The Unpaid Internship: The Good, the Bad, and the Ugly

In January, the US Department of Labor (DOL) released new guidelines clarifying the requirements an unpaid internship must meet in order to be legal.

Unpaid internships have always sparked controversy, as having anyone do anything labor-wise for free seems unethical — unless you truly understand the benefits and purpose of an unpaid internship.

The Good

I think, implemented correctly, an unpaid internship can be a fantastic educational and training exercise for anyone.

For interns, an unpaid internship can be a fantastic way to enrich one’s academic studies. An internship allows a person to get a feel for a career path related to their current or previous studies, plus it helps you get a foot in the door at competitive organizations and industries, often leading to paid employment later on.

For companies, internships are great ways to identify possible future hires who would be of value to the organization. According to the DOL’s latest rules, an unpaid intern “should complement, not displace, the work of a paid employee.” For employers, that means  interns should be productive members of a business, but with an emphasis placed on training and experiential learning.

Which brings me to my defense of unpaid internships. Many consider these arrangements unethical — and I would agree if the work of interns were yielding direct profits for a company. But this is rarely the case. In fact, unpaid interns actually cost money for companies and can reduce the productivity of other (paid) employees.

Given the time paid members of staff must dedicate to training, educating, and monitoring unpaid interns — not to mention the cost of desk space, light, heat, water, and other overheads — unpaid internships are not a profitable exercise whatsoever.

So what do companies get out of the arrangement? It’s simple: Organizations are willing to invest in the training, education, and experience of young workers in the hopes of gaining a productive paid employee in the long run. In return, interns sacrifice their salaries for the time spent learning within an organization. This is a mutual arrangement, one that will hopefully result in both parties moving forward with each other in the long run.

The Bad

That said, unpaid internships really are a sign of the times.

Once upon a time, someone with a solid education from a good school would have easily gotten a good job with a decent salary. Now, with more young people than ever graduating from college — plus global competition and an oversupply of skilled labor — students with mountains of debt face the final insult of having to work for free just to prove they have what it takes.

I’m all for education. However, I think these days it is oversold. There is a lot to be said for simple experience — working up a corporate ladder in order to reach the top of a Fortune 500 company. Someone who starts at a level as low as summer associate can go on to be the CEO of the largest retailer in the world (see Doug McMillon, CEO of Walmart).

The Ugly

Abuse of unpaid interns has occurred. Unscrupulous businesses see an opportunity for free labor and a reduction in staff costs, and they present a profit-making (currently salary-paying) role to a person looking for intern experience. Given the DOL’s new rules around unpaid internships, it is clear that the government is looking to protect interns from this sort of behavior.

The new rules also make it mandatory that work given during an unpaid internship relates to what a student is studying at school. This helps ensure the internship is solely focused on education, training, and experience. With these new guidelines in place, I believe that the ugly use of unpaid internships as free labor should be a thing of the past.

Arran James Stewart is the co-owner of blockchain recruitment platform Job.com.