Unpaid interns: working for free

July 29, 2011

We went from lukewarm to cold on internships-for-credits, but it looks like it has gotten worse out there. Not only are colleges playing along, advertising unfair internships and making up programs with credits for internships without pay, but now they have started managing the expectations of graduates and legitimize what is an illegal and unfair practice. From the Globe and Mail, this quote from a student at Sheridan College:

“That was something [professors] stressed really hard – that we would not get paid”

Wait, there’s more, from another student:

“Humber is holding my diploma up in the air and saying we’re not giving it to you till you do this.”

At least, one law professor from York sees through it:

“My sense is that many employers believe simply calling someone an ‘intern’ relieves them of all employment obligations”.

Exactly. Ask them a simply question: why do you call it an “internship”?


Unpaid Interns, Complicit Colleges

April 5, 2011

Ross Perlin wrote an op-ed in the New York Times to denounce the complicity of US colleges in encouraging the practice of unfair internships. I have few problems with the argument since it is indeed scandalous that anyone should support such an unfair practice (except Fox Business that hilariously suggests to use those parental connections!).

The op-ed made it to the top of the most emailed articles from the New York Times and has inspired a few reactions on the web. I chose to respond to a blog post by Marc F. Bellemare, Assistant Professor of Public Policy and Economics at Duke University, where he argues that Ross Perlin’s “crusade” is misguided. You probably better have a look at his argument first if you want to understand my response.

You deserve praise for attracting some more attention to the issue raised by Ross Perlin in his op-ed, but I’m afraid that you did not make a convincing argument against his case.

You’re right to point at the group think fallacy in Ross’ (pointless) argument about the perceived political bent of US colleges. This makes it all the more disappointing that you should try to justify the practice because it dates back to the Middle Ages. Are there many other practices that you would like to justify on that basis? Following your own link, it is called a traditional wisdom fallacy.

You rightly point that new entrants on the job market contribute less and deserve a lower pay, but you overestimate the cost. The system of pay raises already takes into account the fact that a less experienced employee is likely to contribute less and hence is paid less. Are you suggesting that new entrants contribute zero to their employer? That they are paid for their experience rather than their contribution to a company? Are you suggesting that certain unions are right to put seniority ahead of performance?

Also, you would be right to suggest that it would be ridiculous to ban unpaid internships (“(…) banning unpaid internships, as Mr. Perlin suggests, is still not the way to go.”) but Ross never suggests this. He rather says that the practice has long exceeded the limits of the Fair Labor Standards Act of 1947 and that credits are a fig leaf for an exploitative practice.  Here, you commit a “straw man fallacy” by attributing him an easily refuted argument.

The problem is “unfair internships” whereby an entry-level employee goes without pay just because it is slapped with the title “intern” — regardless of its actual responsibilities, obligations and contribution. Long live the unpaid internships whereby an intern receives proper supervision and training. But this is not what Ross Perlin has witnessed and is reporting upon. In fact, he says that unpaid internships are just fine “if the college plays a central role in securing the internship and making it a substantive academic experience.” He is criticizing the rise of an unfair practice whereby employers take advantage of a weak segment of the workforce, now with the complicity of colleges.

Later, you say: “To see why, suppose we were to ban unpaid internships starting this year. Once employers have to pay for their interns, there will be a considerable drop in the number of internships are available. That is the direct effect of a ban on unpaid internships.” May that happen sooner than later. The existence of a practice and even its benefits does not justify it if the costs are greater. Should we lift speed limits, we’ll gain time and excitement at the price of safety and efficiency, so we don’t. But to revert to economics, what we have here is a collective action problem and it is the reason why it’s regulated against. The new entrants on the job market have little bargaining power, since they don’t yet belong to a collective bargaining arrangement and compete against each other, nor do they have a “signal” from the job market to prove their worth. The reason why unfair internships are already illegal (cf. FLSA, 1947) is to avoid this race to the bottom where workers are forced to give up even their pay to enter the job market, or have started to pay to work, as Ross demonstrates. When no one can do it, the playing field is leveled and no paid jobs are lost. Some may even be created as these companies would hire entry-level staff to perform those same tasks, stripped of their capacity to exploit the oversupply of labor.

Lastly, two quibbles. (1) You are right that taking an unfair internship is a form of signaling. I don’t see how it justifies it. You are descriptive, but stop short of making an argument to defend the practice. Unless you are concerned for employers who won’t be able to discern from GPA, extracurricular activities, interviews and tests which are the valuable candidates? (2) Your concern at the thought that we will create a generational rift if we enforce the ban on unfair internships (again, there is no ban on unpaid internships and Ross is not suggesting one) is very noble, but a bit thin. You correctly point to a path dependency problem. Are we stuck with this unfair and illegal practice just because we started? Is it clear that the new cohorts will lose more from missing on exploitative work experience than they would from having a fairer job market welcome them?

The “crusade” (the straw man, again!) is one for law enforcement to correct an unfair situation whereby the weak are exploited. The complicity of colleges deserves to be denounced, as Ross did.

Interns angry at being ‘exploited’

February 22, 2010

Excellent piece on BBC news on the situation of unfair internships in the UK, with a nice mention of Interns Anonymous. They have some surprising statistics such as 90% of students work for free and 60% say the experience is not beneficial, according to a survey from the University of Westminster that we couldn’t find…

Is It Immoral to Pay for Unpaid Internships?

August 10, 2009

Derek Thomson, over at The Atlantic, has another blog post about unpaid internships – a slightly different issue from unfair internships, as should be kept in mind. I have commented rather extensively over there so I’ll lazily re-post my comments here. His point is that it’s the fault of the college career centers if there is demand for middlemen charging to find internships.

There is a large-scale illegal use of free labor and it’s the fault of the college career services that aren’t making enough efforts to place their students unpaid internships? Well, at least it is an original explanation.

Just because there is demand doesn’t mean that it’s justified (otherwise, why legislate for anything? there’s a demand for speeding!). Students create the demand and resort to middlemen in a race to the bottom between each other to get a (paid) job. Some time ago, they would start by accepting an entry-level salary, less holidays, etc. Fair enough. A few years later, students have to do an internship to gain some experience and then get a job. Then they have to do a second another internship. Then, internships are a necessity and the competition is too high, so to get a leg up, you need to pay to get an unpaid job. Makes you wonder what’s next.

I mean: how else would it happen if it was unfair? People entering the job market are a vulnerable part of the labor market and employers are taking advantage of it. No wonder it’s illegal. Check the Fair Labor Standards Act.

Or go to http://www.UnfairInternships.com where we have been blogging about this issue for three years. It’s a scandal hidden in plain sight.

Happy to work for free

March 4, 2009

Here’s an illustration of why unfair internships thrive as potential employees are weakened. From The Daily Princetonian:

The recession is also boosting the applicant pool at FG Companies, a small boutique investment bank in New York that only offers unpaid internships, said Kai Chan GS ’04, an associate at the firm. “[The downturn] is great for guys like us, honestly, because we’re finding a lot of people who are saying, ‘Yeah, we’re happy to work for you for free,’ ” Chan said. “I noticed last year when we did interviews and said, ‘Just to be clear, this is an unpaid internship,’ some people were wavering,” Chan explained. “This year, when I explicitly start off the interview saying it’s an unpaid internship, they’re fine with that, and just say, ‘Let’s proceed.’ ”

This is the reason why unfair internships are illegal: because they are the consequence of the weak negotiation position of potential interns – exploitive, in other words. Those have no choice but to lower and lower their requirements to even gain experience. The good news is that there is a solution: collective action through legislation. And it already happened: unfair internships are illegal.

A fortune to work for nothing

March 3, 2009

The Brits are also baffled by the practice of auctioning jobs, cf. Tom Leonard in the Telegraph.

Madness and Shame

March 2, 2009

Internships-for-sale spark the outrage of Judith Timson in the Globe and Mail.

I’m no fan of unpaid internships. Not only do they penalize the less-affluent kids who can’t afford to work for free, but they are exploitive. Apparently some kids even consider taking out loans to cover the cost of working for free. This is madness. And shame on companies who encourage this to happen.

Madness and shame are words that should appear more often in articles about unfair internships.

Most said at first that buying an internship for their kid was troubling, to say the least. (I mean where does it end? Buying them a middle manager’s job at IBM when they’re 40?)

Exactly: where does it end? Isn’t the middle manager also learning something and getting a leg up for a senior management position?