Late one night last November, 26-year-old Ben Yennie got a call from his boss, who needed a last-minute task completed by morning.
As an intern, Yennie was working full-time but making less than $500 a month arranging events for independent filmmakers to learn about production and financing.
When Yennie said he couldn't finish the late-night project, his boss told him there were two choices: get it done or you’re gone. Yennie walked out the door and spent the night singing karaoke with friends, effectively ending his internship. Not long after, he started a competing company, Global Film Ventures, in the same industry. In just a few months, his San Francisco-based business has taken off.
"The internship I did — I would not be where I am without it," Yennie said, crediting the position with giving him the network and contacts to succeed on his own. "It was hard and frustrating while I was doing it, but it was very worth it."
Yennie's low-paid internship is a fixture of America's labor force — 1 million to 2 million Americans participated in an internship in 2012, according to Ross Perlin, author of "Intern Nation," and as many as half of those internships were unpaid or paid less than minimum wage.
While these positions have long been seen as a way to get experience and a foot in the door, unpaid interns rarely obtain more job offers or make more money than their counterparts who do not participate in internships, according to a new study from the National Association of Colleges and Employers (NACE).
Because the Bureau of Labor Statistics does not track internship data, it is difficult to estimate how many internships exist and what their contribution is to the work force. In 2006, Anya Kamenetzi, author of "Generation Debt," did a "quick and dirty" calculation based on the estimate from a Princeton Review report that there were 100,000 internship positions in 2005 — far fewer than the estimated number that exist today.
"Let's assume that out of those, 50,000 unpaid interns are employed full time for 12 weeks each summer at an average minimum wage of $5.15 an hour," she hypothesized. "That's a nearly $124 million yearly contribution to the welfare of corporate America." And given the growth of internships to perhaps over a million, it is likely that number is substantially higher today.
This contribution undermines the ability of entry-level employees to obtain a decent job and places downward pressure on wages, according to Perlin. "Working for free is a way of radically underbidding the competition and promoting a 'race to the bottom' — after all, why should an employer pay for something ever again once it can be had for free?"
Last month a federal judge in New York found that film company Fox Searchlight violated federal labor laws by having interns do unpaid grunt work on the 2010 film "Black Swan," which has caused some experts to question the viability of unpaid internships going forward.
A bad bargain
Internships have been on the rise in the past few decades. According to NACE, 50 percent of graduating students in 2008 held some kind of internship during college.
But not all internships are created equal. In May, NACE released a report on the outcomes of 2013 college graduates. The study found that there was a stark contrast between those who had taken paid internships and those who had interned for no pay. Of those who were paid, 63.1 percent received at least one job offer at the end of the internship. Only 37 percent of unpaid interns obtained an offer, which was slightly higher than the 35.2 percent of students who had done no internship at all.