Education
is one key to economic advancement. On
average, the more education a person obtains, the greater his or her income.
The implications for poverty have been clear: if low-income individuals
increase their educational attainment, poverty will decline. But education
isn’t the whole story. The school-to-work transition can make a huge
difference, and internships have become critical to that transition.
But
many internships today create or perpetuate serious inequalities, especially
for students from families of modest means. Because so many internships are
unpaid, the current system favors students from wealthier families. Unpaid
internships require students to forego wages and finance a living without a
paycheck, putting them out of reach
for many low-income students.
Internships
are now a standard component of a college graduate’s resume. They provide an
opportunity to learn new skills, try out a certain industry or occupation,
network, and meet professionals in a field of interest. In short, internships
provide the crucial bridge between education and the labor market.
Increasingly,
internships are a necessary prerequisite to a permanent job. A Michigan State
University survey in 2007 revealed that half of all college graduate hires had
previously interned at the firm where they were hired. A National Association
of Colleges and Employers survey of employers found that 76 percent of firms
reported relevant work experience as the primary factor that influences their
hiring decisions.
The
idea of an “entry-level” job has become something of a misnomer, as workers are
expected to bring experience to the table before they’ve even started working.
The
recession has only made internships more valuable: students who have completed
internships have a leg-up over other job applicants in a tough job market for
young, educated workers. The unemployment rate for college graduates under age
25 has averaged 9.1 percent over the past twelve months, up from 5.4 percent in
2007.
It
is therefore critically important that internships be fairly distributed among
students of every demographic group.
We
estimate that a typical three-month internship in Washington, DC costs about
$4,000, excluding roundtrip travel. For a family living at the poverty line,
that is roughly a fifth of their annual income. It’s hard to imagine how a
student from that background could afford an unpaid internship in the nation’s
capital.
Internships
should be awarded to those most capable, but the current system is marred by a
competing standard—ability to pay. The
well-off get a boost over better qualified but poorer students who can’t afford
to build a resume with unpaid work.
There
are also broader implications for the labor market. The persistence of unpaid
internships, and the willingness of students to accept them, encourages
employers to replace paid workers with unpaid interns. Why pay a lab assistant
full-time wages with benefits if three unpaid interns could do the same job?
Interns, looking for experience and an advantage in an increasingly difficult
labor market, are providing free labor for firms.
Current
law, as established by the Fair Labor Standards Act and Department of Labor
regulatory guidelines, has a six-part test to determine whether employers are legally
required to pay interns, including that the intern does not displace regular
employees, that the employer derives no immediate advantage, and that the
intern is not entitled to a job at the completion of the internship. If all six
parts are not met, the intern must be paid for his or her work.
Most
internships at for-profit firms would not pass the test. Unfortunately, there
has been little enforcement, primarily because the Department of Labor relies
on complaints from workers to initiate investigations. Interns themselves must
be the ones to complain—but many are ignorant of the law or too intimidated to
speak up.
The
result is that unpaid internships, though often illegal, are widespread, and
students able to afford them get the experience all job-seekers are desperate
to have.
Non-profits and government agencies may lawfully accept unpaid volunteer work,
so unpaid internships are legal. But
they still disadvantage students from poor families. This is especially troubling when the
employer is a legislator or a government agency, since opportunities to learn
how government works and to network in political circles could be crucial for
future government employment.
The
Labor Department recently announced it will devote increased enforcement
attention to internships, but until it does, a system that worsens inequality
will become more and more entrenched.
There
are two solutions to this problem: either all internships should be paid or
means-tested stipends should be funded to support poorer students accepted into
unpaid internships at non-profits or in government.
A
democracy should strive to provide equal opportunity to all citizens, based on
merit rather than ability to pay. Otherwise,
what is given with one hand through education will be taken with the other hand
by an unfair labor market.
Ross Eisenbrey is the Vice President
of the Economic Policy Institute.
Kathryn Edwards is a Research
Assistant at the Economic Policy Institute.