Do Companies Exploit Students with Unpaid Internships?

The Economist recently published a thought-provoking article about unpaid college internships. The title - "Inferno for interns: the annual race to the bottom of the corporate ladder begins" - makes the theme of the article very clear. Internships (especially between one's junior and senior year) often provide a way for companies to evaluate students up close before making an offer for full-time employment; unpaid internships are certainly better, for one's future job prospects, than no internships at all. But can companies really not afford a summer intern for ten weeks? Or do they choose not to incur the cost because they can get labor for free? 

According to the author of a book on this very issue, which will be released next month, "[o]rganisations in America save $2 billion a year by not paying interns a minimum wage." (According to its Amazon.com page, the book offers the following joke: "How many interns does it take to screw in a light bulb? Who cares, it's free." Zing.) A quick Internet search reveals many articles and webpages on the topic of unpaid internships, showing a real concern among college students.

Last year, in April 2010, the New York Times published an article describing US regulators' worries that such internships are in fact illegal. The NYT article gives some of the criteria required for the internship to be unpaid, such as "the internship should be similar to the training given in a vocational school or academic institution" and "the employer “derives no immediate advantage” from the intern’s activities". (Worth noting: "when the jobs are mostly drudgery, regulators say, it is clearly illegal not to pay interns.") An interesting statistic is that "[e]mployers posted 643 unpaid internships on Stanford’s job board this academic year [2009-2010], more than triple the 174 posted two years ago."

It seems that in some industries, students feel they have to accept unpaid internships to get a foot in the door. And certainly, if there is someone who mentors them and shows them the ropes (provides an educational opportunity), that could be a valuable experience. But students should also realize that the name of a prestigious company alone will not help their career prospects if they can't say anything at the next interview about what they did at the internship, or if they admit they filed paperwork and made photocopies. This simply will not help them stand out compared to other candidates.

They would be much better off using their alumni network and inviting local alumni working in the field that interests them for a cup of coffee - alumni would, one hopes, be more reluctant to make a student from their alma mater sweep the floors and clean the door knobs (two examples from the NYT article, as experienced by students from top schools). They might be even better off taking a minimum-wage job at the local diner to make a bit of money over the summer.

Rather than worrying about putting the name of a famous company on one's resume, they should try to think about their own personal brand and create experiences that reinforce that brand. In the worst-case scenario, depending on their major, they could even try to contact one of their professors and volunteer for a project they could do from home over the summer - maybe a literature review or a small study for a marketing project, for instance. With so many resources online, including most academic journals available through the university library's website, college students could do a little research project from home, and develop their creativity and innovation in the process. That would be far better than making coffee for people who don't bother training them.

Comments

[Paul Rubin]

It would not shock me if a significant number (perhaps the majority) of internships really are exploitative. In some cases, though, the intern may be doing meaningful work that requires more of the supervisor's time than she would spend doing the work herself. The company gets the benefit of evaluating the intern for possible employment, as well as giving the intern a head start if hired, but if forced to pay for what amounts to zero or negative incremental productivity, the company may balk.

The other issue is budgeting. I don't know how often it happens, but I suspect that sometimes low level managers take on unpaid internships as a favor to the intern or his parents (or a professor). The company may not be interested in budgeting for interns.

Since it would be hard for the law to treat those cases separately, I'd be interested to know how often they occur.

[Aurelie Thiele]

Good points, Paul! I'd hope that, if someone at a company takes on an intern as a favor to a professor or the intern's parents, he'd really make sure that the student learns something, so that it would indeed be legal to have an unpaid internship.

I suspect some companies underestimate how eager college students are to show their worth, and thus assign them menial tasks instead of giving them a challenge. What a lost opportunity.

[Ilyaquant.wordpress.com]

The one thing that really bothers me about unpaid internships is that shouldn't a company capable of hiring people making 5 and 6 figure salaries (maybe 7) be able to part with the next-to-minimum-wage pay so that an intern would at least be able to cover rent and food in a city he may or may not live in?

[Aurelie Thiele]

Hi Ilya,
that's a very good question. There is also the issue of building long-term relationships - if a student is paid nothing and sweeps the floors (which is clearly an example of illegal unpaid internship, according to the articles I quote), he should share his experience with his friends and career services at his university. Whenever I hear of a company that is not treating my students well (even if it's just the result of the actions of one person rather than company policy), I become very reluctant to recommend that company to my other students.
Maybe providing students with a valuable internship opportunity (not exploitative, whether it's paid or not, although paid is better - companies, and people, tend to value more things they had to pay for) does not seem important short-term, but in the long run, companies that treat interns like dirt will not be able to attract the best students. Word of mouth is a powerful thing.

[Ilyaquant.wordpress.com]

Well, in my opinion, a company having the necessary work to intellectually challenge people between their junior and senior years in college should first and foremost go without saying (which unfortunately it doesn't--the work I did during my actuarial internship completely disenchanted me with the industry), but on top of that, I just don't like the idea that someone like me (who was being supported by just my mother at the time) would have to mooch however much money from parents to possibly have to rent an apartment/studio in an expensive city, without really getting a penny towards being able to pay for that room/board.

Generally, I'm of the opinion that interns should be able to cover their costs. That is, would it be so much to ask for an employer to be able to find an intern a proverbial "hole in the wall" and enough money to eat and maybe do laundry?

Odds are, if the intern got through the entire interview process, he or she should be able to at least add enough value to cover those costs.

[Santa Ozolina]

to improve the situation of interns, please support this initiative:
http://www.surveymonkey.com/s/Europe-Internships