Thursday, July 04, 2013

In Praise of Unpaid Internships

Companies, of course, want cheap labor. It's hard to get cheaper than free so some firms will let people work for nothing. Why would anyone take this deal? Seems bizarre to be willing to work well, well, below minimum wage.

But millions take these jobs, better known as unpaid internships. In fact, more than half of all college-level interns weren't paid. And that doesn't include post-college internships.

Why so much interest? Being in an internship--paid or not--demonstrates a level of legitimacy to future employers, signals responsibility and professionalism, unlocks networking opportunities, opens the door to one or more professional references, and may even lead to a full time position. Of course, many of these things may not happen but you can say the same thing of going to graduate school (another way to stand out in a crowded job market). And graduate school takes a lot longer and is a lot more expensive.

So here we have a system of mutually benefiting participants. Interns get experience and networking. Companies get free labor. They would be willing to pay more if they knew the interns were worth the extra cost, but they don't...that's why interns are willing to work for free. It's their chance to prove themselves. Why would anyone have a problem with this?

Enter Eric Glatt, the Black Swan intern-turned-law-student who sued for wages. To be clear, he knew the position was unpaid. He knew it could lead nowhere (or was foolishly optimistic). But he sued for something that was never ethically owed him anyway. (Granted, he was probably right on the law but as a matter of justice and fairness, the company owed him nothing.) Last month, the court ruled in his favor.

Glatt recently appeared on Q on NPR advocating and end to minimum wage internships. Virtually none of what he said made sense. Most of what he says isn't worth repeating as it's ignoring the logic of why people eagerly take unpaid internships.

But of note he claims "interns who do get paid...get better paying jobs when they finish their degree than those who did unpaid internships. Some studies even show that people who did unpaid internships have a lower starting salary than people who did no internships at all."

Great workers are hard to come by so companies are willing to pay them more to make sure those workers work for them. Interns who do get paid are probably very talented compared to those who don't and thus will naturally go on to higher paying jobs. But internships aren't the only way to stand out in a competitive job market: those who do no internship at all might not because they have particularly impressive grades, extracurricular activities, or recommendations. Causation is not as clear-cut as Glatt implies.

There is nothing immoral about offering an unpaid internship and nothing foolish about taking one.