NEW YORK (Reuters) - With U.S. unemployment at a 20-year high, some Americans are working for free while looking for a job, but experts are split over whether it is a sign of dedication or desperation.

A job seeker makes a phone call to a potential employer at The Work Place, which provides comprehensive employment and career services in Boston, Massachusetts July 2, 2009. REUTERS/Brian Snyder

Unpaid job seekers can keep their resumes fresh by boosting their experience and learning new skills, experts say, but others warn businesses may take advantage of the jobless and that it is illegal for commercial companies not to pay workers.

Dana Lin, 22, is one of the 14.7 million unemployed workers in the United States. She lost her marketing job at a technology company near San Francisco in April and since then has been working for free for about five hours a week for Internet company Jobnob.com.

“Every company has thousands of people applying for each job, and I realized I needed more appeal,” said Lin, a graduate of Cornell University. Since being laid off, she has applied unsuccessfully for about 50 jobs.

“In some cases companies might be getting the better end of it (by having unpaid workers),” she said. “But it’s nice to have something occupy yourself with and when speaking to prospective employers it’s nice to say ‘I haven’t just been sitting around all day, I’ve actually been doing something.’”

It’s not only the unemployed taking on free work. Some employed people are being asked by bosses to go without pay.

British Airways last month asked its British-based employees to volunteer for up to a month’s unpaid work. Some companies and U.S. state and city governments have made staff take unpaid furloughs, but some employees still work anyway to keep up or because they are worried about losing their job.

Ross Eisenbrey, vice president of the Washington D.C.-based Economic Policy Institute, warns that while people can volunteer time for non-profit groups and government, it is illegal for commercial companies to not pay workers.

“It’s not just a bad idea, it’s illegal,” Eisenbrey. “The law says (companies) may not suffer or permit employees to work for less than the minimum wage.

“The more desperate people get, they will do things like this to try and make themselves more appealing to an employer,” he said. “The short-term prospects for most of the unemployed are very bad. They aren’t going to be made much better by working off the books or working for nothing.”

BUILDING TALENT PIPELINE

Job seeker Lin started working with Jobnob.com, a website that tracks salaries, after the company held its first so-called “happy hour” -- to link unemployed people with mostly start-up businesses that have work but are unable to pay.

“The job seekers have time,” said Julie Greenberg, co-founder of Jobnob.com. “It’s really dangerous for them because once you are unemployed for a few months, there’s this proverbial white space on your resume that’s growing.”

“They immediately see the benefits, they need references, they need to keep their skills sharp, a lot of people are learning new skills,” she said. “I don’t think there’s anybody who feels taken advantage of because they understand that ... we wish we had revenue, we wish we could pay you.”

Greenberg said more than 300 job seekers attended the first two “happy hours” and more such events have been planned.

Alexandra Levit, workplace expert and author of “How’d You Score That Gig?” recommended volunteering at non-profit organizations to gain or build experience.

“I think you have to be careful that you’re not undervaluing yourself. If you do have the experience, then you should be paid for it,” Levit said. “I absolutely think companies are taking advantage.”

Madeline Laurano, principal analyst at workplace research and advisory firm Bersin and Associates, argued that the recession-spurred trend of working for free is a great way for companies to build a “talent pipeline” to tap when the economy recovers.

“Employers need to think about the same strategies that they would if they were hiring someone who was getting paid. You still want a quality person,” Laurano said. “Job seekers also need to think the same way, ‘I still want to invest my time in a company I believe in, that I can grow and learn from.’

“The argument that people are making is, is it desperation or dedication,” she said. “It’s not necessarily volunteering at a homeless shelter, but it’s contributing that might also bring you some benefits in the long run.”