Unpaid Internships: The New Entry Level Job?

Unpaid Internships: The New Entry Level Job?

Shleby Cook

Staff Writer

Last November, British Parliament voted on a bill proposing a ban on all unpaid internships. The bill didn’t pass, but its introduction into the House of Commons raised some questions about the legality and ethics of unpaid internships—an issue college students and recent grads alike are all too familiar with.

Somehow, in the last ten years, internships have become all but synonymous with career success. In fact, if you don’t land at least one internship during your four years of college, you’re probably already behind before you’ve even crossed the graduations stage.

This is especially true today: one out of every three Americans has a Bachelor’s degree, meaning that a college education alone isn’t enough to distinguish anyone from other job competitors. Couple that with the fact that economic fallout from the recession continues to make jobs scarce, and you’re left with millions of graduates scrambling to find for ways to set themselves apart. Even if it means working for free.

According to the National Association of Colleges and Employers, nearly half of all internships in the United States are unpaid. Of course, that means there are also many paid internships, but students and graduates who are desperate enough for a job, particularly in more competitive fields like finance, communications, or politics, are willing to trade a paycheck for a line on their resume.

So, what legally constitutes an unpaid internship? In 2010, the US Department of Labor (DOL) outlined six criteria against which to determine the legality of an unpaid internship. If an employer doesn’t comply with any one of these criteria, their intern is considered an employee and, as such, must be paid. Some of the standards set forth by the DOL, however, are not entirely clear, which leaves them open to interpretation by employers.

But even that doesn’t get to the heart of the problem; the real problem lies in the fact that these guidelines are rarely, if ever, enforced.

That’s because the Department of Labor only investigates employers based on complaints from workers. And interns, who are taught to be practically invisible, are hesitant to report a company when it might endanger a future job.

After graduating from college, I held three different unpaid internships in the field of video production. During my time at each one, I helped create content for the associated company, which the company then used as promotional material. According to the fourth criterion under the Fair Labor Standards Act (i.e., “The employer that provides the training derives no immediate advantage from the activities of the intern”), every single one of my internships was illegal.

In fact, I’d argue that most unpaid internships are illegal. And it’s not because the majority of employers are mistreating their interns, but more because both employers and interns don’t understand the law.

What started out as a good thing, a way to gain job experience during school or after graduation, has become a breeding ground for unregulated, unchecked free labor, in the hopes that that labor will translate into future employment: If I work an extra hour...if I file another report… if I come up with a smart strategy, then maybe they’ll hire me.

But this is rarely the case. According to Ross Perlin, author of the book Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy, “Since 2008, rising college tuition, record levels of student debt and high levels of youth unemployment have exacerbated the dismal prospects for unpaid internships.” The reality is that it’s become less and less likely for an unpaid internship to lead to a job.

Additionally, a study conducted by the National Association of Colleges and Employers stated that students who held an unpaid internship during their college career were actually more likely to be unemployed six months after graduation.

Yet unpaid internships are repeatedly pushed and praised in thousands of universities throughout the country. Between 1992 and 2008, the percentage of graduates that held an internship during their college career jumped from 17 percent to 50 percent, and many universities even require students to complete an internship in order to graduate.

Essentially, unpaid internships have become the new entry level job. Unless your dad knows a guy, or you happen to graduate with the right in-demand degree into the exact right market (I’m looking at you, engineering and computer science majors), most entry-level positions are going to ask for a level of professional experience that recent grads just don’t have. The only way to get that experience is often through an internship.

Ironically, an influx of unpaid interns in your industry may be the reason there’s so few entry level positions available. According to Investopedia, a leading financial news and education website, a large number of unpaid internships “creates a cycle of fewer jobs and more job seekers willing to work for free to open the door.” That’s because the only people able to get their foot into said door are those who are willing to forego a paycheck to do so.

Some economists even contend that unpaid internships are harming the economy at large. Without wages, young people cannot contribute to the income tax pool, or to social security, or to economic growth in general. Instead, they’re forced to leech off of their parents (decreasing their parents’ purchasing power in the process), or to apply for government assistance. Considering how many recent grads are saddled with mountains of student loan debt, we really should be helping our newest members of the workforce dig themselves out of that financial pit, not fall deeper into it.

Another compelling argument for paying interns is that unpaid internships work to inhibit class mobility Generally, unpaid work opportunities are resume-builders available only to those with some form of financial “safety net”; to young workers who can afford to live without any income for the length of an unpaid internship. This places students from working-class families and/or of lower socioeconomic status at an unfair disadvantage. The larger implications of these trends are not only that employers might be missing out on some of the best and brightest workers, but also that powerful industries and influential agencies (including those in government) are less in touch with the lives of everyday Americans than they might believe themselves to be. While there are benefits to unpaid internships, like learning to work in an office environment, and making valuable contacts in your field, their overall mission has failed. Instead of decreasing unemployment, promoting economic growth, and affording talented, ambitious young professionals a means of setting themselves apart, unpaid internships have done just the opposite. They’re holding recent grads back, rather than propelling them forward. If you believe in equal opportunity, then make no mistake: this system runs entirely counter to that goal. And if that isn’t enough to cause you to reevaluate unpaid internships, then perhaps the economic implications will be.

To put it simply: what’s good for interns is good for businesses. When young job-seekers hear that a company offers paid internships, it can only do good things for your reputation, which will lead to a larger number of applicants for any given job opening. Studies also show that employers who pay their interns design programs that are more individually tailored and beneficial to interns, because—and this should come as no surprise—by paying interns, companies end up more invested in their success.

Then, there’s the very simple fact that when you give a twenty-something a little bit of pocket money, that money goes right back into the economy. Unpaid internships make for less dollars spent on goods and services provided by other businesses. And let’s not even start on the topic of home ownership, which has proven to benefit municipalities in myriad ways, but remains little more than a pipedream for someone who has no means of accruing personal capital, despite active participation in the workforce.

Regardless of the direction unpaid internships take, there is clearly a need for stronger, more effective internships and job training. To achieve this, chambers of commerce executives can start by reaching out to member businesses and local universities to at least initiate a conversation about what it would take to develop such programs. In the words of Matthew Yglesias, Executive Editor of Vox, “Erecting extremely sharp walls between ‘education,’ ‘training,’ and ‘work’ doesn't make a ton of sense in theory and isn't working out very well in practice either.” Ensuring that interns receive fair compensation for their labor isn’t just a student issue; it’s a business issue as well—one that the sooner you address, the richer you’ll be.