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April 06, 2010
Economics of the Unpaid Internship

The Labor Department has launched a scare campaign to goad for-profit employers into compensating their interns. Yet, this “pay them or else” message may backfire, driving companies like Strategic Communications Group (Strategic) to simply kill their long-standing internship programs.

In recent articles in the New York Times (http://www.nytimes.com/2010/04/03/business/03intern.html?src=me&ref=business) and Time Magazine (http://www.time.com/time/magazine/article/0,9171,1977130,00.html) the US Labor Department has clearly articulated its dour view of the unpaid internship.

Nancy Leppink, the acting director of Labor’s wage and hour division told the Times’ Steven Greenhouse, “If you’re a for-profit employer or you want to pursue an internship, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law.”

This government view has been applauded by the defenders of student rights. Robert French (http://www.linkedin.com/in/rdfrench) -- a faculty member of Auburn University, blogger at Infopinions and creator of student PR network PR OpenMic – weighed in with his kudos:

“We're happy to see national coverage of this scandal. PR agencies and all others, take notice. It is very unlikely that your unpaid internships are legal. Give these students the respectful treatment they deserve.”

Strategic does not and will not provide monetary compensation to interns when they first join our organization. This decision has nothing to due with respect; or wringing profit off the backs of uncompensated workers; or an attempt to make today’s student adhere some dated, fraternity-esq requirement of “paying your dues.”

Rather, it is about the economics of hiring and our ability to deliver value to a client. When Strategic makes an offer of employment we are projecting future results based on a track record of performance.

Plus, the experience a prospective hire has gained in other professional environments establishes a level of comfort that this person will represent our firm well when interacting with clients, while serving as a positive contributor to our culture.

When dealing with a student who, in many instances, has little (if any) relevant industry experience the hiring criteria becomes trust-based. And, in my opinion, the opportunity to gain a meaningful portfolio of work becomes fair and acceptable compensation.

Of course, Strategic quickly steps up and pays an intern once they’ve proven themselves and desires to stay on with the firm. This typically happens in three months.

In fact, one of our outstanding full-time employees (http://www.linkedin.com/in/emarr) rose to his current position through our internship program. Plus, we’ve had a number of other interns advance to profile positions at communications consultancies (http://www.linkedin.com/in/stephaniebostaph), PR firms (http://www.linkedin.com/pub/jennifer-friedel/3/613/681) and corporate marketing departments (http://www.linkedin.com/in/jenniferlavin).

In no way am I defending organizations that view their internship program as akin to slave labor. It’s the responsibility of the company (and the intern) to ensure that the scope of activities is comprised primarily of meaningful, portfolio building assignments.

Yet, take notice…if the Labor Department makes good on its promise then I assure you we’ll be intern-less at Strategic. And that’s a lose-lose for everyone.

Marc Hausman is president and CEO of Strategic Communications Group, a public relations and social media consultancy based in Silver Spring, Maryland. Read more at http://www.strategicguy.blogspot.com.

comments, Post A Comment!

toniantonetti posted 04/12/2010:

We offer paid internships because if the students aren't paid, there's no incentive to even come to work. Even in this supposedly poor economy, the students don't show for interviews, and sometimes quit because they can't find their way to an event. They also expect to be supervising and writing immediately, rather than learning the biz from the ground up. I can't imagine what we would get if we didn't pay the students at all.

SunshinePR posted 04/12/2010:

I just think back to my days as an intern and I NEVER expected to get pay. The expecations were set: do an internship, gain credit and get on-the-job experience. If it wasn't for my unpaid internships, I would have never landed my first role out of college. I has a portfolio of great work, great references from the people I worked with and could it the job running in an entry level position. The NLRB needs to really think about what they are doing - it could very well force those companies who do have internship programs to cut them, leading to a group of students graduating with no practical experience and an overabundance of entry level jobs without entry-level talent to fill them.

EllenP posted 04/09/2010:

Our past interns worked here through arrangements we have with their universities or trade schools and received school credit, plus valuable OJT. Many of them, not all, had to have schedules that allowed them to work PT jobs elsewhere. If we have to pay interns, I don't know how that will affect our internship program. (I steer clear of HR stuff.) But, my guess is we would discontinue the use of interns. The California State University interns (from two nearby campuses) will probably be OK without it. But internships are a key component of the trade school whose interns we work with, and for those at a health care trade school client of ours. I would hate for those two schools to lose their ability to place interns.

jrandrews79 posted 04/08/2010:

I haven't read many of the comments except a few and wanted to put my two cents in: Some of us can't take unpaid internships because we need income while going to college. Unpaid internships are last on my list because I can't go to mom & dad to pay my rent all the time. I'm from a low-income level family and had to work my way through college which hurt my grades in school. Also its unfair IMO for for-profits to not pay when we go to college (which always has tons of homework), work for them and then most of us have to get a job outside of that to have income. Companies need to realize we have to have income for food, bills, other expenses and can't always depending on our parents. All you need to do is give us minimum wage. I have yet to get me a internship in PR because I have to go only for paid ones and compete against all my classmates & other pr majors out there in my state. I have more success finding internships in my other field of event management where I am on my third internship and interviewing for another internship next week (not sure if they are considering me for their event or pr internship since I applied for both).

CatherineT posted 04/08/2010:

As a career coach, I always advise my clients who are in college to find internships (starting in high school if possible). However, there are internships and there are volunteer jobs. And I think internships should be compensated financially and/or with educational rewards. Internships should be at the least... linked into an education... for credits. They should be structured to reach defined benchmarks and goals, related to exposing the intern to that business. Volunteer jobs are usually less structured, more project-oriented, and should be more flexible on a day-to-day basis. Plus, many volunteer jobs seem to be related to helping out for a cause about which the volunteer is passionate. If an employer is asking a student to join their team to do meanial tasks for no money or educational benefit... I'd advise that student to look elsewhere! Let's face it...if a candidate puts a job like that onto his/her resume ... and are asked in an interview to describe that 'internship', the interviewer will probably see little or no value in that intern's experience if it offered nothing that helped to prepare the candidate for the job at hand...in fact, the interviewer may even wonder why the person put up with it! I'm all for paying our dues...but I'm also keen on there being two sides to a relationship-- and the best relationships I know of are giving and demonstrate mutual respect and support for each side.

CaseyZ posted 04/07/2010:

The government should focus more on assisting students with tuition and the other costs associated with going to university. Running an internship program also requires some use of internal resources (someone has to find work for the intern to do and show them how to do it and supervise them). If companies have to pay said intern at the same time, most companies won't even bother hiring them in the first place. Bottom line being there will be less internship available making it harder for students to get their foot in the door.

jeremy posted 04/07/2010:

If unpaid internships were so bad, then no person would voluntarily participate in them. If you are a student and making lots of cash is your priority, then you are welcome to get a job waiting tables. Lots of students in fact choose this option. However, others defer their desire for money to the future in order to make a long term investment in themselves. School is an example of this and so are internships.

Boomer1955 posted 04/07/2010:

I'm a college instructor with more than 20 years of PR experience who supervises internships. I have also taken unpaid internships as a student myself. Here's my view. I think an unpaid internship is fine if the student is receiving college credit for it. In fact, I know organizations that will not accept interns without verification they will be receiving credit. In this situation, there is an agreement between the intern, the provider and the school. The internship location becomes a lab classroom, and the supervising professor has oversight via site visits, chats with the supervisor, and regular reports from the student. We can make sure the student is exposed to learning opportunities and can use knowledge gleaned in the academic setting. We require a job description before assigning an intern to that organization. If one of my students tells me that her internship supervisor won't let her attend meetings or participate in media events, when that's on her goal list, then I can get on the phone and ask what's going on. We can weed out those internship opportunities that turn out to be less than ideal. When working closely with the university, the internship provider is less likely to put the kid to work at only meaningless menial tasks that have no learning value. Good internships for credit become meaningful partnerships between the student, the company and the university, with a win-win for all. If the intern receives pay in addition to meaningful experience and college credit, that's wonderful. But I don't think it needs to be a requirement, as long as the student gets credit. The problem I have with unpaid internships is that those not for credit often are not learning opportunities, and the student has no recourse. I know for a fact that some internships are promoted by opportunistic companies out to get free labor when they should just pay the kid minimum wage to do the kinds of menial tasks they end up doing. I've seen time and time again students complaining about working slave labor at an "internship" where they are not exposed to any strategic decision-making, no client interface, no team projects, and never get to do any work other than make copies or distribute the mail. Even though I tell them to read everything they copy, that's not a learning environment, that's a company using a kid who's desperate to get any experience at all on their resume. It should be illegal to make someone work for free if they are getting no value out of it in return. I hope the NLRB looks into these practices, but I also hope they make an exemption for internships taken for college credit. Anything else needs to be accompanied by a paycheck to keep unscrupulous employers from using people for their own gain.

jeremy posted 04/07/2010:

If unpaid internships were so bad, then no one would voluntarily participate in them. My company pays interns, but that's because we find it brings higher quality candidates. Every situation is different, but there is no need for rules and regulations here.

faithn2009 posted 04/07/2010:

I have to agree with Marc and Tim on this one. This is not a "class" issue (rich or poor). If students start getting paid for their internships, then it's no longer called an "internship." And in these non-compensatory relationships, they ARE getting compensated for their work by gaining practical work experience in a corporate environment and probably in a field for which they are studying, among other things. I also feel it's wrong for the Labor Dept. to mandate this, and if they do, I'm afraid Marc is right, it would be a lose-lose for everyone.

Tuftshealthplan posted 04/07/2010:

I'd like to offer a different twist to the "typical" intern profile as a related tangent to this discussion. As a non-profit organization (Massachusetts health plan) we strive to be creative to stretch our communications budget. We tapped our local women 's communication group for a professional who was looking to return to the workforce after many years away. In this economy, we were hoping to give an opportunity to someone who needed to refresh his/her resume with current experience. We hired a terrific candidate, who had worked in television in a small market and has been home raising children. She has a bundle of great skills, and we are teaching her new ones, specifically related to technology. We have been abiding by state law that requires we pay at least minimum wage. Now that she has demonstrated her talents, we will be compensating her more fairly for the remainder of her internship. I hope this offers food for thought for those wanting to hire interns but have a limited budget. This is a win-win for all of us.

ion1 posted 04/07/2010:

We follow strict University guidelines and pre-requisites. Therefore our interns are usually Juniors or Seniors. No pay and their duties are to earn college credits so therefore, they are not placed in labor that no one wants positions. they are learning from dept heads and have specific duties. According the the University requirement for usually a 3 credit for Summer. Post Grads are not considered for Internsips. as they would be considered a candidate for employment.

gschlee posted 04/07/2010:

You assure us that your decision to not pay students "has nothing to due (sic) with respect; or wringing profit off the backs of uncompensated workers", yet that appears to be exactly what you are doing. Spending extra time with the interns and letting them generate some pieces for their portfolios is somehow seen as adequate compensation for three months work. It's a persistent problem, usually perpetuated by employers who feel they 'paid their dues' in their own special way in a bygone era. Thank heavens many for-profit PR organizations view interns with more respect than that.

deborahdawn posted 04/07/2010:

If for-profit companies are expected to pay interns, why not the White House or Congressional offices, etc.? All of those internships are unpaid. Many people probably wouldn't want their tax dollars to be spent that way... And many for-profit companies' clients don't either - in fact they put it right into the contract. Yet few companies want to take a risk on a new full-fledged employee with little or no relevant experience making it impossible for some candidates to land their ideal entry-level job. I have to say, if a student or other new-to-the-workforce candidate is willing to work in an unpaid position for a limited time to develop skills and get their foot in the door with a company they want to work for, more power to everyone involved!

gschlee posted 04/07/2010:

You indicate that "This decision has nothing to due (sic) with ... wringing profit off the backs of uncompensated workers", yet go on to say that your organization essentially does just that. Do you wait three months before paying all new hires, or just the students because they have limited track records and a strong desire to build their portfolios?

bpfeiferharms posted 04/07/2010:

I've had an unpaid internship program at one nonprofit and now a paid program at my current nonprofit. Both have been successful (though I get more resumes now than I did w/the unpaid one - no shocker there). i agree internships should be portfolio and skill builders first and foremost, and that this truly can be even more valuable than pay (aren't we more likely to hire a newbie w/intern experience over one with only classroom work? And do we care if they were paid?) I've run into colleges that require internships to be unpaid in order to get credit - so that would have to change if there is a federal mandate. At my previous nonprofit, I would never have had interns if pay was required; nonprofit budgets often cannot accommodate even a meager additional salary (w/o benefits) outlay. I've never been able to even dangle the hint of a post-internship job for interns, but why should that matter? Even with a full-time job situation employers can rarely guarantee job advancement; why should interns expect it?

valarie posted 04/07/2010:

When I was at school, it was very clear that the people who benefitted most from unpaid internships were the kids who already had money. Because they came from money, their parents usually had connections to get their feet in the door to begin with. Because they didn't have to worry about juggling their course load and a job, they could be much more flexible and accommodating to their employers. And when they graduated, their experience from the internship gave them a leg up on the job market over those who had to work to get through school. The kids who suffer most, then, are the kids who have to earn their own way, and they already know a whole lot about sacrificing and putting forth effort. But the kids who have skated through life, the ones who could probably stand to learn a few life lessons, just keep on skating.

cclamz posted 04/07/2010:

Just another example of big government enacting legislation with considering (or having any understanding of) unintended consequences. This sounds a lot like the recent minimum wage increases. Sounds great in theory until you look at the fact that most of the people that work for minimum wage are teenagers. Due to the higher cost to employers, huge numbers of teenagers that want to work (or just gain some experience) can't find jobs. http://www.ajc.com/business/thomas-oliver-we-are-382530.html

ethanax posted 04/07/2010:

I understand where you're coming from, Marc. Certainly anyone who works hard will reap the rewards. But I think you are overgeneralizing the situation. For example, if I'm going to college in southern Illinois and want to take an unpaid internship in Chicago (where many of the best agencies are), once I move to Chicago it might take me a few months just to find a part-time job to cover expenses. By then, my internship is nearly over. Plus, even if I do work a part-time job, a lot of students depend on their year-round part-time income just to cover the costs of going to college, let alone expensive rent in the city. It's just not that easy. Plus, I still think there is a lot to be said for the QUALITY of students you'll get if you decide to pay. Do you think Target, General Mills, Delloite, etc. pay their interns? YES, of course they do. And some of the best college students seek those companies out. Those internships were highly desired when I was a student.

obpr posted 04/07/2010:

I forgot to mention in my last post, I have a son who will take an unpaid internship in government (not in communications) next fall. I am paying for the college credit he will receive. My son and I view this as win-win. Like Marc, I was decidedly on the low end of the economic spectrum when I did my unpaid internship at a TV station, went to school full-time and worked three jobs. Given that experience, I am passionate on the need for today's college students to have a work ethic and a willingness to make the necessary sacrifices and take the necessary risks to compete and win in the jobs marketplace. If a student has no guarantees and learns that a particular field is not right for him/her it was well worth the unpaid experience. Ethan, much hyperbole there. Truth is some of the best internships are unpaid and well worth it for the interns. They draw the best talent and oftentimes hire that talent. On the issue of working just any job for money versus an unpaid internship in a chosen profession, there is little argument as to which is best for career development - it's the unpaid internship where the experience is priceless.

MarcHausman posted 04/07/2010:

@ethanax - while I respect your passion, I have a different take on this issue. When I was in journalism school at the University of Maryland, I took a full class load, held an unpaid internship, and worked as a waiter at nights and on the weekend. I had to earn money to pay for a shared apartment, food, expenses, etc. Was it a lot of work and draining? Yes! Yet, the pay off for me has been rewarding. Let's not cry for how tough students have it. They actually need to put forth effort and make sacrifice to achieve their professional goals. Sounds like an important life lesson to me.

ethanax posted 04/07/2010:

I am very passionate about this topic. You need to remember the student is taking a risk, too. In many cases, the student has to pay for living expenses, such as apartment rental, food, gas, etc., while working the internship (particularly in the summer months). Also, no matter how hard the student works, there is not guarantee the internship will be a rewarding experience and there is no promise positions will be available at the end. Perhaps the biggest crime of unpaid internships is they perpetuate the division of social class. If only rich kids can afford to work for free, then only rich kids will get the internships. There are no scholarships to cover room and board. Unpaid internships are wrong - bottom line and end of discussion. For students out there, please keep this in mind: in my experience, you will learn just as much, if not more, working a real minimum wage job. Internships aren't the only place to learn lessons about the working world. Futhermore, for employers out there, the BEST students are going to seek out the best opportunities. If your competitor pays their interns but you don't, who is going to recruit the best talent?

obpr posted 04/07/2010:

If a student is paying for a college education and receiving college credit for the internship, then the internship is nothing more than a real-world classroom for participants. It is understood that managers and employees will spend extra time (non-billable) by making an investment in the interns and their educations. In return, the interns provide low-level services. It is a form of bartering that has worked for decades. The NLRB is now taking the view that there is no value exchange and operates on the assumption that the student/intern receives no value for participation. This shows no understanding of the non-compensatory relationships that exist in both education and business. I understand where you are coming from. If the NLRB backs its bark up with a bite, the market for internships will take a huge hit and the quality of entry level talent will be greatly diminished across the board.