All Commentary
Wednesday, July 6, 2016

The Attack on Internships Is Wrongheaded

They are slight glimmer of hope in a job market that is growing increasingly dark for students.

Google “unfair internships” and you get a blizzard of complaint. Interns are underpaid. Internships favor the rich. They are exploitative. They are a strategic way of getting around federal labor law. Some want mandates on pay. Others want them forbidden.

Here we have a narrow means of escape for young workers, a slight glimmer of hope in a job market that is growing increasingly dark for them. Following college, they can work for free or at a very low rate, for a time, and then perhaps have a greater chance of building a career, or at least avoiding the label “loser.”

And then what happens? The opinion elite conspire to wreck that opportunity too. Our laws and institutions set them up to fail, and then smother one of the few chances they have discovered to avoid that fate.

Why Internships?

Kids spend as much as 16 years sitting in desks, listening to experts, and taking tests to demonstrate that they can recite information. Then after undergoing all this, and paying ghastly amounts for the privilege, they are stunned to discover that they lack skills for the workplace.

Why is the marketplace not dumping barrels of cash on their heads as a reward for their good behavior? As it turns out, that’s not what a job is about. A job is a contract that pays money in return for the value that the employee creates. If you can’t create value in excess of your financial aspirations, there is a problem. You won’t get hired at a desirable wage or you won’t get hired at all.

More importantly, young people lack a network to even get in the door. At every stage of life, they march through school with their peers, step by step, and the adults around them celebrate each hoop they jump. Then the real world hits hard, and no one much cares about the only thing they have been told to do their entire lives.

Bombarding institutions with education-laden resumes is not doing the trick.

Escape the Trap

Internships are a means by which a young person can build a network, gain valuable skills, gain a sense of what it means to do work, and then add something impressive to a resume. The existence of a degree alone does none of this. It’s just a piece of paper. It creates no value of its own.

An internship demonstrates initiative. It helps young people rise above the pack. It can provide a competitive edge. The complaints that they are unfair miss the point entirely. The whole point is to stand out and get some attention for yourself. Not everyone gets them, which is why they are valuable.

It is certainly true that richer families have greater access to internship opportunities than poorer ones, in the same sense that more money generally provides more opportunities. What is to be gained by harming some because not everyone gets an equal share? How is the world made better off by diminishing opportunities for anyone?

The thing to do is to expand, not shrink, opportunities for gaining valuable experience without high onboarding costs. Eliminating the minimum wage, for example, would open up the job marketplace to a broader range of young people beyond just the few. Allowing people to work for any wage, any terms, without restrictions, is the way forward.

Reviving the Apprenticeship

The apprenticeship has been part of entryway training in most countries since the Middle Ages. You study under a master. You gain skills. You work without wages, possibly in exchange for food and housing. This goes on for a number of years until you can start to earn real money. Apprenticeships were a mainstream part of work life for hundreds of years.

But starting in the Progressive Era (with the Smith-Hughes Act of 1917), internships came to be regulated by governments at all levels. This is inevitable in a planning state that aspires to regulate work hours, wages, and terms of contract. In those days, school became compulsory, and it came to be considered a legal privilege to be employed at all. It was part of the effort by governments to sort people into categories based on eugenic notions of fit and unfit. To gain an apprenticeship at all required government approval.

Gradually, over the course of the 20th century, apprenticeships declined and eventually were replaced by internships. What’s the difference? An apprenticeship provides housing, food, and trains for the purpose of later employment. In fact, the costs associated with the apprenticeship were paid back in work at a later time.

That whole system was smashed by government, especially with the national minimum wage and labor regulations of the New Deal. “Child labor” was banned so that, for many, getting a job actually became illegal.

Now every laborer was subject to a homogenized experience. No longer could employers and employees work out their own deals without being threatened by fines.

But the need for an entry into the workforce grew more intense. Internships do not provide housing or food, but are either unpaid or paid in a lump sum in the form of a scholarship, as if it is a mere extension of education rather than vocational training. They are subject to extreme restrictions by the government too.

Deregulate the Interns

People today complain that interns are paid too little and don’t experience a direct benefit in the form of employment after the internship ends.

But guess what? This isn’t the fault of the business. This is the fault of government. Incredibly, federal law stipulates conditions that are designed to devalue the internship in general; these are the six main ones:

  1. It must be more like school than work. Ridiculous and counterproductive.
  2. The intern, not the employer, should benefit. Why not both?
  3. The intern cannot displace a regular employee. This is a mandate for uselessness.
  4. The employer cannot benefit from the activities of the intern, which, again, is a devaluing mandate.
  5. The intern is not working toward a job with the company, and this is well understood.
  6. Both the employer and the intern know that no wages are paid to the intern.

If you look at those conditions, you can see that the practices that so deeply irk the critics of internships are specifically mandated by federal labor law.

For example, the head of the Ford Foundation complains that “America’s current internship system, in which contacts and money matter more than talent, contributes to an economy in which access and opportunity go to the people who already have the most of both.”

Again, a piece on Buzzfeed worries about millennials who are “perma-interns who, long after they graduated from college, have little hope in ever finding full-time employment in their chosen fields.”

Yeah, okay, but maybe the reason is that federal law imposes this very result!

The answer is to permit the internship to be more like work than school. Let interns be valuable to the employer. Allow them to be aspirational to the point of actually challenging the positions of the already employed. Let them work toward a job with the company. Above all else, permit the employer to pay interns in wages – not as a mandate, but only as an opportunity.

(A more far-reaching reform would abolish child-labor laws so that kids could start building professional capital much earlier.)

In other words, get the Department of Labor out of the business of regulating internships. By the time a kid is 22, he or she has been bludgeoned by government at every step of life. Having wrecked so much of their lives, by the time a person leaves college, the government needs to let it go.

P.S. Even with existing restrictions, some institutions are finding work-arounds.