Common Cents: The Benefits of Paid Internships

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by Lloyd Ambinder and LaDonna M. Lusher

Even before the onset of the 2008 recession, college students and recent grads have eagerly, if not desperately, sought out unpaid internships hoping to gain the necessary experience to land a paid job. Unfortunately, rather than provide a structured educational environment for interns, many, if not most employers treat interns like entry level employees without providing them any compensation. In the end, rather than acquiring critical experience helpful to starting their career, most often these unpaid interns end up doing menial work from cleaning the office refrigerator to running personal errands for their supervisors. All the while their colleges and universities continue to charge thousands of dollars in tuition for academic credit, while providing little or no oversight of the interns’ activities.

While it is not per se illegal for employers to provide unpaid internship programs, perhaps it is time to make such programs unlawful. Many unpaid internship programs do not come close to satisfying the U.S. Department of Labor’s six-factor compliance test that would render them legitimate. Complying with the DOL test is likely to prove burdensome and inefficient for most employers, particularly since a basic tenet prohibits interns from performing work that would benefit the employer or would serve to displace another compensated employee.

A common sense balance would be to compensate interns in a work environment that provides on-the-job training thereby benefitting the employer and the intern. Employers would be free to utilize interns as they see fit, and take advantage of their talents by having them perform substantive work instead of menial tasks. Employers could further assess the interns work performance and potential for full-time employment without being subject to oversight by the DOL.

Companies such as Viacom, Sony, Madison Square Garden, Donna Karan and Warner Music Group, all of whom are currently facing lawsuits brought by unpaid interns, could have avoided the expense of litigation and eliminated exposure to liability by simply paying their interns at least minimum wage (currently $7.25 per hour under federal law). Those employers, some of whom allegedly required their unpaid interns to perform such tasks as getting coffee, making copies, and picking up supervisors’ prescriptions, could have compensated their interns and directly benefitted from the work and skill set the interns offered.

The interns would also benefit from mandatory paid internships because they would receive an actual wage for any variety of tasks they are required to perform. Studies show that, while nearly half of all graduating college students have performed some kind of internship, those fortunate enough to land a paid internship are more likely to gain a full-time job offer or higher starting salary than those who complete an unpaid internship. And those who perform an unpaid internship do not fare any better in finding paid employment than individuals who do not participate in any internship program at all. Offering at least minimum wage to these highly motivated and educated individuals would provide further incentive for them to work even harder to gain full-time employment.

The economy also benefits from paid internships, which generate millions of dollars in taxes and revenue to state and federal governments by requiring employers to pay minimum wages, overtime, payroll taxes, unemployment insurance and workers’ compensation. Paid internships also increase the number of paid entry-level employment positions, resulting in a decrease in the unemployment rate. Interns who are compensated also face a lesser financial burden than those who are forced to accept an unpaid internship and simultaneously work a paid position, or borrow money, simply to make ends meet. Mandatory paid internships would also generate competition amongst businesses competing for talented new recruits, and result in higher salaries for entry-level employees.

Finally, requiring employers to pay interns a minimum wage promotes the underlying remedial purposes of the Fair Labor Standards Act which was enacted by Congress to protect workers from detrimental labor conditions and ensure payment for work performed. Conversely, encouraging employers to offer unpaid internships results in paid employees being replaced by unpaid interns, a reduction in the number of paid employment positions, and the elimination of fundamental workplace rights.

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