The economics of internships

February 17, 2011


The haves and the have nots are delineated in multiple ways through our polite society here in America. That separation is apparent to a significant degree when it comes to the opportunities available to the folks we are counting on to pull us out of the ditch we’ve found ourselves in after the nuclear winter of sub-prime mortgages and the supposed near collapse of our financial system. They are, of course, our interns.

Internships are seemingly thankless jobs, but they are often a rare golden ticket to a path to highly sought after positions. The issue is that most of these jobs are non-paying, making them unaffordable for those who don’t come from a privileged background. When one must toil through 12-hour days, with tasks ranging from the banal (fetching coffee) to somewhat skilled (fetching data,) it doesn’t leave time to take a second job to support their dream. This creates a very real societal structure that locks out those on the lower rungs of society from pulling themselves up. The American Dream requires more than a little help from friends and a well established and generous family.

Aside from the fact that this practice only allows children of upper middle to upper class families the opportunity to take these coveted jobs, it may even be illegal. In a New York Times article back in April of last year, it was noted that number of unpaid internships had seen a significant rise in recent years, leading the New York labor commissioner to launch an investigation into several firms.

Many of these companies are quite bold. Jezebel, the woman focused vertical of Nick Denton’s Gawker Media network, put out a bat signal for unpaid internships to help launch their upcoming “Book of Jezebel” publication. This set off some chatter on the Tumblr blogging platform where many weighed in with their mostly negative opinions of how Gawker was perpetuating the unfair practice. One user noted how it is exactly the type of behaviour Jezebel seemingly would be looked to be taking a stand against:

“Jezebel should be genuinely upset about this too, b/c anytime there are structural inequalities like this it is women and people of color who feel the effects most of all.”

Is there an answer to bridge these inequities? Businesses have little incentive to comply if the laws are unenforceable. It seems that it’s nearly impossible to enforce these laws because the very interns who take the jobs will not report the firms because they don’t want to make waves that could disrupt their chances with future employers. The system continues because the few who are able to benefit are complicit with the system.

Perhaps the authorities need to randomly send out undercover interns to apply for jobs suspected of these unfair hiring practices. The threat of random applicants who could be an agent in disguise could give employers pause. It is, after all, not only a lost opportunity for someone who needs it more than the well off, but it’s lost taxable income for the fed and the state. The incentive may not be there for the employer to comply but in a country saddled with both federal and state deficits, any drop in the bucket by way of tax revenue can help bridge the gap.

If there were such rules, we all would benefit by having a broader base of well trained young people across the social landscape. In a country that has never had a more striking separation of those at the very top from those struggling to make their way from the very bottom, addressing this inequity couldn’t be more timely.

Photo: An intern for House Energy and Commerce Committee Chairman Henry Waxman sits with stacks of paperwork in anticipation of a committee meeting to mark-up health care legislation titled “America’s Affordable Health Choices Act of 2009,” on Capitol Hill in Washington, July 29, 2009. REUTERS/Jonathan Ernst


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It’s unfortunate that most internships do not pay, which gives the lower class student a substantial disadvantage.

I experience these issues personally while in college. The reason I never did internships were specifically for the reasons you had mentioned.

The upside to my situation was that my resume was stacked with job experience that not only included summer months , but also included my college years.
The downside, most of the jobs I held were not your “corporate” level positions that were as targeted within my major.
Be unconventional, think outside of the box, get your name out in other way, because at the end of the day everyone is partaking in internships except you. This already sets you apart from the rest. Ambition and hunger will get you further in life than a handful of internships. Just my thoughts.

Posted by rzeligzon | Report as abusive

Excellent reporting and ideas. I’m a child of an upper-middle class family and I worked this summer for next to nothing. I worked from the time I came home from college until a week before I had to go back home. I made less than a $1000 and launched five different websites, data, blogs, and Twitter accounts. In addition, I had to also coordinate gift bags and press packets as well as additional work employees pushed on me. The best part? There were four other interns and they weren’t paid. Imagine my discomfort when I found out they were getting no compensation (credits OR money) and I was! So embarrassing. The internship director at my college removed the company from our school database and pressed all of us (who happened to be from the same school) to sue our company for wages and abuse. None of us pursued charges (because the company was going down the tubes and literally barely functioned this summer). I guess it was a good opportunity to learn to research internships more and not just take something that seems interesting for face-value.

Posted by mp817 | Report as abusive

It’s not just a problem for college students. When I graduated, I applied for a paid internship with a well-known PR firm. While I was midway through the interview process, they informed me they were changing the internship program to unpaid. I withdrew my application.
I’m certain what they were doing was illegal. I was not a student; I had a degree and some level of experience from past internships. But I’m sure many graduates took on the internship because it was a big name, despite being totally exploited.

Posted by c86 | Report as abusive

Although this article is titled “The Economics of Internships,” I found it to be surprisingly bereft of anything that could be called “economics”. This author seems to be oblivious to the knowledge that the increase in non-paying internships is a result of wage controls. This amateurish oversight is painfully noticeable in the author’s proposed solution: “regulation” of the internship market.

Like all scientific laws, the laws of supply and demand simply cannot be wished away – regardless of how earnestly this author misrepresents the basic causal mechanisms that are relevant to this economic analysis.

Posted by acastillo | Report as abusive

I’m from a lower income background and I have already done one internship and already have one lined up for next summer. They were financially taxing, absolutely, especially when I was commuting into a city. Basically, I worked 4 days a week at my internship and as many hours as I could get at my part time job, often hopping off the train in the evening and going right to work. It’s not easy and I often got a bit resentful of the interns who didn’t have to work and would go out for expensive lunches/dinners/drinks after or during work, but when it came down to it, I made amazing connections.

I want to work in legislative government so when push comes to shove, an internship is a necessity for that field. It can be done if you are lower income, it’s just harder.

Posted by elovejoy925 | Report as abusive