The Value of Offering Paid Internships
Although a significant proportion of internships are unpaid—more than 40% at for-profit companies, as of 2017—many organizations are recognizing the benefits of having educated and professional students fill their temporary hiring needs through paid internships.
Benefits to Employers and Interns
One of the benefits of internship programs is that companies and nonprofits get to try out these temporary employees for a brief period with no commitment. If an intern turns out to be a motivated star player within the organization, the company has the chance to offer them full-time employment once the trial period is completed.
Having interns come in for brief periods of time offers employers help in meeting their future hiring needs. Employers not only learn the interns’ aptitudes and abilities but are assured that the intern knows what they are getting into since they’ve become familiar with both the work involved and the business environment. All of that ultimately means higher retention for new employees and lower employee turnover for employers.
When it comes to internships, employers have an opportunity to attract talented students by offering a salary or monthly stipend.
Creating Equal Opportunities
Paying interns also assures an employer that they are not overlooking successful students who cannot afford to work for no pay or to pay for college credits to complete an internship during the summer. Many employers require students to receive credit for the internship instead of pay, to justify that the student is receiving some type of benefit for doing the internship.
The problem with this approach is that many students cannot afford to pay for college credit if they are not paid for the internship. Students doing internships during the fall or spring semester can usually roll their internship in with their college tuition; but if they do an internship during the summer, they have to pay the college a per-credit-hour fee.
Some colleges have initiated transcript notations as a way to show their commitment to honoring the value of an internship experience without requiring the student to pay any college fees. Transcript notations can be used when an internship does not qualify for credit or if a student elects not to do the internship for credit due to additional tuition costs required by the college.
More colleges are putting together programs that offer students a stipend or provide other funds for those doing unpaid internships for the summer. It is a great incentive for students to get experience in the nonprofit sector while being able to make some money to help with their living and college expenses. The Praxis program at Smith College is a good example of what some schools are doing to provide assistance to unpaid summer interns.
Some colleges offer alumni the opportunity to fund internships, and that arrangement is beneficial for everyone. Alumni get the chance to assist students from their alma mater; the school gets good press for helping students get relevant work experience prior to graduation, and students gain the knowledge and skills they will need to put them on par with or ahead of the competition when entering the job market.
The Future of Paid Internships
If internships continue to become more of an integral part of the employee hiring process, we should see an ongoing rise in the percentage of internships that are paid.
However, in January 2018, the U.S. Department of Labor introduced new guidelines for when interns must be compensated that should make it easier for companies to justify not paying them. A previous criterion that stated an intern should be paid for any activity that resulted in an "immediate benefit" to the company was eliminated. The updated guidelines sprung from a 2015 Court of Appeals ruling in New York that found the previous criteria were too rigid.
The unemployment rate will also no doubt play a role in how willing employers are to compensate their interns. When joblessness is low, employers should feel more pressure to offer paid internships because there are fewer prospects to fill those positions and they will want to do what they can to attract worthwhile candidates. The unemployment rate in September 2019 was 3.5 percent, the lowest it had been since December 1969.