I see both sides of the issue here. For those not in the know, spec (for speculative) work is giving ideas up front before any contract is signed. Typically this is done on the internet and spec designing has become proforma at some online freelance design sites. The idea is that you invest time, effort and inspiration on the off chance that someone will decide to choose your idea and pay you.
I have had clients approach me with sketches in hand that were done on spec by some other designer. It’s pretty shady getting a sketch for free and using that person’s idea and inspiration to try and get a discount by having someone else do the actual illustration. When I come across this I bow out from the job.
High end designers eschew designing on spec because it devalues their work. Design is a highly skilled field and the amount of fiddly crud you have to know is staggering. Easily comparable to any four year degree. We’re professionals and we deserve to be able to earn a comfortable living at this. It’s not reasonable to ask a skilled professional to put in 8 hours of work for $25.
Go to Craigslist for your town and check out the Creative Gigs section. I’m sure you’ll come across someone offering $25 for a logo, or maybe even offering the chance to create their logo for free.
Having photoshop on your computer doesn’t mean you’re a designer. Just like having MS Word doesn’t make you a writer. (In fact, most low-end designers don’t know that Adobe Photoshop isn’t a tool for creating logos. Really, it’s not.)
People working on spec or for next to nothing reinforce the notion that design isn’t worth much. That it’s unskilled labor that goes to the lowest bidder. For a small mom & pop coffee shop having a $25 dollar logo isn’t going to destroy them. But it isn’t going to make people take them seriously either.
On the other hand, designing on spec will likely be around for good. There is a market for it and some people will surge to fill that niche.
What I see happening is a stratification with high-end designers floating like a pudding skin on a vast sea teeming with low-end, paid next-to-nothing amateurs and semi-professionals.
The important thing is to make it obvious which side of the surface you’re floating on.