen unemployment rate was due to the minimum wage rather than the business cycle.

  • I read about this particular issue in the WSJ. What I found to be amusing was that the measure would only be applied to "for profit" concerns; gov't and non-profits are exempt. Wanna bet every law firm has a 503-C corporation, to facilitate the willing students?

  • Peter

    spencer:
    when you raise the minimum wage you automatically get more people earning minimum wage without hiring one more person because all those people that were earning just over minimum wage didn't get a raise they just fell back down to minimum wage again. This also explains the second part of your data.

    sethstorm:
    The only people in this country that are not capable of moving to a different area to find a better job are those that are mentally incapacitated to the point that they are unable to move themselves in a purposeful manner. People can walk, ride a bike hitch a ride or roll their wheelchair to the next town, state or all the way across the country if they are sufficiently motivated. So obviously that boorish boss isn't motivating them enough to do so. My cousin has had employers pay to move him across the country to start a new job. Not that skilled? Im betting the government will subsidize your move to get a job even if its only a tax credit on the income you earn in your new job.

    As far as minimum wage goes for teenagers or others looking for experience is there anything that says the employee cant pay the employer for the benefit of being hired at minimum wage? Could you pay McDonalds for the rental of your uniform so that you can get that minimum wage job for them? Yes the employer would have to deal with the extra income from the rental but I am sure a balance point could be reached where the employers net expense could be reduced below the current minimum wage.