True, but given his advertising and rate I would imagine he'd be busy enough. And yes, you spend hours on a portfolio for free, free from the pressure to do inane, boring corporate work for example. I mean, at the end of the day it's just advice, but I don't imagine there are many designers would agree this is a good thing. Entrepreneurs, maybe; designers, no.
If he spends 1-2 hours on a design, that's $7.50-$15 per hour. Any longer and he wouldn't be making enough to be worth his time, even in the Philippines or India. For a true portfolio, you'd want better designs than 1-2 hour quickies
If he's trying to build up a portfolio of work, he'd normally be doing it for free, why would he be trying to make market rates? You're assuming that this is someone building a living from this.
But if he spends more time on the early projects (say, 10 hours each to showcase his best work), eventually he will have to cut down the time per project or increase the price to make it profitable. In that case, he would Need complete rebranding, which would be tough, since people would know him as the cheap design guy. If he were just after the portfolio, he should design 10 designs on spec and put them on a site that pitches high end design from the start.
No, it's not done for free. It's an investment of time designed to earn a return. The value of that time is supposed to be included in the price charged to the client. 'Doing it for free' is about giving value, not the inability to get paid.
It's possible that maybe he's only spending an hour a piece on these, but he might go back to them later and build on them more for a portfolio. It's good to make a bunch of quick and diverse designs just to see what happens.
His portfolio should be relative to what he wants to do in the future. If he intends to do full-scale designing, then of course he should focus on getting that into his portfolio. But if he intends on doing quick, small design deals, this is perfect.