The Unpaid Internship Is Dead. What Now?

The unpaid internship — once a right of passage for aspiring professionals — is doomed. Following some high-profile lawsuits and mounting student opposition to the practice, companies are axing unpaid internships. For example, Condé Nast, the media giant whose coveted internships have launched the careers of many top writers, is ending its program next year.

At issue is the question of compensation. Courts have ruled that unpaid interns are covered by minimum wage laws when their work benefits the employer — which, arguably, is almost always the case.

But the moves by Condé Nast and possibly other companies, raise an interesting point: If students need internships to graduate or to get their foot in the door in a highly competitive industry, then what are they going to do now? It's a question a lot of experts are asking these days and they don't yet have answers.

"From a student's perspective, an internship for credit, even if unpaid, is a step toward both graduation and a job in her chosen field at the same time," Malcolm Harris writes on Al Jazeera. "But as many commentators have pointed out, employers commonly use internships as a way to skirt minimum-wage laws. College administrators and employers have colluded to invent a loophole where none existed."

The media business isn't the only one facing this problem. Roughly half of all unpaid interns work in the public sector, including the Supreme Court and the United Nations, reports NBC.

One possible solution is for school credit to replace compensation. But even that practice doesn't seem likely to hold up in court. In June, a New York federal judge ruled that Fox Searchlight Pictures’ unpaid internship program violated federal labor law. The fact that interns received college credit for their time didn't matter. The students, the court held, were entitled to both minimum wage and overtime.

One the face of it, the obvious fix is for employers to start paying newbies — and to look at internships not as an opportunity for young workers to gain valuable experience but as an opportunity to cultivate them as future stars within the company. "Critics of the unpaid internship seem to assume that tighter regulation would simply mean today’s interns would magically become paid employees," says Matthew Yglesias in Slate Magazine. "In some cases, that might happen. But many positions would simply be eliminated."

David Carr of The New York Times doesn't write off compensation as a solution so easily. He points out that unpaid internships have typically benefited those who can afford to work for no pay, which means employers have missed an opportunity to diversify. "Only a certain kind of young person can afford to spend a summer working for no pay," Carr writes. "Unpaid internships typically provide people who already have a leg up a way to get the other leg up."

Companies will have to come up with the money, concludes Carr, but that's how they'll attract meaningful contributors. "Paid internships, properly conceived and administered, could bring a diversity of region, class and race to an industry where the elevators are full of people who look alike, talk alike and think alike," he says, referring to the media business. He cites Atlantic Media as an example. The company ended it’s unpaid internship program and now offers yearlong fellowships that, for some graduates, have morphed into permanent roles.

Slate's Yglesias agrees that internships serve a valuable function in society. "If there’s a policy solution fix here, it’s not going to be about banning internships, but about building better bridges between education and the workplace."

For all the ongoing debate, here's an interesting statistic: The National Association of Colleges and Employers reports that 63 percent of paid interns wind up working full time afterward (with median starting salary of about $52,000), while unpaid internships led to employment 37 percent of the time (with median starting salary of just under $36,000), according to The Journal Times.

Is it possible that unpaid internships aren't, in the end, all that they're cracked up to be?

[Image via Fox 20th Century Media]