OP here. Irrespective of a lacking portfolio, spec work should not be encouraged. If you need work to build your portfolio, you can still find some less than favorable jobs (that at the very least pay). If that's not enticing, work on a personal project that interests you (doesn't have to be a startup or unique, just something you'd like to build).

It's important to note: building a portfolio takes time. Building a reputation takes even more time. Taking on spec work only lowers the value of your work/reputation. Once upon a time I felt the same way, but by saying "no" now, you're saying "yes" to a lot later.