Education Supplement: Unpaid Internships Aid Schools' Bottom Lines, But Do They Flout the Law?

Will work for credits

Last summer, Duke University senior Jessica Kim joined the thousands of college students serving unpaid internships in New York City. She worked for a well-known blog alongside a dozen full-time staffers and three other interns. Her days were long. "Ten hours was expected," Kim says.

Working for free got her a foot in the door of a prestigious publication, but internships like Kim's are now at the center of a new debate. These unpaid jobs have long been considered the dues students need to pay to enter the so-called "glamour" industries of publishing, TV, film, and fashion. But with youth unemployment now hovering near 17 percent, more than double the rate for those 25 and older, students in all majors are taking similar internships on the slim hope of future employment.

Businesses say they're doing students a favor by providing valuable work experience plus academic credit hours. And universities increasingly see them as vital to their academic programs. When the U.S. Department of Labor issued guidelines last year warning that the awarding of credits fulfills only one of six criteria to permit unpaid work under the Fair Labor Standards Act, 13 university presidents—including NYU's John Sexton—issued a letter asking the government to back off.

"The internship experience is for the benefit of the intern."
Courtesy MGM Studios
"The internship experience is for the benefit of the intern."

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"We are troubled by the Department of Labor's apparent recent shift toward the regulation of internships," the presidents wrote. "We urge great caution in changing an approach to learning that is viewed as a huge success by educators, employers, and students alike."

Yet not everyone regards the internship boom as a "huge success." Since students have to pay for credits earned via internships, they end up not only working for free, but also sinking further into debt. And by requiring free labor in order to earn a diploma, say some critics, schools become complicit in a system that's ripe for exploitation.

A 'Lost Generation'

Between 1 and 2 million Americans are now working as interns, with no benefits or workplace protections, says Ross Perlin, author of the recent book Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy. It's a system, he estimates, that saves firms about $600 million a year.

Perlin says charging tuition for internships would be justified if they provided more of a substantive educational experience. But in many cases, he charges, colleges are simply taking advantage of their students in order to turn a quick buck. Oversight of internships is generally lax due to scant manpower, he says, and schools cheapen the value of academic credit by "outsourcing the educational experience" to employers. And in allowing internships to become the "accepted gateway to the white-collar workforce," Perlin says, schools also perpetuate income inequality: Less-fortunate students are less able to accept unpaid positions.

"The recession has exacerbated the problem," Perlin says. "There's a lost generation of young people today who have not been able to gain a foothold into a career, and at the same time, you have a lot of companies using the excuse of the recession to exploit young people. Clearly there's some connection between youth unemployment and people doing internships."

Internships like Kim's could actually violate state- and federal-labor laws. The Department of Labor guidelines stress that "the internship experience is for the benefit of the intern," and for-profit employers are supposed to derive "no immediate advantage from the activities" of the unpaid interns. Indeed, business operations "may actually be impeded" in order to train the intern, who should "not displace regular employees."  

While Kim received a university grant to take her unpaid internship, she wasn't getting any credit for her labor, despite New York's wage order 142, which stipulates that "students obtaining vocational experience" are exempt from wage laws only if their jobs fulfill the curriculum requirements of their schools. "That definitely suggests the unpaid internship must be a degree requirement," says labor attorney Elizabeth Wagoner. "If it's just an optional school-credit situation, it would not fall under that exception, and that student would have to be paid."

Mandatory internships

Perhaps that's why more schools are making internships a required part of their programs. "Some are doing it legitimately because they see it as a learning experience, and they allow students to get paid," says Phil Gardner of the Collegiate Employment Research Institute at Michigan State University. "And then we have some that are doing it to rack up credit money." With faculty time at a premium, mandatory internships can allow schools to charge tuition for credits that don't require conducting classes. "They won't say that up front, but I've been to enough faculty meetings to know it's a way to raise money: Make it part of the graduation requirement."

Monroe College, whose subway advertisements tout an "Education for the Real World," is in the process of making internships mandatory for all of its degree programs. "We have proven data showing employers want graduates with more work experience," says Cathy Carbonelli, the internship coordinator on Monroe's Bronx campus. (The school's second campus is in New Rochelle.) "A lot of companies are reaching out to us. The demand for interns has definitely increased."

Over the course of a four-year degree, Monroe students can do three internships for a total of nine credit hours. The cost of tuition is now $485 per credit. Unlike at some schools that require internships, Monroe students can also get paid for their work if they are lucky enough to land a paying gig. "With the economy of the past few years, they're mostly unpaid," says Carbonelli. "There's also an academic component to these internships, with students reporting to a professor."

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