April 8, 2014

RITHOLTZ | The Future of the Intern

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By SAM RITHOLTZ

Over the past few years, the topic of unpaid internships have come under much scrutiny after former unpaid interns have sued their former employers for violating minimum wage laws. The explosion of suits filed against for-profit companies occurred after two men successfully sued Fox Entertainment Group for failing to pay them during their internships on the set of Black Swan. Similar suits followed with cases accusing media giants like Hearst and Condé Nast of violating similar standards.

The former Fox interns argued that they were replacing paid labor and were not participating in any educational program. Their case was based off the Department of Labor’s six criteria used for evaluating the legality of an unpaid internship. These legally unpaid internships must benefit the intern, include a training program, not replace a regular employee, not directly advantage the employer, not promise a job upon completion and include a mutual understanding of its unpaid status.

These laws have come under intense scrutiny, as unpaid internships have become the norm. The New York Times, citing the National Association of Colleges and Employers, estimated that almost half of the internships undertaken by the class of 2013 were unpaid. Condé Nast, home of the New Yorker and Vogue, had one of the most remarkable responses to this controversy when it formally cancelled its internship program.

While many students decry this loss of opportunity, I applaud the changes that challenge the current system. In the case of most for-profit companies, the idea of the unpaid intern is a gross taking advantage of a competitive labor market. The employers of these prestigious unpaid internships in competitive fields understand the supply and demand of this specific market and know that many students would kill for the opportunity to have these company names grace their resumés. Even though they are parts of multi-billion dollar industries, these companies do not pay their interns because they recognize that there will always be someone else willing to work for less.

Aside from the labor violations inherent in this process, the unpaid internship is also an unjust institution that perpetuates socioeconomic discrimination. It comes as no surprise that only those with substantial financial support can maintain an unpaid internship. These prestigious internships are often in the country’s most expensive cities and come at the opportunity cost of working for pay. As a result, only students of a certain economic class can access these internships and enjoy the benefits of this work.

As these cases undergo legal review, there is no clear future for the unpaid internship. Until the institutions can be made more equitable, it is up to universities like Cornell to compensate for these inequalities for the good of their own student bodies. Cornell already has some programs in place that help offset these costs, but more could be done to make these opportunities more available to students. The Cornell Commitment office offers a summer expected savings replacement grant to overcome these financial issues, but the office includes less than five percent of the undergraduate population.

Cornell should implement more programs that work to help offset the cost burden of unpaid internships — specifically those for students who must take out loans to compensate for their expected summer earnings in their financial aid packages. In addition, Cornell should follow in the footsteps of its peers such as Columbia and NYU, who have both been very vocal in condemning unpaid internships. This condemnation appeared in the acts of refusing to post unjust opportunities and refusing to grant credits toward graduation for internships at for-profit companies. It could also appear in having the University openly acknowledging the inequality in this system and assisting students in finding paid alternatives or further resources. Regardless of the future of unpaid internships, we can do more to mitigate its inequities today.

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