For-Credit Internships Can—and Should—Be Paid

February 20, 2024 | By Alicia Hazen

Op Ed
An illustration of a stack of books, a graduation hat, and a coin.

TAGS: compensation, Internships, journal,

NACE Journal / Winter 2024

The School of Human Ecology at the University of Wisconsin-Madison (UW) differentiates itself from other institutions by making for-credit internships a mandatory component of our undergraduate curriculum, recognizing that internships offer invaluable professional learning experiences that bridge the gap between classroom-based theories and real-world applications in workplace settings The internship serves as the culminating experience within our three-course careers curriculum, designed to ensure that all students graduate career ready in alignment with the National Association of Colleges and Employers (NACE) competencies.

Although our flexible approach allows students to complete their required internship during the fall, spring, or summer terms, more than 50% opt to complete their internship in the summer when they have fewer competing priorities. As is true with other academic courses, students must pay tuition to enroll in the three-credit internship course required of their major. This can pose a substantial financial burden, especially for those participating in unpaid or underfunded internships, and particularly for those who rely on income from a summer job to help cover their tuition costs for future semesters. Therefore, we are actively working to address the issue of unpaid internships within our school.

Change Agents for Equity: A Case Study Addressing Uncompensated Internships

Change Agents for Equity: A Case Study Addressing Unpaid Internships
Explore the history and prevalence of uncompensated internships on Tuesday, April 23, 2024 with Alicia Hazen and Sarah Fox, and reflect on how you can be a change agent for equity in your own work in advising or career services.

LEARN MORE

Unpaid For-Credit Internships and Financial Pressures

The Fair Labor Standards Act (FLSA) addresses the issue of pay for internships, which currently is dictated largely by the “primary beneficiary test.” Unfortunately, some for-profit employers use this test to justify not paying interns who otherwise would have to be paid; they require students to take the internship for credit, thus enabling the company to demonstrate that the internship is “tied to the interns’ formal education program by integrated coursework or the receipt of academic credit” as outlined in the FLSA.1

This places additional financial pressure on the students: In almost all cases, the student must pay for the academic credits and complete all corresponding coursework to receive them. Therefore, when an internship is unpaid, yet requires a student to enroll in an internship course for credit, the student is not only losing money by participating in an unpaid internship instead of a paid position, but they are also paying thousands of dollars in tuition to take it.

There are additional consequences to not paying interns. For many students, particularly underrepresented, first-generation, and low-income students, taking part in an unpaid internship is simply not feasible, even when the internship directly aligns with their major and career interests and may provide an opportunity for them to build and enhance their professional network and skills. As a result, employers exclude students who cannot afford to work without pay and disproportionately favor more affluent students who have the financial means to do so.

Although some courses of study do require a student to take part in an internship for credit, it is important to remember that credit is bestowed by the institution, not the employer. Employers should not make credit a requirement for their internships. By eliminating the stipulation that students must enroll in an unpaid internship for credit and by paying their interns, employers can contribute to making their internships more accessible to everyone, regardless of their financial circumstances. Moreover, employers with interns who are earning credits for their internship as part of their course of study should still pay their interns: Interns can earn both credits and be paid. Again, providing pay means more students can take part.

Additional Effects on Students

In addition to posing financial challenges for students during and after an unpaid internship, research conducted by NACE suggests that unpaid internships may lead to less desirable career outcomes post-graduation as well. For instance, students who participate in an unpaid internship receive fewer job offers and lower pay in comparison to their paid peers, thus perpetuating a cycle of inequity that persists long after the internship has ended. In surveying the Class of 2023, NACE found that unpaid interns receive an average of 0.9 job offers compared with 1.4 offers for paid interns, and starting salaries that average $22,500 less than students who were paid.2

The Center for Research on College Workforce Transitions (CCWT) at UW also found that unpaid internships “are disproportionately pursued by female college students,” which is a concern given the unending gender wage gap that “estimates that women earn 84% of what men are paid.”3, 4 Additionally, according to results of NACE’s 2019 Student Survey Report, “Black students are more likely to be in unpaid internships and participated in more unpaid internships than their white peers” and “first-generation students were also less likely to be paid as an intern compared to students whose parents went to college.”5

What We Have Seen

Much of this has proven true in the School of Human Ecology, where 70% of our student body identifies as female. The two majors with the highest percentage of unpaid internships are textiles and fashion design (TFD) at 61.5% and community and nonprofit leadership (CNPL) at 40.5%.

Although these are the school’s two smallest majors, they also represent two out of the three majors with the largest percentages of students who identify as Black, Indigenous, and people of color (BIPOC). CNPL also has the largest percentage of students who identify as first-generation at 26.7%, and TFD has the third largest percentage of women at 88.5%.

Unfortunately, both CNPL and TFD also happen to have two of the lowest placement rates at the time of graduation, with 51.2% of our TFD students still seeking employment within six months post-graduation, and 30% in CNPL. A higher rate of unpaid internships might be expected in CNPL when the major directly aligns with the nonprofit industry that is not required to pay interns under the FLSA. However, that should not be the case with TFD students as many are interning with for-profit organizations housed within the retail/fashion industry.

While overall our students are completing unpaid internships at a much lower rate (23.9%) than the national average, which was 41% according to NACE’s 2023 Student Survey, several of our underrepresented student populations are completing them at higher rates than their white peers. For instance, from fall 2021 through summer 2023, 70% of our Black students secured paid internships, compared to 76.5% of their white peers. These numbers are even starker in our business-related majors: In personal finance, 66.7% of our Black students took part in paid internships compared with 76.8% of our white students; in consumer behavior and marketing studies, just 57.1% of Black students were in paid internships compared with 74.8% of white students.

In addition, of the more than 400 for-credit internships our students completed in summer 2023, 5.9% were advertised as requiring students to complete the internship for credit, with 88% of those also being unpaid. Of those offering unpaid for-credit internships, 45.5% were in the public relations industry, 27.2% were in retail/fashion, and 9.1% were nonprofit.

Addressing Financial Challenges for Students

Given the significance of this issue, we recognize the need to address these financial challenges and create equitable opportunities for all students pursuing internships, regardless of their financial circumstances or racial or cultural background, especially as we require students to complete an internship as part of their degree. Therefore, we have invested significant resources into building an inclusive internship program that increases access to paid opportunities and reduces financial barriers for our students.

For example, in the School of Human Ecology, we established the Paid Internships Program in 2015, through which we collaborate with community and nonprofit partners to provide funding to offer paid internships that may otherwise be unpaid. Additionally, the school’s Internship Scholarship Program, introduced in 2017, provides much-needed financial support to students completing unpaid, underfunded, and out-of-state internships with a significant cost for participation.

These initiatives have already made a notable impact. The Paid Internships Program has transformed unpaid opportunities into paid experiences for 59 students thus far, while the Internship Scholarship Program has awarded more than $286,000 in scholarships to nearly 200 students to date, in partnership with UW Summer Term, the office that oversees summer enrollment at the institution. We are proud to have invested more than $380,000 in these two programs since their inception.

Moreover, the school itself has become a noteworthy employer, investing more than $222,000 in paid internships for students working throughout the school and its many departments, centers, and programs each year. As of fall 2023, 10 different units in the school were offering paid internships during the 2023-24 academic year, creating opportunities for at least 60 students. We are expanding our Paid Internship Scholarship program to include unpaid research experiences students are completing for credit this spring as well.

By investing in students’ professional growth, we are empowering them to thrive in their chosen fields, develop robust networks of industry connections, and graduate career-ready. We firmly believe that a workforce equipped with practical experience and financial support is better poised to succeed in an ever-evolving job market. We urge all employers, especially for-profit employers with the means to pay, to pay your interns and stop requiring them to take an unpaid internship for credit. In doing so, you can help end the cycle of inequity that plagues the workforce.

Unpaid Is Unfair

Unpaid internships, including those tied to academic credit, place an undue financial burden on students and perpetuate a cycle of inequity that hampers their future careers. Therefore, we stand united with NACE's statement: “Unpaid is unfair.”

As we move forward, our commitment remains unwavering, and we implore employers to join us in addressing this unfair practice by providing financial compensation to all interns, thus ensuring a brighter, more inclusive future for all our students.

Endnotes

1 U.S. Department of Labor, Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act (January 2018). Retrieved from www.dol.gov/agencies/whd/fact-sheets/71-flsa-internships .

2 Gatta, M. (August 2023). The Class of 2023: Inequity Continues to Underpin Internship Participation and Pay Status. National Association of Colleges and Employers. Retrieved from www.naceweb.org/diversity-equity-and-inclusion/trends-and-predictions/the-class-of-2023-inequity-continues-to-underpin-internship-participation-and-pay-status/ .

3 Barroso, A., & Brown, A. (2021). Gender Pay Gap in U.S. Held Steady in 2020. Pew Research Center. Retrieved from www.pewresearch.org/short-reads/2023/03/01/gender-pay-gap-facts/ .

4 Hora, M. (March 2022). Unpaid Internships & Inequality: A Review of the Data and Recommendations for Research, Policy, and Practice.Center for Research on College Workforce Transitions. Retrieved from https://ccwt.wisc.edu/wp- content/uploads/2022/04/CCWT_Policy-Brief-2_Unpaid-Internships-and- Inequality-1.pdf .

5 Anderson, G. (September 2020). Analysis: Students of Color Less Likely to Have Paid Internships.Inside Higher Ed. Retrieved from www.insidehighered.com/quicktakes/2020/09/10/analysis-students-color-less-likely-have-paid-internships .

Alicia-Hazen Alicia Hazen is assistant dean and career services director in the School of Human Ecology at the University of Wisconsin-Madison (UW-Madison). She holds a Bachelor of Arts in communication arts from UW-Madison and a Master of Science in organizational leadership and change from Edgewood College. With nearly 20 years of experience at UW-Madison, Hazen leads the School of Human Ecology’s career readiness initiatives, overseeing career advising, internships, employer relations, and a three-course career development sequence for undergraduates. Having served as both a career adviser and instructor, Hazen pioneered the school’s Internship Scholarship Program, Paid Internships Program, and mandatory one-credit online career and leadership development course. Her primary goal is to empower all students in the School of Human Ecology to identify and excel in career paths aligned with their interests, strengths, and skills.

An alternative career for engineers and scientists NACE24 Preconference Workshops NACE's NEW Coaching Certification Program

NACE JOBWIRE