Paid Internships: Moving Toward Greater Equity, Setting Pay

February 4, 2022 | By Kevin Gray

woman holding a check

TAGS: benchmarks, Internships, nace insights, retention, trends and predictions,

The paid internship provides key advantages for students seeking their first post-college position. For starters, results from NACE’s Student Survey have consistently found that paid interns receive more job offers before graduation than unpaid interns and more than those who haven’t engaged in an internship.

Overall, Class of 2021 graduating seniors reported receiving an average of 0.83 job offers. Meanwhile, paid interns received an average of 1.12 job offers, unpaid interns received 0.85 offers, and those who had no internship experience received 0.64 offers.

In addition, NACE’s research consistently shows that those students who had paid internships are more likely to secure a job prior to graduation than their counterparts.

Related Resources
See NACE Brief: Inequity in Internships and NACE Brief: Virtual Recruiting. NACE members can access both for free through MyNACE.

However, NACE research has found that opportunity is disproportionately dispersed among the student population as, overall, historically marginalized groups are underrepresented in paid internships, overrepresented in unpaid internships, and more likely to have not participated in any internship. In fact, NACE analysis revealed that a larger portion of paid internships—the internships offering the best head start into a career—went to white students, male students, and non-first-generation college students.

Paid internships offer key benefits for employers, too. They satisfy federal regulations and permit employers to give their interns real work and a more hands-on experience to gain a better sense of their performance in a potential position or department. By paying their interns, employers can also ensure that their intern pool is not made up just of students who can afford to forgo a paycheck for the summer, which helps them create a more inclusive program.

Employers committed to building a pipeline of diverse talent must consider how to diversify the makeup of their internship program and identifies initial steps as:

  • Auditing the historical makeup of their internship program to determine a base line.
  • Tracking the pool of internship applicants to identify where there is underrepresentation.
  • Reassessing how intern talent is sourced and adjusting to identify additional sources. For example, many employers have a set of colleges and universities from which their intern pool is being drawn, often with an eye toward which majors the institutions offer, the quality of the academic programs at those schools, and the organization’s history of success with students from those schools. Taking into consideration demographic diversity along with other criteria can provide organizations with a more diverse and inclusive talent pool. In addition, as part of this, employers can consider expanding their standard recruiting efforts to use virtual methods to connect with students more broadly. (Note: Results from the Student Survey also found that, in general the virtual setting was viewed positively by historically marginalized populations.)
  • Reviewing recruiting and hiring processes to identify barriers that hinder diverse talent from engaging with their organization.
  • Assessing their organization’s culture to the extent to which it is welcoming and supportive of diverse talent, making changes necessary to address problem areas, and tracking and revamping as needed

Another important consideration for employers offering paid internships is setting intern salaries. During this process, employers take into account major and functional area. Many employers also use the student’s degree and year of study in setting rates. Average salaries for interns tend to increase as students persist toward attaining higher degrees and by ascending class years. (Note: These data are reported through NACE’s annual Guide to Compensation for Interns & Co-ops. The 2022 survey report and compensation guide will be available this spring.)

Other steps employers take and factors they may consider when establishing salaries for interns include:

  • Understanding interns’ employee classification—Interns typically fall into the “non-exempt” category due to the nature of their positions. As such, they are paid an hourly wage.
  • Having a basis for salaries—Many employers use the salaries they pay new college hires as the starting point for determining intern wages. Intern pay rates vary based on the student’s major and the functional area in which the student is assigned, just as new college hire rates will.
  • Making adjustments for location—If the internship is in a city with a high cost of living, some employers will pay students interning there a higher salary to account for this factor.
  • Otherwise, being consistent—Interns will talk amongst themselves, so many organizations ensure that they apply their pay scales consistently.
  • Establishing this as an annual process—Organizations can ensure they are in line with current intern pay rates by setting intern salaries each year.