The Impact of Unpaid Internships on Interns the Economy

Are Unpaid Internships Becoming Obsolete?

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Unpaid internships have become more and more common since the recent economic recession. When evaluating, the growth of unpaid internships must be viewed in light of their effect on the intern and the overall economy.  When looking to eradicate all unpaid internships, it could have a negligible effect on students even though the Department of Labor’s Guidelines were drafted to protect interns from exploitation by employers.

On the other hand, a recent survey completed by The National Association of Colleges & Employers survey found that the benefits of a paid internship far exceeded those of where the internships were unpaid.

Some of the questions employers and students need to ask themselves are if the unpaid internship is legal and if they are violating any current labor laws? Is the work the student getting of benefit to them or does it focus more on helping the employer? What is the impact of unpaid internships on the economy as a whole?  There is also the inequality factor with unpaid internships since only students with financial means are able to do them because those students that are not wealthy need to make money for the summer.

According to The Department of Labor, the FLSA’s six criteria must be applied when making a determination if an internship is required to be paid:

  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.
  1. The internship experience is for the benefit of the intern.
  2. The intern does not displace regular employees, but works under close supervision of existing staff.
  3. 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.
  1. The intern is not necessarily entitled to a job at the conclusion of the internship.
  2. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

In the past, unpaid internships have become a common practice amongst companies. In order for an internship to be academic worthy, students doing internships in conjunction with their college coursework are expected to gain hands-on experience that helps them develop the knowledge and skills required to gain entry into their field; but the New Guidelines could affect the quality of internships since one of the criteria states the employer derives no immediate advantage from the activities of the intern.

The distinction that the New Guidelines are looking to enforce is that internships are for educational training rather than having interns do the work of regular employees. Many employers spend considerable time training and mentoring their interns and do not derive much benefit from having them complete an internship with the organization.

While other organizations expect interns to jump right in and do the same work as a regular employee. An unfortunate result of strict adherence to the New Guidelines and in interpreting the issue of the legality of unpaid internships could make it more difficult for students to find internships in the future.

The cracking down on the unpaid internship has recently come to light due to employers seeking free labor with no intent of hiring the intern in the future.  One of the benefits of an internship is the training and establishment of a professional network with hopes of being hired for full-time employment once the internship is over. The misuse of interns by employers has brought the issue to a whole new level, including recent lawsuits that have cost employers millions of dollars.

There are some instances where an unpaid internship still has its advantages such as providing a student with experience they could not get elsewhere along with the opportunity to establish strong networking connections with professionals in the field. Excellent recommendation letters are another advantage that would help the student gain full-time employment with other organizations in the field.  For nonprofit organizations unable to pay their interns it’s not an issue; but for for-profit companies looking to save money, they could find themselves in the middle of a lawsuit that would cost them much more than if they had agreed to pay their interns.

One things students should think about when considering an unpaid internship, is a recent survey completed by The National Association of Colleges & Employers (NACE) where they showed that paid internships have a higher chance of leading to a paying job as compared to unpaid internships, since most of the interns who received job offers from the employer accepted the positions. Sixty percent held a paid internship compared to 37% of those who worked for an unpaid one. It was also stated that unpaid internships tend to provide trainees fewer skills as opposed to paid internships.  A survey given by the Institute on Education and the Economy at Columbia University's Teachers College also found that paid internships provide a better experience for interns than unpaid ones. Of course, for some organizations they do not have the ability to pay. When this is the case, students must decide how valuable the experience will be to them and how much it will ultimately help them to achieve their future career goals.

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