Unpaid U.S. Interns Gets Scrutiny

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itera's picture

http://www.bloomberg.com/news/2013-06-27/sleeping-giant-issue-of-unpaid-interns-gets-scrutiny.html

The practice, especially common in competitive industries like journalism, finance and filmmaking, could change if the appeals court upholds the ruling of a federal judge in New York who found that moviemaker Fox Searchlight Pictures Inc. violated labor laws by not paying two of its interns.

“This question of whether private-sector internships violate the minimum wage laws has been sort of a sleeping-giant issue for many years,” said David Yamada

To critics, unpaid internships are an abuse of the labor system, a way for employers to take advantage of desperate job seekers. Supporters, including some former unpaid interns, see it as a way to get training and career contacts.

I wonder if this will impact people trying to get unpaid finance interships just to get experience on the resume.  I know that my firm has not allowed unpaid interns.  We’ve had experienced finance people willing to work for free, but were all turned down by HR.  the practice is very much alive though

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

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whatsyourgovt's picture

I am against regulation forcing all internships to be paid, then again, I am against min wage too. Having said that, I myself would never participate in an unpaid internship (never have) but that doesnt mean others cant find some value in it. In any event, i hope the court rules against this supposed violation because I do foresee (like everything else) detrimental consequences with respect to firms providing internships. 

spunboy's picture

My company won’t allow unpaid interns also.  There are definitely tons of kids knocking on the door willing to work for free.

I don’t believe in a minimum wage and bet most on this board agree.  Let demand/supply work itself out.  Only exceptions would be child labor laws and safety in the workplace. 

“Research is what I’m doing when I don’t know what I’m doing.”  Wernher von Braun

ohai's picture

I can understand how unpaid “internships” can be exploitative in low skilled fields. For instance, lets say I get unpaid interns to work in my warehouse or factory. The work requires little training, meaning that the unpaid temporary person has most of the productivity of an experienced worker. Furthermore, the interns do not gain many transferable job skills from menial work. I could also hire unpaid workers on some promise - like giving them a job reference letter - which I can renege on. 

However, in fields like finance, unskilled interns have very low productivity. During the first three months, a new worker contributes very little to the business. They might even have negative contribution, since the experienced workers must train and mentor the new worker. Thus, internships in fields like finance are used as recruitment opportunities, not as sources of labor. Under these circumstances, unpaid internships have low potential of being exploitative. 

“Be aware of this 40 year old men in our country.They suffer from mid life crisis and are always trying to be in the good books of young girls.” -Rahul Roy

itera's picture

part of the argument I think I saw was that interns were doing simple admin stuff which was real value (however you define that), so therefore it was deserving of “a paycheck”

If you had an intern shadow you and do nothing except try to pick up and learn stuff, I would totally agree a $0 pay would be worthwhile. 

But we all know the truth: experience gets people hired (or at the very least.. an interview), and you are not required to say you were unpaid on the resume.  It’s like the pre-foot in door

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

whatsyourgovt's picture

Sold input, but is there such thing as an internship in a warehouse or factory? I know you were just using these ideas as examples, or concepts, but more than likely such work that provides little transferable skills will result in an hourly wage. 

I think it comes down to choice. If you, as a free human, desire to learn an advanced skill and the only method of doing so would be to work for knowledge, than so be it. In all reality, we all know internships entail grunt work and the skills you pick up are of little value except for the idea of converting full time. 

bchad's picture

It’s been a while since I’ve worked with an intern, but it’s often a challenge just to think of what the intern can do that is useful.  Usually it’s some kind of news gathering on low priority but necessary projects so that you can spend your time on higher priority work.  However, it is nice to at least let the intern watch how you do the higher priority stuff, even if they don’t get to participate very fully.

You want a quote?  Haven’t I written enough already???

woodywoodford's picture

I don’t have particularly strong feelings on paid vs unpaid internships.  I’ve always wondered how people afford to go those months without any income though?  I mean, if I’d been offered one, I’d have to live off dad for the term and he won’t do that.  No way a typical college student has enough saved up for to get by, so in a way the whole unpaid internship really limits the pool of talent.

krazykanuck's picture

I’ve never worked for free, but in my college days, most of the people who I knew with unpaid internships were more often than not, working in liberal arts type things, interning with non profits, things like that. All the business student kids got paid.

lockheed10023's picture

Screw this, at this point, I’m actually willing to ‘Pay’ the ‘Company’ to give me an ‘Unpaid Internship’.

If any of you work at a company that has a finance related internship in the NYC area, I will pay you $3000 to give it to me. You don’t have to pay me sh—t.  Just let me observe and learn some practical stuff.

MBA, CFA L2 Candidate, 10yrs experience




spunboy's picture

lockheed10023 wrote:

Screw this, at this point, I’m actually willing to ‘Pay’ the ‘Company’ to give me an ‘Unpaid Internship’.

If any of you work at a company that has a finance related internship in the NYC area, I will pay you $3000 to give it to me. You don’t have to pay me sh—t.  Just let me observe and learn some practical stuff.

MBA, CFA L2 Candidate, 10yrs experience

Wow, you’re getting pretty desperate. It sucks that you’re having such a hard time with ten years under your belt.  From what I recall you’re in fixed income, correct?  FI positions are going to get a lot scarcer once they start floating NAVs in money funds.  Some of my analyst buddies expect their companies to wind down their funds. 

For all you kids that keep asking how to break into the industry, look here at lockheed.  Maybe you all will get it through your thick skulls how tough the job market is for finance jobs. 

“Research is what I’m doing when I don’t know what I’m doing.”  Wernher von Braun

The Righteous Hacksaw's picture

It should read:

HACKSAW MBA, CFA L2 Candidate, 10yrs experience

No Homo

itera's picture

spunboy wrote:

For all you kids that keep asking how to break into the industry, look here at lockheed.  Maybe you all will get it through your thick skulls how tough the job market is for finance jobs. 

+10, and also add: Just passing the CFA exams alone will not open the door for you.

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

rawraw's picture

I did my senior year internship at Merrill Lynch.  I was into equity analyst type stuff and the group of brokers did their own buy/selling.  It was an “unpaid internship” due to BofA rules, but my boss still paid me because he thought it wasn’t right.  I was just sworn to secrecy about it lol

And I guess I took my internship for granted.  I probably did 1 or 2 hours total of grunt work the entire year and was really given free reign to do anything with the Bloomberg terminal that could produce meaningful results.  Ended up designing an entire new investment process for the group by automating lots of stuff

Wendy's picture

Bloomberg wrote:
The practice, especially common in competitive industries like journalism, finance and filmmaking,

At the risk of disagreeing with Bloomberg, I don’t think that unpaid internships are common in finance, like they are in journalism.

(Although one of my friends did do an unpaid investment banking internship – that lead nowhere in the end).

I think that an unpaid finance internship is a pretty solid sign that that finance firm is not really legit.

eternal optimist's picture

WOW… So many people think it’s OK to get free labor but still bitch and cry foul when the labor is exported to an offshore, third world country! Doesn’t anyone see the double standards here? Well, if you don’t let me tell you why the minimum wage requirements is necessary & why unpaid internships are NOT a way to enter the industry:

1.     You are assuming that supply & demand law will take care of setting wages in the market. But that would happen when both the supplying and the demanding entities are equal. But in case of the market, the supplying entity or human resource is always majorly at a disadvantage to the company or the organization that is demanding the skill. If the organization needs a person with an MBA, a CFA charter holder and with 10 years of equity research experience (assumptions here), and based on your supply and demand theory it adjusts the salary to match the minimum that a person with these qualifications would accept to work for. But, if it really hunts for such people all across the world, it would always find cheaper labor with better credentials and skills. Why? Because life is interesting and you would always find someone with huge skill set in a crappy condition willing to work for three square meals a day! Minimum wage avoids this situation and prevents the strong from exploiting the weak. Heck, the fortunes that some of you made are a direct result of this minimum wage.

2.     Unpaid Interns – internship IS for scouring raw talent with minimum expenditure and thereby retain that talent. But what is happening with the system currently is firms like UBS (Firsthand experience) hire unpaid interns to do menial clerical tasks which would’ve been pricy had the intern not agreed to take up the job for brand value. Although this is not unfair, this is indirectly hurting the company because, since the internship is unpaid, the organization puts little to no effort in screening the talent. This results in a lot of wastage for both the intern (who comes in with a hope of converting that unpaid internship into a full-time job or get some connections) and the organization which involves its paid resources to train the intern (for however menial the task is, there will be some training) .

3.     Having to pay an unskilled worker to work & hence get trained on the job puts the pressure on the worker to learn the work fast with little mistakes and the pressure on the manager to teach the worker efficiently to catchup and utilize the resources being spent on the unskilled, raw talent.

Finally, I apologize to Lockheed before I say this blanket statement, and believe me, I know that this opinion of mine can change once I understand his/her situation better, but I believe that if you don’t get the job of your dreams in 10 years of trials, it may be time for you to re-evaluate that dream and try for something else. Life does not begin at the finance world, and it does not end there. CFA, MBA, XYZ, ABC are all meant to prove to yourself that the knowledge you know you possess meets a certain standard and is not arbitrary! 

- EO

itera's picture

^ I actually disagree with quite a few points you made here. 

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

spunboy's picture

^ I disagree with you, itera.  I don’t think there is a lot to disagree to, rather, a lot of it doesn’t make any sense. 

“Research is what I’m doing when I don’t know what I’m doing.”  Wernher von Braun

itera's picture

^ I disagree with your lack of disagreement here

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

spunboy's picture

^ Well, I disagree that you disagree which means that  ….   I agree.

 photo untitled-1.jpg

“Research is what I’m doing when I don’t know what I’m doing.”  Wernher von Braun

ofthedivision17's picture

In the United States, we should have the right to sell our labor for whatever price we choose.

ninja_economist's picture

ofthedivision17 wrote:

In the United States, we should have the right to sell our labor for whatever price we choose.

Tell that to your p*mp!

"Ivy Undergrad, GS, Top 3 MBA, KKR, 400+ HP Whip, BSD, HCB, 4000+ AF points.... Or, rusty hacksaw to sack." ~ CFAvsMBA

ofthedivision17's picture

ninja_economist wrote:

ofthedivision17 wrote:

In the United States, we should have the right to sell our labor for whatever price we choose.

Tell that to your p*mp!

My pimp? No one owns me. I’m debt free. If I wanted to take a year of from work to pursue a passion, I could easily live off of my savings (albeit modestly). I doubt that I would ever do so, but I’d like to know that the option is there - wouldn’t you?

ninja_economist's picture

ofthedivision17 wrote:

ninja_economist wrote:

ofthedivision17 wrote:

In the United States, we should have the right to sell our labor for whatever price we choose.

Tell that to your p*mp!

My pimp? No one owns me. I’m debt free. If I wanted to take a year of from work to pursue a passion, I could easily live off of my savings (albeit modestly). I doubt that I would ever do so, but I’d like to know that the option is there - wouldn’t you?

Relax, just kidding…  I worked few unpaid internships during my unemployment days, one of which helped me in landing a full time job.  Desperate times call for desperate measures, so I had to do whatever I can to get my foot in the door.  In current environment with surplus supply of business grads, Level 1 pass wanna-be BSDs and even experienced finance guys looking for work, employers are exploiting the talent pool in whatever way they can.

"Ivy Undergrad, GS, Top 3 MBA, KKR, 400+ HP Whip, BSD, HCB, 4000+ AF points.... Or, rusty hacksaw to sack." ~ CFAvsMBA

Wendy's picture

lockheed10023 wrote:
Screw this, at this point, I’m actually willing to ‘Pay’ the ‘Company’ to give me an ‘Unpaid Internship’.

If any of you work at a company that has a finance related internship in the NYC area, I will pay you $3000 to give it to me. You don’t have to pay me sh—t.  Just let me observe and learn some practical stuff.

This is actually quite a sensible view of the topic.

In my experience, the main difference between Joe Random making $60,000/yr and Joe Wall Street making $360,000/yr, is that Joe Wall Street was at some point able to get his foot in the door at an investment bank.

blackomen's picture

Just pay the interns hourly and by minimum wage..  if you still can’t afford them, then cut their hours back to like, say, 3 hours a day.

Never underestimate the power of having a thick skin.

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