04/01/2024

Understanding the Costs of Unpaid Internships

By Nicole A. Lilly

College students often receive strong recommendations from faculty, staff, and advisors to find an internship. Internships are a type of experiential learning where students can try out a potential occupation or learn about an organization. Researchers from the National Association for Colleges and Employers have shown that internships can help participants increase job-related skills, grow professional networks, and secure job offers (NACE, 2023).

When internships are unpaid, inequities and unintended consequences arise. All students can benefit from the increased skill development that internships offer. Some students, however, cannot afford to work without pay. Students who reside in expensive urban areas or those from low-income families may be especially impacted (NACE, 2023). Unpaid internships can effectively exclude talented individuals who need paid work to support themselves. Unpaid internships can contribute to a lack of diversity and inclusion within various industries (NACE, 2023). Career services professionals have an opportunity to advocate for access and compensation. To advance equity, they need to understand how unpaid internships may reduce students’ financial well-being, employee retention, federal compliance, and student networking.

Economic Impact and Financial Well-Being
Unpaid internships can exploit the enthusiasm and eagerness of new professionals who are willing to work for little to no compensation in exchange for experience. Work without pay devalues interns’ contributions and perpetuates the idea that new professionals should be grateful for the opportunity to work, regardless of compensation. This is often true in journalism, arts, and entertainment industries.

Even if students can afford to work without pay, the position could jeopardize students’ salary post-graduation. In one study, unpaid interns earned less in their first year after graduation than paid interns and students who never participated in an internship at all (Rothschild & Rothschild, 2020). Earning differences may be due to factors like student’s majors. For example, humanities and fine arts majors are more likely to accept an unpaid internship compared to business majors (Rothschild & Rothschild, 2020). Given these compensation trends, students may need to consider the long-term implications of accepting unpaid internships.

Employee Retention
Employers often offer internships as a pipeline for permanent hires. If they are to be retained, interns want to feel valued by their employers. Compensation signals that organizations value their work and see their potential, thus contributing to a positive company brand. When interns are treated well and paid, they will tell their friends or others in their network, which can help maintain the talent pipeline (Cruzvergara, 2023). Unpaid interns may feel they are being used as free labor, which may cause them to perceive the organization negatively and leave (Pologeorgis, 2023).

Legal Risks and Federal Compliance
Unpaid internships may introduce legal risks for institutions. Federal laws against employment discrimination do not extend to unpaid interns because they do not receive compensation. Reduced legal protection could be problematic for universities (Rothschild & Rothschild, 2020). If an employer cannot be held accountable for discrimination, the university could be sued depending on the form of recognition awarded to the student by the institution (academic credit, major requirement, etc.).

Employers may argue that interns do not need to be paid because interns can receive college credit. What employers do not consider when they advertise an internship is that they have no control over whether the institution accepts the internship for credit (Cruzvergara, 2023). Faculty determine if an internship is credit-bearing, not employers.

Additional Expenses and Reduced Networking
Some employers may require unpaid interns to earn college credit to satisfy the Department of Labor’s criteria for internship compensation (DOL, 2018). Credit-bearing requirements compound the financial implications for students. Students must often pay tuition to earn the credits, which is difficult to cover when they are working for free. If a student relocates for an internship opportunity, the extra living expenses away from home can also increase the cost of the experience (Cruzvergara, 2023). Students at unpaid internships may also not have the time to network at internship organizations because they may often work a second job to pay their bills. These additional work hours may reduce interns’ ability to get to know others at the internship and build social capital, possibly impacting the strength of recommendations for later employment.

Career Services Response and Advocacy
Career practitioners can seek system change to help students avoid unpaid internships (Blustein, 2019; Hayden, et al., 2021). Professional communities of practice (NACE, 2024; NCDA, 2024) have called for modifications to public policy. Career practitioners need to get engaged at local, state, and federal levels to educate others on the unintended consequences of unpaid internships. More specifically, practitioners can engage in the following:

• Encourage employers to pay the state minimum wage to interns (DOL, 2024a).
• Connect with state career development associations and/or state legislatures to learn about employment regulations and any possible legislative action.
• Post on social media pages the #UnpaidisUnfair campaign (where allowed) (NACE 2024).
• Draft an internal institutional policy about posting unpaid internships to either modify the type to volunteer experience or stop posting unpaid internships altogether.
• Reach out to local employers to educate them on the pitfalls of unpaid internships.
• Work with faculty to embed micro-internships or project-based learning into their courses with employers submitting real-world problems.
• Assist students by researching or maintaining a list of funding sources to offset living expenses for students in unpaid internships. Popular funding sources are highlighted by the Department of Labor (DOL, 2024b), Fastweb (2024), and Scholorships.com (2024).

If students find unpaid internships they wish to pursue, career practitioners could support students as they negotiate for other things besides pay. Employers can engage in the following:

• Schedule part-time hours or remote work to allow students the flexibility needed to find a paid position to earn money for living expenses.
• Authorize reimbursement for parking or other travel expenses related to commuting.
• Incorporate a food allowance for lunch.
• Provide a company-branded shirt/uniform, relaxed dress codes, or professional clothing allowance.
• Distribute computing equipment and software an intern can keep post-experience.
• Allocate professional development funds to obtain specific training, travel to conferences, or participate in networking events.

In conclusion, unpaid internships can promote inequity in multi-faceted ways beyond a simple lack of financial compensation. Career practitioners can teach skills to help students take measures to ensure professional growth and gain confidence. Career practitioners can assist employers who aspire to recruit and retain top talent by encouraging them to provide equal access and fair compensation for all aspiring professionals. Learning to advocate and be a part of change is an admirable goal for all career practitioners.

References

Blustein, D. L., Kenny, M. E., Autin, K., & Duffy, R. (2019). The psychology of working in practice: a theory of change for a new era. The Career Development Quarterly, Sept 2019(67), 236–54. https://ceric.ca/wp-content/uploads/2020/05/Blustein-et-al.-CDQ-theory-of-change.pdf

Cruzvergara, C. Y., 2023, June 22. More employers are paying their interns. It’s not too late for others to do the same. Forbes. https://www.forbes.com/sites/christinecruzvergara/2023/06/22/more-employers-are-paying-their-interns-its-not-too-late-for-others-to-do-the-same/?sh=1d1f70e62e9a

Fastweb. (2024). https://www.fastweb.com/

Greene, N. (2022, August 2). The staggering cost of unpaid art internships. Wbur. https://www.wbur.org/cognoscenti/2022/08/02/unpaid-internships-art-museums-nikki-greene

Hayden, S. C., Osborn, D. S., Peace, C., & Lange, R. (2021). Enhancing agency in career development via cognitive information processing theory. British Journal of Guidance & Counseling, 49(2), 304–15. https://www.tandfonline.com/doi/full/10.1080/03069885.2020.1867703

Karnstein, A. (2023, September 8). The undue burden of unpaid internships. Daily Trojan. https://dailytrojan.com/2023/09/08/the-undue-burden-of-unpaid-internships/

National Career Development Association. (2024). Why and how to advocate. https://www.ncda.org/aws/NCDA/pt/sp/govtrelations_advocate 

National Association of Colleges and Employers. (2024). Unpaid internships: Spread the word. https://naceweb.org/unpaid/spread-the-word

National Association of Colleges & Employers. (2023, May). Unpaid internships and the need for federal action. https://www.naceweb.org/about-us/advocacy/position-statements/position-statement-us-internships/

Pologeorgis, N. A. (2023, September 12). Unpaid internships and the impact on the labor market. Investopedia. https://www.investopedia.com/articles/economics/12/impact-of-unpaid-internships.asp

Rothschild, P., & Rothschild, C. (2020). The unpaid internship: Benefits, drawbacks, and legal issues. Administrative Issues Journal: Connecting Education, Practice, and Research, 10(2), 1–17. https://files.eric.ed.gov/fulltext/EJ1289868.pdf

Sholarships.com (2024). https://www.scholarships.com/

U.S. Department of Labor (DOL). (2018 January). Fact sheet #71: internship programs under the Fair Labor Standards Act. https://www.dol.gov/agencies/whd/fact-sheets/71-flsa-internships

U.S. Department of Labor (DOL). (2024a). State minimum wage laws. https://www.dol.gov/agencies/whd/minimum-wage/state

U.S. Department of Labor (DOL). (2024b). Careeronestop toolkit. https://www.careeronestop.org/Toolkit/Training/find-scholarships.aspx

Nicole Lilly, MS, is a career exploration promoter, ex-scientist, and first-generation college student. Currently, she is an Instructional Specialist at Florida State University managing a low-cost experiential learning recognition program. She may be reached at nlilly@fsu.edu.