Thursday, March 31, 2011

The Unintended Economic Consequences of Paid Internships

I had a great conversation yesterday with a friend about internships.  Actually, it was a terrible conversation.  Mostly texts back and forth over a ten minute period, but the subject was interesting.  He argued that unpaid internships are a way rich people keep poor students poor.  In many cases you can’t get a paid job without doing a free internship first.  Let’s generalize that not all students with paid jobs are poor, but that all poor students need paid jobs.  If there is a poor student and a rich student, the rich student is going to inherently have the advantage for the future paid “career” job because they had the means with which to work for free beforehand.  An opportunity the poor student could not afford.  If the poor student takes on two jobs (one non-career paid job, one unpaid career-oriented internship) then his work is going to suffer relative to the rich intern, and reflect in future job offers out of the internship.

Makes sense as a theory.  I just don’t think it applies in practice.  If there was a mandate for all internships to be paid, there would be unintended consequences affecting the overall market, not just applicants looking for an entry level position.  Counter intuitively, free internships actually help those that can economically afford them the least while a paid internship will adversely affect them.

Let me agree that the system right now with unpaid internships is NOT fair.  All of my friend’s earlier points regarding this are correct.  However, the systemic problems for this occur well before college internships and need to re-balance at a much earlier stage of education than college internship in order to make a real difference.  So how do we account for correcting this in internship programs?  Unfortunately, the poor student is going to have to work harder for the same result.  Most people I know (myself included) that did unpaid career internships in college also worked part-time at a paying gig.  Cal Convenience Store/UC Berkeley Library desk attendants stand up!  I was able to start my career position two weeks after graduation solely because of my prior unpaid one.  The data point of one is always a dangerous thing to go off of, but most of the interns that I have worked with in my career also had similar success after graduating and the vast percentage had paying part-time jobs as well as school work.  I don’t know why, but we always seemed to recruit Red Lobster employees.  Again, let’s assume that not all Red Lobster student workers are poor, but that all poor students would need to work at a paying job (in this case Red Lobster).   The unpaid internship is treated like vocational school for white collar workers.  No different than a class you would take at University, only more applicable.  No different than going to trade school to learn about engines, except instead of paying tuition for it, you pay in the opportunity cost of not being able to work more at your paying job.

In theory, a mandate for paid internships works because it takes the above scenario and relieves the additional force of Red Lobster for which only one of the two students has to account.  However, the reality is that if companies were forced to pay all of their interns, then it would eliminate the majority of internships.  This happened to one organization with which I was associated.  We went from 4 summer interns to 0 when we switched to mandated pay.  With fewer internships, the spots will go to the students that are the most polished and can help immediately.  This is generally going to favor students who come from affluent backgrounds.  Poor students will still have to get the job at Red Lobster.  The only difference is that they won’t have the training for what they want in a career when they graduate.  Currently, organizations that can hire multiple free interns take more chances on potential since the fate of a project doesn’t rest on the short-term competency of one person.  The same cycle exists, except with fewer paid internships, the poor student finds himself at graduation even further behind than he would in the current system.

Another unintentional consequence is that small businesses will be hurt because they will stretch the employees they already have to do work that had previously been done by interns, while big corporations will be  the only ones able to pay interns.  This will create a competitive advantage for corporations over small businesses that already suffer from great economies of scale deficiencies.  This in turn exacerbates the income gap since small firm owners will be squeezed out of the market.

Basically in a world with unpaid internships poor students are at a great disadvantage, but it is not insurmountable.   Who is hurt the most are students that don’t want to get a career internship in college, regardless of socio-economic background.  From my experience, these are mostly rich and upper middle class students more likely to play during college and not want career track jobs right out of high school.  They are incentivized to freeze the student market for as long as possible.  This leads more into a cultural question about when people become adults and so on.  If I can prolong my childhood through college, then I want a paid internship afterward since my parents/financial aid are no longer going to help out.  If I am forced to think about my career at 18,  like most lower income students have to, then I want as much opportunity to gain experience, regardless of whether it is a second tier internship that leads to a better one next year, or a class that is more practical than fun.  In a world with mandated paid internships, small business can’t compete as well, and the rich students are given an even greater advantage since they are going to be the best candidates for the narrowed internship opportunities.

Distracting background media consumed while typing:  Twin Shadow, Foster the People, Diamond Rings

Next subject: The Real Lesson of ’79: Why Egypt’s Recent Revolution Should Be Embraced by All Fox News Viewers… regardless of their fear of Muslims

Friday, December 31, 2010

The Brian Hopkins Project

Hi.  This is going to be my blog… The Brian Hopkins Project.  The original posts were from when Ashley and I went to South America.  Then I stopped.  The new idea to start writing again came out of two seemingly contradictory thoughts.

1.  I’m really interested in a lot of different subjects and I enjoy writing, so this is a way for me to do something different than what I am currently discussing at work or school.

2.  The explosion of social networking sites is full of people writing about things that they care about… but maybe not a lot of other people do.  I’m not as excited to know that you just checked in to your local convenience store.  Hopefully this becomes a conversation.

I have an amazing amount of diversity in my friendships- everybody from business school professors to anarchist welding inspectors- so it will be fun to see your respective perspectives.  I’m probably going to be wrong a lot, but your feedback is not only going to make me more accountable in my initial research, but I’m also going learn from you along the way.

Saturday, July 26, 2008

Why would anybody do this?

So in an earlier post I inferred that the scariest part of this trip was not the possibility of running into Maoist rebels in Peru, nor street criminals in Rio, but rather skiing down a mountain in Chile. I was wrong. Pictures of us hang-gliding over the beaches of Rio are at:

While soaring past Christ the Redeemer was the highlight of Ashley´s life, mine was probably landing. This of course was after flying for a couple minutes, hearing the guy piloting the ´plane´talk to himself in Portugese, and then look over at me and mutter in broken English, ¨turbulance¨ as we headed toward the high rise hotels on the beach. This is a word that terrifies me in a real plane, never mind in something that looks like it was possibly made from Legos.

Thursday, July 24, 2008


We have been in Rio for 2 days now and I already think it is my favorite city. We climbed Pau de Acucar this morning and then spent the next couple hours sipping coconuts on the beach of Ipanema. Life is good.

Sunday, July 20, 2008

Another border crossing

Just finishing with Argentina. Pictures are at:

Iguazu Falls is maybe the most spectacular thing either of us have ever seen. Ashley had a great Birthday today celebrating here in the park on the Argentine\Brazil border. After an icredible week in Buenos Aires and a great two days on this side of the river, we are off to Foz do Iguacu tomorrow to see the Falls (or Foz) from the Brazilian side. Then a plane on Tuesday to our last stop on the tour in Rio.

Saturday, July 12, 2008

BA Arrival

We just arrived in Buenos Aires this morning. The city looks great and we already went for quite a walk. Just spent 3 days in Mendoza, Argentina which is in the center of the Argentine wine country. We did a pretty cool wine tour yesterday after renting bikes and riding around the town of Maipu. We´ll be here for the next week until taking a bus up to Iguazu Falls.

Wednesday, July 9, 2008

Chile Pictures

Colorful houses, more Plaza de Armas', and somebody thinking it was a good idea to put Brian in skis. All at: