Are Unpaid Internships Mere Exploitation?

By Eric Reed

NEW YORK ( MainStreet)--The data is in on unpaid internships, and with pretty nasty results. The practice broke into the headlines a little over a year ago with a set of labor suits against Fox Entertainment and Gawker Media filed by former interns alleging that they were owed back pay for what amounted to menial positions. Since then the critics have piled on, painting a picture of exploitation and abuse by companies simply looking to hire de facto entry level employees while saving a quick buck.

The standard, in fact, does seem fairly damning. According to Department of Labor guidelines, an internship can only qualify for work without pay if it meets several fairly rigorous standards. These include training similar to an educational environment, not displacing any other employees and "that 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."

So how many interns honestly do work that's of no value to their employer? Sorting mail might not be glamorous, but if the intern doesn't do it someone who's getting paid will.

According to data, there isn't even a pot of gold at the end of this rather shabby rainbow. Recent studies from the National Association of Colleges and Employers (NACE) suggest that students who take on unpaid internships do no better on the job market than those who had no internship at all, and considerably worse than those who got paid.

The data seems conclusive and the result seems not only inevitable but also intuitive; even college students deserve to make their rent. Yet data that seems conclusive on the surface can mean something very different once you start to pick it apart, just as it does here.

It's a problem of missing the trees for the forest or, in other words, deciding that because some of the picture looks bad, all of it must be. According to Philip Gardner, director of the Collegiate Employment Research Institute at Michigan State University, condemning unpaid internships altogether misses the real point.

"There's different reasons that students get involved with unpaid internships," Gardner said. "If they're good internships, whether they're paid or unpaid, if they're designed well and its working for the student and employer, then both sides gain from it."

The problem with the recent media blast against all of these programs is that it throws away the good along with the bad. I'll be the first to say that many of the unpaid internships out there are not only exploitative but also deeply illegal. However many are genuine opportunities for students to learn, grow and get experiences that they otherwise never could have had, and the data just is not one size fits all.

For a student trying to decide whether or not to take a particular position, here are a few criteria to consider.

Job Prospects

One of most often cited benefits of the unpaid internship is its supposed connection to employment down the road. Although companies are barred by law from making any promises of employment, there's a sense that taking this job is part of paying your dues.

You make the sacrifices now, and they reward you later. As the link between offers and dues-paying has seemed to weaken, people have begun arguing that if these programs can't even help you get a job then what good are they?

Unfortunately, this mechanical approach only tells part of the story. An internship isn't supposed to be a linear relationship between work and reward. That's part of the reason those promises are banned in the first place. What's more, the big-picture data lumps all industries and internships in together, which is a little like running a study on entry level positions that includes both the fry cook at McDonald's and a first-year attorney. Just because lots of people are fleeing the law office, doesn't mean that fry cooks are particularly unhappy, it just makes the data look that way.

One person who has seen this in action is Genevieve Harclerode, Assistant Director of Experiential Learning at the University of Michigan Career Center. According to Harclerode an internship, paid or otherwise, can have immense value beyond the immediate possibility of a job offer. They offer students an opportunity to test a field and try their interests, figuring out what works and what doesn't.

One of the major benefits to internships, Harclerode said, is "the ability of a student to say 'I'm certain this is an industry I really want to work for...' That's a place where having previous internship experience is valuable. I think it's helpful for a student to be able to be clarified in terms of their own job search."

Students might enter a position certain that they want to work in arts, business or government, but nothing actually prepares you to make that decision like seeing day-to-day life inside that field. After all, from the outside looking in, we only see the highlight reel. Showing up in the office lets a student see what life is like at 2 p.m. on a Tuesday, and that might be an entirely different story.

As to the data showing that unpaid internships don't necessarily correlate to job offers, Harclerode said that this may not just be because the student didn't get an offer but because he didn't want one. These statistics don't take into account the significant number of students who feel that something was a poor fit for them and decide to try something different. They'll still show up as just another unpaid intern who didn't get a job.

The data also don't tell the whole story regarding industry specific practices. While many companies don't hire from their pool of unpaid interns, others absolutely see it as the first step in their recruitment process.

"We do work with a pretty good cross section of employers who are quite intentional and very deliberate about the fact that they are trying to be very smart about the student that they hire as interns, because that is the group that they're trying to draw from for the largest number of offers for full time employment," Harclerode said. "Some organizations are very intentional about the fact that an internship within their organization is the most direct pipeline into their full time talent."

Although an unpaid internship might not necessarily lead to job offers across the board, that doesn't say anything about your interest in a particular field. Some industries or companies absolutely do see it as a stepping stone, and some even see it as a crucial first step in the recruitment process.

Job Training

These job prospects are often fed by the idea of an intern gaining work experience. Some industries need their employees to have some sort of knowledge before showing up for their first day of work, and often that's the kind of training you can't get in the classroom. Many internships offer that but simply could not do so if everyone showing up for his on-the-job education could collect a paycheck.

"The majority of students that are in unpaid internships, they are in areas that they want to enter professionally and to have practice in those fields and training in those fields is required," Gardner said. "If we sacrifice unpaid internships on this altar, then we'll probably damage them because a lot of these internships will have to go away"

Fields like social work, teaching and medicine have long required not only education but also some hands on training before beginning to practice. In fact, oftentimes undergraduate students preparing for medical school will have to get direct experience in the field as part of even applying for their degree at all. The problem is that these students have relatively little to offer an employer, since they're still being trained, and often are trying to enter cash-strapped fields to begin with.

According to Gardner, these positions fit the ideal model for an unpaid internship: one where the student walks away with a significant, useful educational experience in exchange for her time and service.

"A lot of the practitioners in health have to have experiences built into their applications for these degrees, and they're labeled now unpaid internships," Gardner said. "Health care's not going to take on those extra costs if unpaid internships are banned."

If nothing else, mere exposure to a professional work environment has enormous benefits in and of itself. Many college students will have never worked in an office before and, according to Harclerode, learning the ins and outs of a professional environment is often invaluable in its own right.

On the other hand, some sectors have simply come to prize industry experience for its own sake, without any tie to education or skills learned on the job, and these are often the ones to watch out for.

"You have sectors of the economy where they don't pay entry level people anything," Gardner said. "It's a story that results in memoirs and everything of how I became an actress or a great writer because I had to spend five years waiting for my big break, but that's a mindset... that's a culture and they believe it."

The problem is that this culture allows companies to create positions which, in fact, give nothing at all to the student. Rather than developing practical skills or advancing their career in a meaningful way, these positions simply take advantage of someone's enthusiasm for a particular career. They offer the promise of "access" or "exposure," as The Huffington Post calls declining to pay its writers, and leech real, commercial benefit off of vague promises that now you're in the industry. This is a real problem for some positions and commonly leads to our third topic.


The common impression of the unpaid internship is that it's a vehicle for wealthy students to crowd out the competition. As the law firm Outten & Golden says, it "fosters class divisions between those who can afford to work for no wage and those who cannot." Unfortunately, this notion of gadflies crowding out the bottom and the middle has little support in the data.

According to a study released by Michigan State University, not only does wealth not crowd out the marketplace, but in fact the exact opposite relationship occurs. Students coming from a family making less than $80,000 per year were 6% more likely to participate in an unpaid internship than those coming from a family making more than that.

"Most of the students that are involved in unpaid internships are not from really high income families, families with more than $120,000 income," Gardner said. "They're mostly from lower income families."

Harclerode pointed out that many universities, including her own, offer some form of assistance for students who can't afford to bear the costs. Whether it's counseling on how to manage finances, help negotiating some assistance from an employer or outright financial aid, many schools help students level the playing field. The result is a reality that's far less unequal than intuition would make it appear.

That's not to say that there isn't exploitation at work, however.

While the bulk of unpaid internships are offered by small and non-profit organizations that couldn't afford to hire someone otherwise, a significant number still come from large organizations or for-profit companies. According to Gardner, it's these groups, the ones which can afford to pay but choose not to because of the competitive nature of their industry, that have created the crisis at hand. Ordinarily these internships come from high demand sectors, like arts, media or the federal government.

"Less than 12% of the internships in those fields are unpaid and they're the ones that the court cases are about," Gardner said. "Those are the ones that they're going to talk about, because ESPN makes a hell of a lot of money and they're not going to pay their interns anything."

Perhaps the most egregious remains the position offered two years ago by the U.S. Attorney's office seeking licensed attorneys willing to work free for one year in a federal prosecutor's office. In exchange for a year of rent free labor, the lawyer got a hearty handshake and a line on his resume.

The bottom line is that students should be aware of who they're signing up to work with. If a company clearly could afford to pay, or tends to bring interns in to do all of its grunt work in exchange for "industry experience," it's a pretty good indicator of the attitude they'll have towards you altogether.

Ultimately when any position is right for you is all a matter of taste, preference and career goals. However it's important to remember that in all of the media hype surrounding the downsides to unpaid internships, they do serve a very valuable purpose. Working for free can help students to build valuable skills and launch a career, or can let them work with cash-strapped organizations who otherwise couldn't afford to bring anyone on board.

These programs can have a lot more impact than statisticians can measure. Just make sure you pick the right one for you, and don't be afraid to walk away if you're not getting as much out of it as you're putting in.

Written by Eric Reed for MainStreet

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