The class ceiling

How unpaid internships are strengthening socio-economic divides – and hurting business

Note: This is part one of a two-part report on interns. Part one takes a look at the business of unpaid internships, while part two will examine the bigger picture and corporate social responsibility implications. 

It was a muddy night for David Hyde. The 22-year-old was forced to set up camp in less-than-desirable weather after a storm soaked his usual campsite, he explained to a reporter from a Swiss newspaper following his story. 

But Hyde had to carry on — get dressed, pack his belongings and head to work. The camping wasn’t just recreational, it was his portable home — and the only one he could afford during his unpaid internship with the United Nations.

Hyde’s situation is a striking example of a widely shared experience for this generation of young workers. It’s become a depressing, debt-inducing rite of passage for many new graduates — for the last decade or so, the unpaid internship has been the final gatekeeper barring entry to exclusive clubs in advertising, media and entertainment. 

With more workers than jobs, many employers in competitive fields are having a field day with the concept, hiring unpaid interns to do work that would otherwise have been done by full-time workers. 

But the issue seems to have reached a tipping point, with more and more advocates drawing attention to how organizations benefit in the short term at the expense of the interns — and also, perhaps, at the expense of their own future success. 

Unpaid internships are a phenomenon that has become so naturalized, people think they’ve been around forever, said Ross Perlin, Brooklyn, N.Y.-based author of Intern Nation.  

“They identify it with apprenticeships and co-operative education and other forms of the school-to-work transitions that have existed for longer. But, really, internships are a new phenomenon, something that has emerged in their current forms in the last few decades,” he said. 

“On the one hand, you have companies that were originally looking to develop training and recruitment programs and capture some of the best young talent; on the other hand, you have this whole world of experiential education coming out of colleges and universities wanting to sort of go beyond the classroom. Both of those impulses are coming from good places.”

In the earlier days, this generally resulted in good internships that were paid and actually led directly to jobs, he said — but that’s no longer the case. 

“That’s now changed into something that all too often is a precarious labour phenomenon,” said Perlin. “We’re now at the point where internships have become kind of the gateway into the white-collar workforce… and are really beginning to constitute a barrier to entry for many.”

Pressure heating up
As awareness spreads about the negative consequences of unpaid internships, businesses and governments alike have faced mounting pressure to change policies around the practice. 

“We have a lot of very highly skilled individuals graduating from universities and colleges. Unpaid internships obviously don’t generate any income for these individuals, and we know that more and more of these students are graduating with significant levels of debt,” said Anne MacPhee, CFO at Career Edge in Toronto. 

“So it’s kind of a very nasty cycle they can get into where they need the experience for a job, they can’t get the experience until they get a job and, on top of that, you layer in a very competitive marketplace and a student debt load… the pressure on these individuals and the need to do whatever it takes takes on a different level for them. In many cases, I’m sure some of them think they have to do this, even though they can’t afford it.”

In April, the federal government proposed amendments to the Canada Labour Code that would cover interns under occupational health and safety laws. But the changes aren’t enough to solve the numerous issues created by unpaid internships, according to Claire Seaborn, founder and president of the Canadian Intern Association in Toronto. 

A key challenge is there’s virtually no collected data in Canada to quantify the scope of the problem, said Seaborn. 

“That’s been a real issue for us in terms of our lobbying with the government because they’re constantly asking for data, but there isn’t any. So a lot of policy-makers and politicians are finding it more challenging to make those arguments when they don’t have the data to support it,” she said. 

“For that reason, the past three times that I’ve appeared before the House (of Commons) finance committee, we’ve urged Statistics Canada to begin collecting data on unpaid internships and internships in general, as well as work-integrated learning programs.

“Hopefully, that would include the socio-economic backgrounds of interns so we could get a better idea of whether people from more privileged backgrounds are more likely to be doing unpaid work. Of course, anecdotally, that’s the case.”

Business risks
Seaborn and the Canadian Intern Association receive a vast amount of email from young workers who are unable to do unpaid internships because they simply can’t afford it. That’s bad for those young workers but it’s also bad for employers, said Seaborn. 
“Essentially, those businesses are just cutting out a whole group of workers who are unable to do that internship,” she said. 

It effectively creates a paywall which is particularly challenging for the creative industries, said Alec Dudson, creator of Intern Magazine in Manchester, U.K. 

“Surely, creativity isn’t something that’s exclusive to the wealthy?” he said. 

“A Sutton Trust study (in the U.K.) recently claimed that it costs a single person £926 a month to work an unpaid internship in London. It’s an extreme figure… but one that shows you just how many people aren’t able to take these positions on.”

Many who do unpaid internships have to simultaneously work paid jobs, which can significantly strain the worker’s productivity and well-being, said Seaborn. 

“For that reason, we tend to urge companies — even if they’re running legal unpaid internships through academic programs — to restrict the number of hours to 20, 30 hours per week to allow the unpaid intern to do a paid position on top of their unpaid internship, so that way it becomes a lot more accessible for people who can’t afford it.”

And regardless of sector, unpaid internships are a reputational risk for organizations, said Perlin. 

“(For) some employers who have openly advertised unpaid internships… it really has backfired.”

HootSuite is one Canadian company that faced backlash in 2013 for unpaid internship practices, said Perlin, which resulted in the company ending the practice and providing backpay to interns. 

“There’s a growing awareness that you have to pay for real work,” he said.

There are many solid business reasons why strong organizations put diversity at the heart of recruitment efforts, said Perlin. 

“It can be kind of impossible to know exactly what sets of skills and what sets of backgrounds you’re going to need in the evolution of your business and the evolution of society,” he said. 

“For larger organizations in general, it’s very clear-cut that there is real demand for representation. If you don’t have a workforce, if you don’t have a pool of talent at the table when you’re making decisions that is representative of the society and the market and the world that you’re looking to reach, it’s very likely that you won’t know how to reach it. And people looking from the outside will say, ‘This organization doesn’t get it. They don’t represent me, where I’m coming from.’”

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