Unpaid internships: A raw deal?

By Courtney Ridenhour

I recently stumbled across a year-old series of articles in The Atlantic critiquing the merit of unpaid internships and laying out the economics behind them. Given the time of year, it seemed an appropriate topic.

In the articles, the author, Derek Thompson, asked readers to share their opinions on the subject. The first article focused on the negative, underlining several key ideas: the effects of family income on ability to work, the economic inefficiencies of unpaid internships, an inflated labor supply and the resulting lower wages, and the implications of free labor.

In the second article, those who responded called unpaid internships “better than college.” The primary takeaways were the following: unpaid jobs are like free training, they are an economic reality, and the agreement is, ultimately, economically sound.

I agree with the point that unpaid internships inherently limit the field of applicants – without grant money, a fair number of people cannot afford to accept an unpaid internship, in spite of the experience gained.

Experience, in this case, is the currency. Thompson pointed out quite correctly that the economics of unpaid internships is not a market failure. Students want experience; they are willing to exchange their labor for nothing (monetarily, of course).

I would argue experience is a non-market good. Sure, it is a bit of a raw deal to not make a dime for all your work, but you still maximize your utility, as does the firm.

I too have done an unpaid internship – one reader referred to them as a “rite of passage.” What did I get out of the deal? Real world experience – something no undergraduate program can perfectly imitate (although they may get very, very close). Did I wish I were getting a paycheck? Of course, who wouldn’t? But, at the end of the day, the payoff was much greater.

Read the articles here: The Atlantic