Compensation Consternation: Inside the Struggle for Paid Internships

Amid imperative internships, lofty entry-level job requirements, and financial insecurity, too many students find themselves between a rock and a hard place. THINK takes a closer look at unpaid internships and how they can be transformed into more meaningful experiences.

You need experience to land a job, but you can’t gain experience without first having a job. For today’s recent graduates, this catch-22 serves as an eye-rolling right of passage into the working world. One bids farewell to quizzes and essays to plunge into a new realm fraught with imposter syndrome and corporate jargon (what is actionable, scalable synergy anyways?). Unfortunately, any potential humour is lost on young people whose career trajectory, financial security, and well-being are at risk.

For many students, ‘experience’ before full-time employment comes as internships. Besides establishing the foundations of their résumé, internships teach students the practical applications of their studies and introduce them to professional networking. Yet for such a necessity, the path to securing an internship is riddled with barriers. Students not only need to find work but also make sure that they can support themselves throughout the internship after the chore of locating, applying, and interviewing for dozens–even hundreds–of listings. Finding a position that fits one’s area of interest is one matter, but finding one that accommodates one’s level of expertise, competing involvements, geographic constraints, and financial means makes for a grueling and disheartening process, even more so when the only internships that fit the bill are unpaid.

On the origin of trainees

Is this struggle a new phenomenon? Well, the concept of internships certainly is not. Centuries before the dawn of automated résumé screening, they existed as apprenticeships. Young people would provide unsalaried labor in return for expert mentorship, often in trades or arts. Here, knowledge and technique (as well as lodging and other necessities) was the form of payment to apprentices, not coin. Fast forward to today, and this concept of learning by doing persists, having pervaded nearly every industry imaginable.

With a recent explosion of internship offerings, such ‘outside-the-classroom’ experiences have become so crucial that they may as well be mandatory for graduation – and oftentimes they are. Internships are now seen as a tacit requirement by potential employers where university degrees used to suffice. This elevated bar of entry is further evidenced by the myriad (and equally amusing) online job listings for so-called ‘entry-level’ positions that demand a befuddling two to five years’ relevant experience. In short, internships are the new entry-level jobs.

Questions of definition

For too many students, the expectations for ‘experience’ seem callously unfair, particularly so when supporting themselves financially becomes a challenge. Is there an arrangement that could better benefit both employers and those seeking experience?

The choice seems simple: ‘#PayYourInterns,’ Twitter roars. Problem solved! There should be little opposition to the notion that a worker gets paid for their contributions. Except, if the issue were so clear-cut and agreed-upon, surely this system would have met its end by now. Still, many companies and institutions are reluctant to do so; look no further than the UN’s current internship scheme that advertises two-to-six month, 35-hour-per-week, non-remunerated positions. Such is the price of placing ‘UN intern’ on your fledgling résumé.

Employers contend that on-the-job experience is more valuable to the intern than the intern’s work is to them. As such, internships are framed as an educational experience for students to dip their toes into the real world.

One might be tempted to point to the perceived illegality of unpaid internships, but the keyword here is perceived. Employers face no pressure to compensate students as long as each party has agreed to the conditions of the experience. This latter term, ‘experience,’ is also critical to clarify, since employers rarely classify their interns as ‘workers’ who do ‘work.’ 

Instead, employers contend that on-the-job experience is more valuable to the intern than the intern’s work is to them. As such, internships are framed as an educational experience for students to dip their toes into the real world. Employers thereby liken themselves to an education provider rather than a place of contractual employment – just as a student pays to attend university, employers will argue, students can be financially responsible for this form of immersive education.

To paint each and every employer as a bogeyman clambering to squeeze free labor out of naïve, bright-eyed youngsters would be a thrilling yet imperfect comparison. Companies face expenses and limitations like any one person does. Granted, businesses by nature seek the greatest returns at the lowest expenses. There now exists a defined minimum wage and extensive labor laws for the simple reason that if businesses could, without impunity, reap labor from employees at costs that amount to a rounding error, many would do just that. Thankfully, interns today are more likely to develop carpal tunnel than lose their hand in an unregulated 19th century textile mill.

The great debate

While some advocates for retaining unpaid internships argue that interns should simply manage their finances better or vacation less, others present better founded and less patronizing arguments. A frequently cited reason for withholding payment for interns is that, for better or worse, interns are considered unqualified for full positions, even entry-level. Employers are understandably reluctant to allocate funds for individuals whose talent and work ethic are not yet proven in a professional setting. Instead, they advertise efforts to coordinate with students’ universities and encourage students to exchange internship experiences for course credit in lieu of payment. The more generous among them may even set aside a small stipend. They also enthusiastically tout the experiential benefits of internships that cannot be learned in the classroom.

but to deny payment on the grounds that the intern’s contributions are insubstantial should challenge the existence of that internship altogether.

However, much of this reasoning buckles under additional scrutiny. For starters, the onus is on employers to select promising individuals for their program to benefit both parties. If a suitable candidate isn’t found or recruitment funding poses an issue, offering an internship at all is probably not in the employer’s best interest, since neither they nor the intern will adequately benefit from the arrangement. After all, internships are framed as an educational experience, meaning an earnest effort from each side is necessary to ensure an intern is properly trained. Admittedly, not all internships are created equal, since they vary in terms of intensity and required expertise, but to deny payment on the grounds that the intern’s contributions are insubstantial should challenge the existence of that internship altogether.

As for offering course credit, this transaction should not distract from the fact that students pay for credits. In essence, the setup amounts to paying to complete an internship. Such an arrangement may be rational in countries with affordable tuition schemes, but it poses problems where the cost of higher education is greater, such as in the US with its infamously astronomical price tags that climb to thousands of dollars per credit-hour. This consideration sheds light on perhaps the gravest concern of unpaid internships: they exacerbate social and economic inequality.

Cyclical disenfranchisement

Who is able to take on an unpaid internship? Simply, students who have the ability to forgo payment by securing a scholarship, working another part-time position, or benefitting from existing financial support. Students lacking a strong support network must make tough financial decisions or else forfeit their search and resort to a less relevant and less desired job to pay the bills. In a world where internships are expected, failing to complete one means that these same students are later viewed by potential employers as less qualified than peers who were able to do so. In the end, privilege often begets prestige, whereas those without a leg up seeking to climb the ladder find theirs missing rungs.

Although internships are deemed essential, studies show that unpaid internships actually correlate with impaired short-term career success versus their paid counterparts

Oddly enough, though internships are deemed essential, studies show that unpaid internships actually correlate with impaired short-term career success versus their paid counterparts, which more often lead to full-time positions. In fact, according to one 2015 study, unpaid interns ended up earning lower salaries post-graduation compared to peers who completed no internships whatsoever, despite employers indicating their preference for hiring applicants with relevant experience. When it comes to the numbers, unpaid interns paradoxically (and tragically) take a post-graduation hit in spite of their tenacity.

One would think that poor public perception and damning raw data should constitute a nail in the coffin for the practice, so what keeps unpaid internships kicking? First, the power differential. Employers don’t face a demand to compensate interns when unpaid internships are offered under a peculiar guise of charity. No lone second-year can hope to take on a multinational corporation and demand payment when that corporation can simply proceed to the next applicant willing to work for free.

This leads us to the second reason: desperation. Students are increasingly compelled to complete internships. Even if a majority of applicants banded together in a union-esque manner, there will always remain those willing to gain experience at whatever cost. Employers face no recourse thanks to near-constant demand, and if berated for appearing exploitative, they can explain that interns knew what they agreed to.

Looking forward

After decades of debate and heated op-eds, it seems the time for change may have finally arrived. One champion at the forefront of the fight is Carlos Mark Vera, founder of the American non-profit Pay Our Interns and a leading proponent of the not-so-radical notion that interns who dedicate their time and energy to an employer should be financially compensated. Vera recalls his experience as a student from a low-income, immigrant background interning without pay in Washington, D.C.: ‘I had to do a part-time job and then take six classes as a 17-year-old [while] interning over 30 hours a week. I remember those days of just fighting not to fall asleep, always doing my internship or walking down the hallways of Congress and realizing that no one looks like you except the custodian.’ Determined to make sure other students avoided his situation, Vera’s non-profit, whose slogan is ‘Experience doesn’t pay the bills,’ has been integral in convincing the US Congress to devote over $25 million to support interns working on Capitol Hill.

And he’s far from alone in the effort. Across the pond, the European Parliament voted in October 2020 to condemn unpaid internships within EU institutions. In recent years, numerous grassroots organisations have formed worldwide to advocate for intern pay and help students find and secure meaningful, remunerated experiences. While promising, these changes aren’t imposed on for-profit companies, who still do not pay 43% of their interns as of 2019. Even though the call for compensation seems like a no-brainer from a moral perspective, a sobering report from the US-based National Association of Colleges and Employers concludes that ‘[w]hile unpaid internships remain controversial within both the court of public opinion and the field of student development, they are not likely to go away anytime soon.’ The time is now to reconsider what companies truly want from interns and vice versa.

Employers must appreciate that paid internships provide mutual incentives: one for interns to be committed and productive during their stint, and one for employers to actively include and educate interns so that the experience actually prepares them for the job later on. Unpaid interns report feeling unsatisfied with their experience more often than their paid peers. Knowing that an employer views you as a valuable resource, not merely a means of discharging menial tasks, should undoubtedly lead to a worthwhile experience and quality work. By investing in their interns, employers benefit from their interns being reliably committed and involved. As a result, payment is more likely to lead to both parties’ needs being met. The responsibility is on employers to nurture talent through fair treatment.

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