Tuesday, April 6, 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 and Time Magazine 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 -- 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 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, PR firms and corporate marketing departments.

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 said...

Sharing an interesting exchange I had with a member of the MyRagan community about this topic:

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?

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.

cparente said...

Marc -- good post that explains our position on the matter. One more point to add -- most of our interns are getting school credit for the internship. So they are getting compensated, just not monetarily.