When NACE looked at salaries, a similar pattern emerged. It found that median starting salary for graduates with paid internship experience was $51,930, far above the median $35,721 salary that those with unpaid internships were making. Those who had completed no internship at all actually fared better than the unpaid intern group, with a median starting salary of $37,087. For recent grads, taking an unpaid internship proved to have little to no value in terms of getting a good job.
And yet these unpaid internships persist. According to Perlin, the pressure for these internships is "coming from all directions: from employers by turn opportunistic, rational, and afraid of being left behind; from a bottomless supply of harried, ambitious students; and from vociferous proponents in the Academy."
But the economic consequences of the elimination of unpaid internships could be worse for young workers, according to some experts. Jeffrey Tucker at the Mises Institute, a libertarian think tank, said that unpaid internships are a way for young workers to get any opportunity in a tight labor market that might otherwise reject them. "The costs of hiring far outstrip the value of new workers to firms," he said. "During a recession, these marginal workers are avoided. There must be some solution that the market provides, if only for young people to not be completely shut out of the division of labor."
But is it legal?
In the wake of the Fox Searchlight decision that the internships violated the Fair Labor Standards Act (FLSA), many companies are re-evaluating the legality of their unpaid internship programs.
Although nonprofit and government institutions have much more leeway in the kind of work their unpaid interns can do, the FLSA restricts for-profit entities to six stringent criteria. The three key provisions are, 1., the internship experience is for the benefit of the intern; 2., the intern does not displace regular employees, but works under close supervision of existing staff; and 3., the employer that provides the training derives no immediate advantage from the activities of the intern and on occasion its operations may actually be impeded.
Although Judge William Pauley ruled in the Fox Searchlight decision that these criteria were violated when unpaid interns did work that the company would have had to hire other paid employees to do, other courts have reached different conclusions. In 2011, the Sixth Circuit rejected the FLSA test in certain circumstances as "a poor method for determining employee status in a training or educational setting." Similarly, a federal judge in the same district of New York as the Fox Searchlight case found that the six-part test was a "framework," but that the "totality of the circumstances" must apply. For a company trying to decide whether or not to take on unpaid interns, it is difficult to find clarity in these differing legal directives.
An uncertain path forward
Since the Fox Searchlight decision, former unpaid and low-paid interns have brought lawsuits against Condé Nast, The New Yorker, Gawker and Warner Music Group. Recently, NBC, Viacom and other media firms have shifted from unpaid to paid internships. Given the shaky legal and economic landscape of unpaid internships, it is uncertain what the future holds for these positions at for-profit institutions.
Ben Yennie doesn’t think unpaid internships in the film industry are likely to change anytime soon. "The thing about a creative industry is your degree means very little," he said. "It’s more about what you’ve done. There are jobs that need doing and there are people who will do them for free, and as long as that’s the case, I don’t think they’ll ever completely go away."
Yennie does, however, have advice for those considering an unpaid internship, given the reality that it may not lead to a job. "If you’re going to take an unpaid internship, do it in something you believe in, whatever that may be," he said. "Because there’s more incentive than just financial. At the very least it’s a cause you believe in. You can take that home with you."