This sort of entry position has been around since the middle-ages, likely earlier. In those days they were called apprenticeships, and the young people who got them to learn a trade were essentially sold into bondage—contracted servitude with penalties for runaways—by their parents. Not a lot different from internships, except child labour laws have removed the parents from the equation so the interns make their own deals.
The system works for some, and exploits others. Like the explosion in 'contract' workers generally, it's kinda caught the various establishments unawares. Like every change in work and commerce before, we'll either judge it a reasonable practice, or we'll take collective action to deal with the worst shortcomings and abuses.
Making it explicit law that internships/contract workers be covered by written employment agreements so that employer liability and responsibility are the same as for paid staff, and that interns/contract workers acting for the company are likewise its official representatives and agents, as an example. There might be <gasp> defined work, duties and hours written and enforceable even if it was up to the individuals what action to take about The Morning Latte Problem. It'd be a start.
Eventually, bigger slushier issues like employee benefits will become unavoidable issues as well, and we'll either have to accept more of a class system in our societies, or finally deal with that one squarely. One of the major factors—and least expensive to fix— in the increasing inequality of paid work in North America is the escape from various payroll taxes and employee benefits that employers take advantage of by contracting, by part-timing their work forces and by using interns to do significant amounts of labour.
As with all collective action the question is whether we'll be out in front with insightful leadership, or waiting to be energized by disaster and led by demagogues and ranters. Either way problems gotta get fixed.
