06.27.2013

Are unpaid internships worth it?

Every year, hundreds of thousands of college students descend upon America’s largest cities, thrilled at the opportunity to intern at prestigious firms and renowned nonprofits.  These opportunities are so compelling, many of these students are willing to work for no pay. But are these unpaid positions worth the opportunities they provide?

 

Opportunity Nation interns Bryan, Victoria and Jacqueline and intern coordinator Katie

The National Association of Colleges and Employers (NACE) found that students who worked only unpaid internships were almost 30% less likely to receive a job offer after graduation than students who had worked at least one paid internship. Those who worked unpaid internships were merely 1.8% more likely to receive a job offer after graduation than students who had no internship experience at all. Those who did not have internships actually earned an average of $1,000 more than students who were unpaid interns, and the starting salary of paid interns was higher than both by around $14,000. 

The statistics don’t seem to favor unpaid positions, but they’re not the whole story. Most paid interns work in for-profit sectors such as finance, whose paid internship programs often funnel into high paying entry-level positions. Many unpaid interns, on the other hand, work for government and non-profits –  two sectors where the federal government rightly allows for unpaid volunteers, and therefore also allows for volunteer interns. This is incredibly important and provides valuable contributions to organizations or entities that may have limited funding available, while enabling interns interested in the organization's mission or work to gain hands-on experiences. 

These factors still do not account for the extremely low rate of unpaid interns who receive job offers following graduation. Regardless of these statistics, unpaid internships do offer students hands-on work experience and the chance to make contacts in their chosen field. However, the Opportunity Index estimates the percentage of youth not in school and not working at 14.7%, and in an era of rising student debt, most students simply cannot afford to work for no pay.

Many unpaid internship are not only ill-advised; they are actually illegal. The United States Department of Labor laid out guidelines for unpaid internships in the for-profit sector. If an internship does not fit the Department of Labor guidelines, the intern is actually an employee and, under the Fair Labor Standards Act (FLSA), must be paid at least minimum wage.  The guidelines are as follows:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The federal guidelines do not offer an exemption for interns who receive course credit from their colleges or universities for their work experience. Course credit is an oft-cited reason some companies and organizations use to justify not paying their interns, who are presumably getting something valuable in exchange for their labor, even if they are going without a paycheck.

If interns are qualified as employees by the above guidelines, however, compensating them through course credit or a stipend is not sufficient. Course credit is given out by higher education institutions, not employers, and can be given in addition to a salary if the university so desires. But it is still the responsibility of the employer to comply with labor laws and pay their interns if they are qualified as employees.

A federal judge in New York agrees. Judge William H. Pauley III ruled earlier this month that Fox Searchlight Pictures had violated minimum wage laws by not paying two interns who worked on the movie Black Swan. According to the New York Times, the case “could upend the long-held practice of the film industry and other businesses that rely heavily on unpaid internships.”

The judge ruled that the two former interns were entitled to back pay, as their work did not fall under the Department of Labor internship guidelines. This ruling will hopefully bring some visibility to labor law violations that many companies don’t even know exist, and award workers the compensation they didn’t know they deserved. But, as a paid summer intern at a nonprofit, I hope the biggest takeaway, reinforced by both the NACE study and the Department of Labor standards, is this:  employers value real work experience, and real work should be compensated appropriately.

What are your thoughts?

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