The scam of unpaid internships: How companies exploit free labor from students under the guise of unpaid internships.

Many people have taken on internships that were unpaid merely to learn some transferable skill or to build a solid network.  This was okay in a time when graduating students had little debt and higher education was more affordable.  Today some companies have used interns as a source of free labor without adding any benefits for the interns.  It is interesting that in the last year there has been a growing movement against unpaid internships.  It is bad enough young Americans are underpaid so why add insult to injury and have them “work” for free?  Most internships require students to receive some sort of takeaway that may include gaining new job skills or learning a new trade.  However, as has been the case many times over, many students are used as errand runners fetching coffee or other menial tasks.  This isn’t to say that all unpaid internships are bad or don’t serve a purpose.  However, the Black Swan ruling is showing an underlying trend of problems with our unpaid internship system.

Calling a spade a spade

The laws on internships are rather clear yet rarely tested:

“(NY Times) The companies being sued operate in a wide range of intern-heavy industries. Global brands, famous television and fashion personalities, multinational subsidiaries flush with profits — these are some of the employers that have refused to pay young workers at least $7.25 an hour. How have they done this for so long?

The federal law is clear: if internships at profit-making companies are to be unpaid, they must foster an educational environment. (The rules are different for nonprofit and governmental agencies.)”

The problem with the Black Swan interns was that they were doing menial work (i.e., answering phones, fetching food, etc).  Not exactly something that would constitute an educational environment unless going to Dunkin Donuts is a transferable skill.  With many young students saddled with record levels of debt, having a quality internship becomes of the utmost importance.  There are many industries where internships are vital to getting your foot in the door.  Not a big problem when you leave school with no debt or manageable levels of debt.  The problem is very different when you have tens of thousands of dollars in debt that need to be paid off.

Over half of recent college graduates are underemployed or unemployed:

Many argue that unpaid internships are a way to gain solid training and knowledge.  If that is the case, it falls within legal guidelines.  Yet what makes this groundbreaking case so important is that it challenges companies that are simply too cheap to hire minimum wage workers and would rather bring on free labor from a young educated college pool.  Given the current “recovery” there is an unlimited pool of students willing to work for free given the quid pro quo that somehow the internship will lead to bigger and better things (i.e., employment).

Mixed in with the mess is the fact that many internships do lead to jobs:

“(BusinessWeek) According to the National Association of Colleges and Employers, 37 percent of 2012 graduates who worked in unpaid internships received offers of paying jobs. Graduates who worked in paid internships were offered jobs 60 percent of the time.”

This is probably a more important fine line here.  60 percent of paid interns received a paying job after their internship.  However, only 37 percent of those in unpaid internships received an offer of a paying job (meaning 63 percent received zero momentary compensation from their work).  Within this large figure, there is plenty of room for flat out exploitation.

Unfortunately this is the state of our nation and exploitation is rather high for young Americans.  We are hearing more and more regarding this:

“(The Week) It’s a refrain heard many times from the millions of 20-something Kates who are scrambling to find jobs with a steady paycheck and benefits. After all, who wants to still be an intern at an age when you should have a 401(k) and a modicum of job security, or at least be earning more than you did at your summer job during high school? “People my age expect to start at the bottom,” Kate says, “but in this economy the bottom keeps getting lower and lower.”

When I ask Kate how many jobs she’s applied for, she says, “Like a million.”

With a growing low wage segment of our population, expect more of this.  It is amazing that so many companies are able to get away with this but it makes sense.  Why rock the cart?  An unpaid internship is a way to grow your resume and expand your horizons, right?  Well maybe if the internship truly carried substance.  But if someone is running around fetching coffee for the crew, we are truly talking about an assistant.  We have minimum wage regulations for a reason.

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