So what? Why is lowering wages a bad thing? If the wages are lower across the industry, it means consumers get lower prices. You're totally ignoring the consumer side of the equation.
So really, any regulation has another side. It benefits one group of people, while robbing another group, which is less vocal and less identifiable and thus is less likely to be remembered in this case at all.
You're both arguing about something irrelevant. Whether low wages result in lower prices or higher dividends doesn't matter. The point is that a worker and an employer have decided on what each believes is a mutually beneficial relationship. Unless someone is forcing them at gunpoint, we should respect their free decisions.
You implied that employers always have the power in the relationship. I'm pointing out that it can go either way. Obviously people working for free must be in a weak negotiating position.
Even still, nobody's forcing them at gunpoint. Presumably they chose a an unpaid graphic design internship because they value the experience. They could have chosen to work elsewhere for pay. As long as they are not being forced, are not being deceived, and are choosing according to their own priorities, it's their decision.