The decision is in: no thanks to the Department of Labor’s recent crackdown on unpaid internships, The Obama Administration has – in effect – turned its back on our nation’s Youth, Student Labor Market and the Small Business community seeking a new generation of entry-level talent.

In our conversations across the country two relevant concerns have emerged about the future of internships and the future of student employment in America – and neither report from the field bode well. First, the U.S. DOL has effectively told youth and students – the very core of the Obama “change” movement that got him elected – that internships are effectively over. In its over-zealousness to “regulate” the corporate use of youth and students, President Obama’s Labor Department is diminishing the very purpose and value internships provide.

Second, as our economy still works through major transformations – and according to highly regarded economists the Nation’s recovery is still not out of the woods yet – youth and students in America face the bleakest job future since the 1970s.

Unless internships are revitalized and even embraced by the Obama Administration – America could easily resemble Germany and France in 5-10 years with millions of unemployed youth – buried in debt with limited earnings potential to ever recover and with good reason to be increasingly anxious about their futures.

To recap, the DOL’s recently reasserted an antiquated system of compensation exemption that is guided by a 63 year-old “Six-Pronged Test.” These guidelines are counterintuitive to making internships beneficial for students and employers alike. As such, the DOL has essentially said that any for-profit company with an unpaid internship of any real mutual value is probably breaking the law.

Relying on obsolescence to address the urgent needs of modern times is short-sighted, grossly irresponsible and flat-out reckless. These guidelines decimate the shared value proposition and benefits to all parties. What the DOL describes as ‘productive work’ is laughable and relegates internships to job shadowing, which nearly eliminates an employer’s motivation to provide such opportunities in the first place. If an employer isn’t gaining an advantage, chances are, the student is doing less productive work tasks, which is typically why they are willing to forego pay as well as for the opportunity to ‘earn’ a job, which – by the way – the DOL also says is unacceptable.

The Internship Institute – in communicating with over 4,000 individuals across the Nation – as well as employers from small entrepreneurial firms to major global corporations – has learned that unless and until there is appropriate planning and support around internships for youth and students to gain “real-world” experience as scientists, engineers, researchers, creative talent, and innovators – then the very Presidential Administration that promoted “change” has effectively closed the door to its own powerful constituency for that change.

Direct feedback from an internship program manager at a major market radio station – who asked not to be identified – reported that, “My new General Manager stepped in and asked me if interns were performing some entry level work … and I said, ‘yes!’  He asked me if the station was deriving some ‘immediate benefit’ from it … and I said ‘yes.’  He then barked at me about the ‘letter of the law’ in terms the U.S. Labor Department’s 1947 definition.  He said, ‘From now on, interns will only shadow our employees.  They are to ask questions [slowing down company productivity], but nothing more.’ I then told him, that was it.  Our radio station college internship program was now officially over.”

Indeed college students are even more adamant about the restrictions. Simply summarized by one, “What’s the point of working for free to get experience if all I get to do is watch? I may as well tap the online [career] sites to get the same benefit and flip burgers to make an extra buck. I have college loans to pay off.”

So here again it’s evident that some bureaucrat sitting in a cubicle in Washington DC decided to throw the baby and the bath-water out while not understanding the unintended consequences to America’s youth and students. They essentially lit the fire, pulled the alarm, slipped out the back door and left it for everyone else to extinguish.

So what should employers do now? The Internship Institute has issued a Compliance Advisory to recommend that employers focus on additional training as a prudent measure to satisfy the DOL along with a solution to build that talent equity. Whether paid or unpaid, employers have an obligation to train interns, states the Advisory. In spite of any short-sightedness and inadequacy by the DOL, TII firmly advocates that the experience should be mutually advantageous.

As for the letter of the law, the indicators are clear enough. If President Obama allows the Department of Labor’s position to remain unchallenged and unchanged – then purposeful internships in America will be terminated, finished, cooked.