Twice in my life I worked a job for no pay.  Both experiences helped me more than college and any number of paid jobs I had held.

The summer of my Junior year in college, I got the opportunity to work in the Capitol Building for a Florida Congressman.  I attended classes in the morning at Georgetown, then took a bus ride to then-Congressman Connie Mack's (R-Fla) office to write news releases, research radio remarks and hang around a Congressional office.  I walked away from the experience with more writing experience a better resume, some experience and a few new connections.  I was happy to work for free.

After I was graduated from college, my friend Pat Guanciale introduced me to my future employer.  I showed up for the interview only to be told that  there wasn't any money to hire me.  The deal I struck was that I would do the work without a paycheck BUT I would be paid when I deserved to be paid.  Several weeks later, I was employed as a "receptionist," performing those tasks for money and doing other stuff to prove myself.

The point is that I didn't see those volunteer jobs as abuses or as situations where I was taken advantage of; they were learning experiences that helped me with my career.  I would have fought other applicants for the opportunity.

Too bad the Labor Department doesn't see things that same way.  Lots of young people are going to miss out on some great opportunities.

Update:  Greg Mankiw on unpaid internships.