THE BLOG
12/02/2013 10:51 am ET | Updated Feb 01, 2014

The Minimum Wage, Unpaid Internships and the American Dream

There has been a fair amount of recent news coverage about people working in retail and fast food who need food stamps and charity to survive. The pressure on corporations to provide ever higher profits and return on investment has led to efficiency and cost cutting that has reduced both prices and wages while increasing profits. People living on the minimum wage can barely support themselves, let alone a family. For many people, the bare minimum costs of housing, utilities, food and transportation is more than they make. Health care is a luxury, as is anything else.

In addition to the difficulty in meeting basic daily needs, we see that increased standards of living for many has created enormous pressure on families and has redefined necessities. The school kid without a smartphone and a home computer cannot participate in contemporary social and intellectual life. When I was a kid, a baseball glove and bat, a library card, and a bike was the price of admission. There were no monthly cable bills, internet costs, or cellphone minutes to pay for. The financial requirements to achieve the modern definition of a middle class lifestyle have grown. This is fueled by the media and has been fully absorbed into the norms of American culture.

Writing in the New York Times last week, Steven Greenhouse observed that: "For retail workers nationwide, who earn a median pay of about $9.60 an hour, or less than $20,000 a year, holiday shopping sprees are most often enjoyed by customers on the opposite side of the counter." All of this has served to create a greater distance between the haves and the have nots. We have all seen the data on reduced economic mobility and increased inequality. New York City Mayor-elect Bill de Blasio ran and won election by highlighting what he called a "tale of two cities," one rich and one poor. America is in danger of creating a permanent underclass, a trend that would fundamentally alter the idea of America and the American Dream.

My father's father came to America in 1917. My grandfather worked as a baker and was able to support my grandmother and their five sons. My father and his brothers were first-generation Americans who in some measure achieved the American Dream. One was a corporate executive, one a lawyer, one an accountant, one a government scientist and the other a publisher's sales manager. They had the advantages of excellent public schools, drive and ability, but they also had the confidence that America was a land of real opportunity. When I was growing up, those opportunities were assumed -- a sort of American birthright. While I know that those opportunities were never available for everyone, my friends and I never questioned our access to the American Dream.

The reality and the idea of boundless opportunity are fading fast and pretty much gone. Even the students I teach at an elite university worry about a world of unpaid internships and part-time underemployment. I think one of the reasons the idea of boundless opportunity has disappeared is that somewhere in our culture we have lost sight of the dignity and value of work itself. In the contemporary mindset, hard work is not its own reward; working hard is for obsessive people and suckers. Keeping your head down and doing your job is not sufficient. You need to call attention to yourself, network and self-promote. To be noticed you have to spike the ball and do a victory dance in the end zone. Times have changed: When Joe DiMaggio hit a home run, he rounded the bases with his head down to avoid showing up the pitcher he had just defeated. The pitcher may have lost the battle, but he had worked hard too. It's impossible to even imagine that scene today.

A sign of the decline of the value of labor is the unpaid internship. I am not arguing against volunteerism. Volunteering to help those in need is a noble form of public service. The unpaid internship I oppose takes place when a student or recent graduate works for an organization that can well afford to pay a salary, but takes advantage of the weak job market by "allowing" young people to work for free. They claim that this "experience" can lead to paid employment. Sometimes it does, usually it doesn't. It is exploitation, plain and simple. What can be more demeaning to the dignity of labor than refusing to pay for it? Just as I oppose slavery, I oppose unpaid work. It is a disgusting and unethical practice. I hope it is found to be a violation of minimum wage laws, but if it is not, then those laws should be changed. It is a clear indication that the value of labor and the power of workers have been reduced in America.

The institutions and practices that promoted labor, such as unions and minimum wage laws, continue to lose ground. The decline was caused by a powerful and determined opposition but also by the unions themselves. Much of the labor movement ceased being a movement, and became a set of self-regarding interest groups. As the nature of work and labor changed in the United States, the unions were unable to keep up. Unions represent a smaller and smaller proportion of the labor pool, and conservative pro-market ideology has delegitimized public policies that protect workers. Economic policy has been redefined as government "interference" in the free market. Policies and institutions designed to promote labor have deteriorated and nothing has grown to replace them. Yes, the earned income tax credit was a partial substitute for a growing minimum wage, but in the end, wages have declined to the point that many of our hardest workers remain impoverished. The opportunity structure that fueled the American Dream had elements of reality and elements of myth, but today the dream is over.

In his piece last week, the Times' Steven Greenhouse reported a grass roots effort to raise the minimum wage:

By a large majority, Americans support raising the minimum wage, according to a CBS News Poll done from Nov. 15 through 18. The poll, which surveyed 1,010 Americans, found that 69 percent of respondents approved of raising the minimum wage, while 25 percent opposed the idea.

It is unlikely that today's House of Representatives will vote to raise the national minimum wage. Nevertheless, many states and cities are considering raising their minimum wages. Some have already been enacted and others will be passed in the near future.

The underlying issue that needs to be addressed is the future of work in the brain-based, post-industrial economy. Businesses argue that an increase in the minimum wage increases their labor costs and reduces the number of people it can hire. Let's assume this is true. A society where workers on the bottom of the economic ladder are impoverished undermines the value of work. It also requires society to indirectly subsidize the businesses that refuse to pay a living wage. Unless we are willing to see working families sleeping and begging in the street, then growing public subsidies will be required for food, housing, health care and transportation to augment the inadequate wages paid to the working poor. This is a public subsidy to low-wage employers.

Automation will increase the problem of unemployment and underemployment, unless we devise a 21st-century version of employment policy. The low-wage, low-skill jobs that survive automation must be paid a living wage that does not require a public subsidy. This minimum wage must be indexed to inflation. New professions and new businesses need to be encouraged to increase the level of life-long learning and then make use of that increased expertise. The last several decades have seen the creation of a wide range of new jobs, such as web designer, events planner, sustainability manager, energy efficiency officer, green market coordinator, community relations coordinator, personal trainer, and IT help desk manager. The technology that enhances our quality of life must be periodically reinvented, maintained and repurposed. That will create jobs that have not yet been invented.

While many of these changes can be left to the free market to develop and manage, public policy has a role to play as well. A floor must be set for wages. Opportunity for learning and retraining must become a right rather than a privilege. The basic and applied scientific research that fuels the brain-based economy must be funded by the federal government. Finally, our elected leaders need to get back to basics and rekindle the sense of confidence that hard work can lead to opportunity and that the American Dream is not an impossible dream.