Lost Wages, Found Experience: The Dilemma of Unpaid Internships
Article by Fora Research Assistant, Mekhalaa Muraly
In the realm of secondary schools and universities, where young individuals yearn for summer jobs and internships, the arduous journey of submitting countless applications and weathering moments of anxiety is a familiar tale. Amidst the challenges they face, their aspirations converge on the quest for a single job offer. This offer is not only expected to extend them with financial support for their sustenance but also provide valuable learning opportunities and a chance to enhance their resume, enabling them to secure full-time employment at a reputable company. However, a majority of high school and university graduates are struggling to find employment, while a significant percentage of Canadians under the age of 25 are earning minimum wage (Government of Canada, 2023). In light of such challenging labor market conditions, the emergence of a substantial number of unpaid internships becomes an ever more concerning phenomenon that confronts young jobseekers in Canada.
“Being a university student personally, I experienced a sense of disillusionment when I aspired to apply for an internship with esteemed international organizations like the renowned United Nations, only to discover that they were unpaid. ”
To make matters worse, some of these opportunities even demanded students to relocate, bearing the burden of funding their own living expenses. My immediate reaction was disbelief, thinking to myself, "The United Nations? Seriously? In 2023?”
Similarly, during a discussion with a friend who is currently interning at a tech start-up, she expressed her firsthand account of dedicating long hours to work for zero financial compensation. Despite willingly choosing to intern at the company and having a personal goal in mind, she encountered numerous difficulties in managing her expenses and had to endure lengthy commutes to reach her workplace. What is disheartening is that she felt compelled to accept and persist in the position, solely relying on the hope that it might eventually result in a potential full-time job offer. The more conversations I had, I came to a growing realization about the inherent inequality present in these "opportunities" – it became evident that the concept of fairness is lacking when factors such as social class, race, immigration status, and economic privilege come into play, dictating who can actually afford to pursue them.
Research reveals that internship experience is highly valued by the Big Four accounting firms as well as technology companies like Meta and Google (Guterman, 2019). Consumer goods and retail companies also tend to value internship experience, with approximately half of new hires at Gap and Starbucks having previously held internships (Guterman, 2019). Surprisingly, the U.S. Congress has the highest proportion of employees with internship backgrounds, with an overwhelming 89.4 percent of new hires having undergone internships (Guterman, 2019). Empirical evidence from the labor market in North America demonstrates that employers place significant value on internship records. However, according to a research study conducted by the National Association of Colleges and Employers in 2019, it is suggested that there are significant differences based on race and ethnicity when it comes to the number of internships attained and the type of pay received (National Association of Colleges and Employers, 2020). The findings revealed that Black students constituted a mere 6 percent of paid interns, suggesting an underrepresentation. However, among unpaid interns, their presence was 7.3 percent, indicating a statistically significant overrepresentation. Furthermore, Hispanic-American students were found to be more likely to have never had an internship compared to having an unpaid or paid internship. Based on these findings, it can be inferred that only individuals from privileged socio-economic backgrounds are able to qualify for unpaid internship positions. This further widens the racial wealth gap and hinders the abilities of marginalised communities to pursue equal opportunities.
“According to a research study conducted by the National Association of Colleges and Employers in 2019, it is suggested that there are significant differences based on race and ethnicity when it comes to the number of internships attained and the type of pay received.”
Considering these results, it raises an intriguing question: do unpaid interns have any benefits compared to individuals without any internship experience at all? Nonetheless, it is undeniably difficult to isolate and quantify the impact of unpaid internships on society and the economy due to lack of conclusive, macroeconomic data. Unfortunately, organizations such as Statistics Canada and Employment and Social Development Canada do not gather information specifically on unpaid interns, which leaves us with only speculation regarding the potential negative effects of unpaid labor on worsening of socioeconomic disparities. For instance, many students find themselves in significant amounts of debt and other financial constraints as they are often compelled to pay tuition fees while simultaneously providing free labor for their employers. Furthermore, in periods of economic recession characterized by high levels of unemployment, students may gravitate towards unpaid internships with the aspiration of securing full-time paid employment. However, this increase in the supply of free labor can cause employers to replace their existing full-time workers with unpaid interns, driving down equilibrium wages and exacerbating unemployment rates, thereby worsening the already weak economic climate.
Another interesting aspect to consider is that start-ups, non-governmental organizations (NGOs), non-profit organizations, and international organizations are more inclined to offer unpaid internships due to limited funding and financial resources. A significant implication is that individuals who assume unpaid intern roles in influential decision-making spaces centered around economic development are often not the ones directly affected by the decisions and policies implemented within these spaces. Since individuals who are impacted by policies are not obtaining positions to influence those policies, there has been a rise in social challenges that must be addressed in order to promote and ensure employment equity and economic prosperity.
“A significant implication is that individuals who assume unpaid intern roles in influential decision-making spaces centered around economic development are often not the ones directly affected by the decisions and policies implemented within these spaces.”
The existing gaps and disparities in the workforce must be acknowledged and tackled as they raise concerns about equity, diversity and inclusion, which directly affects the lives of young leaders. As I address all employers and labor demanders, I want to emphasize this point: it is crucial to recognize that just because there might not be a legal obligation to provide compensation for every opportunity offered, it does not absolve us of the moral obligation to do so. In conclusion, in our pursuit of a fair and equitable society, it is crucial that everyone is provided with an equal opportunity to succeed. This principle extends even to the realm of internships, where innovative approaches like micro-internships or providing an honorarium or stipend can help level the playing field.
While studies present mixed conclusions on the causal relationship between financial compensation and motivation, it is reasonable to believe that compensating interns correlates with their engagement and commitment to the organization. When interns are burdened with the stress of seeking external sources of income to sustain themselves financially, they are distracted from achieving their internship goals. Furthermore, employees today are increasingly mindful of how companies treat their workforce, including interns. They observe how organizations address broader social issues and prioritize diversity, equity, and inclusion. Therefore, by striving for fairness and upholding a culture of inclusivity, organizations can create an environment where interns and employees alike thrive, fostering a more equitable society for all.
REFERENCES:
Canada, E. and S. D. (2023, January 27). Federal minimum wage: Issue paper, Government of Canada . Federal minimum wage - Issue paper - Canada.ca. https://www.canada.ca/en/employment-social-development/corporate/portfolio/labour/programs/labour-standards/reports/issue-paper-federal-minimum-wage.html
Guterman, D. (2019, December 19). To intern or not to intern: Which companies require an internship?. Chegg Internships. https://www.internships.com/career-advice/search/to-intern-or-not-which-companies-require-an-internship
National Association of Colleges and Employers, N. (2020). Racial Disproportionalities Exist in terms of Intern Representation. Racial disproportionalities exist in terms of intern representation. https://www.naceweb.org/diversity-equity-and-inclusion/trends-and-predictions/racial-disproportionalities-exist-in-terms-of-intern-representation/