One of the first bits of advice my old boss gave me: never work for free. I was surprised because I'd never even considered doing that. But it must be common enough for him to have mentioned it.
As a note of perspective, this comes from a graphic designer (Jessica Hische), and their work has an even greater tendency to be devalued by potential clients. Just spend a few minutes browsing the Clients from Hell tumblr to get an idea their typical business relations…
Many graphic designers consider a little free work in exchange for future work or references as a good way to get one’s foot in the door. This usually backfires.
Depends where you are. In creative fields in NY, there is tons of free labor, or people getting paid on a scale of Net-180 to Net-Never (proportional to how many times you say "Fuck You, Pay Me"). As well as a load of illegal "internships". Outside of finance, businesses here are often extremely cheap to the point of being dishonest.
I really don't understand why people put up with it. Nobody has any ethics either.