Is it ethical to require student work in exchange for letter of recommendation Is it ethical for a psychology professor to expect volunteer work in the lab in exchange for a letter of recommendation? The rationale is that they are unable to judge a student's suitability for graduate school without evaluating their lab abilities. I can see the point, but it's difficult for a working student to volunteer for an entire four month long semester on the professor's schedule, which varies considerably.
Yes. It would be unethical to trade lab work for a guaranteed good letter of recommendation, but I see nothing wrong with your scenario. I think it's acceptable for a professor to only write letters for students they've worked with if they has open lab positions. I also think it's good to require a student commit to at least one month of research at minimum. 

It can be hard for many students to juggle/balance life, school, and work. Doubly so for those who need to work through college. But research is the backbone of many grad programs and it's important to get as much experience as possible. The research requirement can get in the way of everything else, but it's also a way for you to try research before applying to grad school.

EDIT: Another way of thinking about it: Would it be an issue if a professor required a student to take their course (or do research) before writing them a letter of recommendation? Of course not! Wanting a letter from such a professor would require you to spend time going to lecture and doing the course work. The only difference here is that one month of research is probably more beneficial and less work than taking a class.