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


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.

“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.”

For 26 years, Pace University’s M.S. in publishing has required one-semester internships from students lacking work experience, followed by a second-semester thesis. “If somebody is working in the children’s book division at HarperCollins, they might write a paper about what’s currently happening in e-book apps for children’s books,” says the program’s internship director, Jane Kinney-Denning. “What’s happening at HarperCollins could be a part of it, but they would look at other publishers as well.”

The work experience is now expected by employers, agrees Kinney-Denning, leading some of her students to accept multiple internships without credit simply to build up their résumés. “It’s incredibly valuable,” she says. “In today’s competitive marketplace, you need a résumé that shows some experience already in the industry to even get an interview for an entry-level position.”

Internships have become the new entry-level jobs. “It’s a requirement to get in the door,” Gardner says. “The entry-level job has shifted back to college, and the jobs that many students are getting right out of college are no longer typical starting jobs. They require experience and have higher expectations on skills and abilities.” In the economic downturn, companies might not be hiring, but they’ve turned to internship programs to prepare for “the huge baby-boomer retirements coming,” he says. “We’ve got plenty of kids who have internships that still can’t find jobs.”

Many academic programs that require internships claim that paying jobs would taint the students’ learning experience, but “there is no research that shows a paid situation undermines the learning that goes on,” Gardner says. “I would like to minimize to none the amount of unpaid internships—just get rid of the bad ones.”

Unfortunately this is easier said than done. High-income students might still enjoy the status and contacts that come with internships in the arts and entertainment, but lower-income kids who want to go into the unglamorous worlds of teaching, health, and the social services would be stuck, as those disciplines lack the money to offer paid internships. “Without thinking about it, you’re going to hurt a lot of people unless you’ve got plans to replace those opportunities,” Gardner says. “Some people think that if they get rid of unpaid internships, something miraculous will happen. That’s not going to happen. Organizations will just withdraw.”

Some programs do resist offering unpaid internships. “Business and engineering just don’t support it,” says Gardner. “In engineering, you’ve got less than 15 percent of students in unpaid internships; in business, it’s about 30 percent. But anything in arts, entertainment, publishing, broadcasting, they’re notorious for unpaid slave labor—this is how you get in. To break that up, it’s going to be difficult.”

Here Come the Lawsuits

Breaking that up is just what attorney Wagoner has in mind. Her law firm, Outten and Golden, has filed a federal lawsuit in Manhattan against Fox Searchlight Pictures over the use of unpaid interns. The plaintiffs, who worked for free on the hit film Black Swan, were not even in school at the time. Other studios may pay their interns or require school credit. “But even if someone is getting school credit, employers are not necessarily exempt from overtime or minimum-wage laws,” Wagoner says. “It has to be a training program.”

One of the plaintiffs, Alex Footman, says he had to rely on family members to meet his expenses in New York while he worked on the film, and all his duties turned out to be menial. “I filed receipts, made coffee, took people’s lunch orders, built furniture in the office, and ran lots of errands,” says 24-year-old Footman. “I wasn’t unhappy because I was doing that. I was unhappy because I was only doing that. I’ve had good internships where I wasn’t being paid, but I was also getting an education.”

Footman says all the unpaid interns on Black Swan worked for more than eight hours a day and performed the same work as paid production assistants. “They had one unpaid intern driving Mila Kunis around for weeks, until they switched it over to a Teamster.” (Fox Searchlight did not return Voice calls for comment.)

Wagoner says schools should be wary of providing fig leaves for unpaid labor. “It undercuts the labor market. When Fox is able to get workers and pay them nothing, they’re going to do that.” Black Swan grossed more than $300 million, she notes. “They have plenty of money to create a minimum-wage, entry-level job.”

Soon after his lawsuit got press attention, Footman recalls, he started to get “snarky” e-mails: “Stuff like, ‘Congratulations, you guys just got blackballed in the industry.'” But he’s not worried about his future. “I’m still working in film and video. Plenty of people think I’m doing the right thing.”

Such reactions are typical, explains Wagoner, and pose the greatest challenge to ending the exploitation of unpaid interns. “We’d like to see this practice end, but I think a few more people will have to come forward and say: ‘You know what? I was owed money for that work.'”

Perlin thinks a groundswell is building around the Black Swan lawsuit and other high-profile investigations by the U.S. Department of Labor, which recently forced an Atlanta public-relations firm to pay its interns after discovering the company had billed clients for their work. “There are signs of a real discussion happening,” he says, noting that a few schools have stopped posting unpaid internships. “But I’m not expecting wholesale changes in policies at any time soon.”

Looking back on her unpaid internship, Jessica Kim says the experience was valuable. In the end, she decided to abandon journalism and applied to law schools. “Obviously everybody saw something in the unpaid internship that they thought made it worthwhile,” she says. “But I wouldn’t do another one. I’m graduating, and now I think I should work for money.”