Internships: Indentured Servitude or the First Step to Launching a Career?

by Matthew Rae

NASA Goddard Summer Interns 2011

In typical Hollywood fashion, The Internship, starring Vince Vaughn and Owen Wilson, portrays the grueling work of unpaid internships as a fairy tale world of sunshine and roses. Billy (Vaughn) and Nick (Wilson) are salesmen who find themselves out of work and with no other options, and are forced to apply for internships at Google. These two middle-aged men teach the young, tech-savvy millennials how to build a team. As always, there is even a little romance, and in the end, everyone lives happily ever after.

Near the beginning of the movie there is a scene in which Billy and Nick contemplate their options. “I feel like our whole generation is sheep that has been sold a bad bill of goods… our generation was told that you go to college, get a job, you get a mortgage,” Billy says. “Here we did everything we were suppose to and where is our thanks? Nothing.” It seems as if this extreme self-absorption plagues not just the millennial generation. Today, the older generation of Billy and Nick characterize the young tech-savvy youth as self-absorbed, naive, entitled children. Judith Warner of the New York Times has summarized how Generation Y is viewed as a group of “entitled whiners who have been spoiled by parents who over stoked their self-esteem.”

The millennials, however, are encountering something unique: the institutionalization of free labor. The number of firms, governments and NGOs offering unpaid internships has risen drastically over the past decade. According to the National Association of Colleges and Employers the number of college grads in internships, both paid and unpaid, increased by 43 percent since 1992. According to Ella Delany of the New York Times, within France and Germany alone, an estimated 1.5 million people complete an internship each year.

A recent survey conducted by the European Youth Forum attempted to collect some statistical data on this growing field of employment. The study found that 64 percent of interns are between the ages of 21 and 25, while 65 percent of all interns who took part in the study are underpaid. In fact, the European Youth Forum found that only five percent of internships in Europe are paid enough to support day-to-day living. This report is significant because it sheds light on a section of the labor market where little statistical data currently exists.

There is no legal definition of an internship, which may explain why opinions on what an intern’s job description should entail are so diffuse. According to Lindsay Coker, a lawyer, in an article in Employees Relations Law Journal, the United States has attempted to regulate certain aspects of unpaid internships with limited success. The Fair Labor Standards Act (FLSA) requires that all nonexempt employees receive minimum wage and overtime pay. The question that emerges is whether an unpaid intern is considered an employee of the firm.

The US Department of Labor has established six factors to determine whether an intern should be considered an employee. These six factors are as follows; training provided for the intern is similar to that given in a vocational school, and training is for the benefit of the trainee, the interns are not to displace regular employees, the employer is to derive no immediate benefit from the intern, trainees are not entitled to a job at the conclusion of their internship, and both parties understand that trainees are not entitled to wages for the time spent in training. These six factors demonstrate that the US Department of Labor views internships as long traineeships.

The most important factor for this debate is how to determine whether the intern is an immediate benefit to the employer. Recent legal victories, such as the Black Swan case, are beginning to establish the precedent that unpaid interns should not help with the employer’s day-to-day tasks, but be purely for teaching purposes, according to Lindsay Coker. This past June, a New York federal judge ruled that the Fox unit had violated minimum wage laws by not paying interns on the set of the film Black Swan. As Andrew Coyne wrote in the National Post, the Black Swan ruling may be viewed as one of these recent victories. In this instance a Federal District Court judge in Manhattan ruled that unpaid production interns were essentially regular employees, and therefore entitled to minimum wage. The Black Swan case may illustrate an emerging legal opinion, but the reality seems to be different.

At an institution such as the Diplomatic Academy there are plenty of students who have done internships, especially unpaid ones. Of the small sample of students interviewed, most of them had a positive view of their experience. The majority of the internships centered on managing databases, answering emails, and assisting in conference planning, which is nothing as extravagant as a Google internship.

Despite the fact that most students felt the internship benefited them in some small manner, they still had issues with the current process. One student raised the important issue that “to accomplish your career goals today you have to do an internship; on some level you do not have a choice.” The same student also questioned how she would be able to afford to complete an unpaid internship and get the experience. She said, “It is becoming a social problem.”

The European Youth Forum report also outlined the growing issue associated with unpaid internships. It found that 49 percent of all interns are financially dependent on parental support. The same report argues that “the chances for young people to achieve autonomy and lead stable and fulfilling lives is significantly reduced,” because they are increasingly dependent on their parents. This is an option for students whose parents who have the financial means to support them during an internship. If a university student, or recent graduate, comes from a low-income family this potential source of income may not be available to them.

There is a social aspect to this debate over unpaid internships. As demonstrated in the European Youth Forum report, many students with internships rely on parental support. However, a student from a low income family will not have access to this financial safety net. There may be a role for some form of government grants in these instances. Or there can be an examination of the education students are receiving.

Unpaid and underpaid internships are seen as investments by students. Coyne elaborates on this potential investment. The on-the-job training the employer is supposed to provide is equivalent to a stock investment without dividends, but with the promise of huge capital gains in the future. This was a theme brought out in the interviews conducted among students.

The students that found their internship experience positive all acknowledge an important component. One student stated that “even though it was unpaid there was definitely an exchange of knowledge for the intern’s time.” This exchange of knowledge could be viewed as a form of compensation and a potential investment in their future careers.

Even if the experience was negative, the students interviewed seemed to gain something from their respective internships. Nick Krol, a student at the Diplomatic Academy, said “it gave him an idea what he did not want to do for a career, which was sitting in an office managing a database.” Despite forgoing another lower skilled, paid job, and assuming more debt, Krol was able to determine a certain sector was not for him, and avoided wasting the company’s money and his time figuring this out through an entry-level position.

One of the first things many of the Western countries should do is at least legally define what an internship is, and in the process, define the boundaries of unpaid and paid contracts to help protect those who are lowest on the professional run. However, it may be unwise to force companies to pay their interns. It could lead to a reduction in internships opportunities, because organizations will cut these positions in an attempt to cut costs, Deborah L. Jacobs wrote in her article “Unpaid Intern Lawsuits May Reduce Job Opportunities,” for Forbes. However, for those internships that are unpaid, there needs to be a clear demonstration that there is an exchange of knowledge and time that benefits the student and the employer.

The report commission by the European Youth Forum also raised the issue of whether educational institutions are neglecting their responsibility to prepare students for the labor market. This is an important question, especially when more and more students are pursuing these internships in attempt to gain the particle skills not taught in school. Not all of our lives will end as The Internship did with plush jobs at Google. There needs to be a serious examination by governments, industry leaders, and educational institutions regarding the growing field of unpaid internships.

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