Evidence that employers really care about internships

What do employers really look for in a resume?  To find out four researchers at three universities did a randomized study where they sent fictitious resumes to online job postings.  Each resume showed a college degree received in 2010 and one job held since then.  The resumes varied by major (half business and half liberal arts), GPA and whether the applicant held an internship in the same field as the opening.  

I was a bit surprised to see 17 percent of the resumes were invited for an interview; this strikes me as very high for an online application process.  But more importantly, what were the key variables in predicting who landed the interview?  It was not the major.  It was not the GPA.  It was whether or not the student had an internship!  Those with internships were 14 percent more likely to get interviews than those without.  

This may actually understate the true impact of internships because it does not include the most common scenario -- where the internship leads directly to a job.  So even though summer school starts tomorrow, don't give up on that internship yet!

On unpaid internships

Passionate op-ed in today's NYT scolding universities for posting and giving credit for unpaid internships.  There are murky legal issues associated with unpaid internships:

The United States Department of Labor says an intern at a for-profit company may work without pay only when the program is similar to that offered in a vocational school, benefits the student, does not displace a regular employee and does not entitle the student to a job; in addition, the employer must derive “no immediate advantage” from the student’s work and both sides must agree that the student is not entitled to wages.

Employers and their lawyers appear to believe that unpaid interns who get academic credit meet those criteria, but the law seems murky; the Labor Department has said that “academic credit alone does not guarantee that the employer is in compliance.”

Ethical issues as well -- regardless of what the Labor Department says, I personally think that well-established corporations should be a bit embarrassed that they are not at least paying minimum wage. 

Yet each and every summer for the last three years, Jenkins MBAs have accepted unpaid internships, some of which has been posted on MBA JobsLink.  In many cases the students have received one hour of academic credit, but usually it is not allowed to count toward graduation.  We try to make sure the hour of credit is scheduled in such a way that the student does not have to pay extra tuition. 

Why does the MBA Career Center post unpaid internships?  One simple answer -- in many ways we now have an audition-based job market.  Companies want to sample a potential employee's actual productivity and behavior because the costs of developing top-level managerial talent have risen.  They can get away with unpaid internships as a means of doing this because the job market has such an excess supply of potentially qualified workers. 

Believe me -- we prefer our students to take well-paid internships that can be leveraged into full-time job opportunities.  But for certain groups of students (internationals, those who are making big career changes, those with little to no work experience) an unpaid internship with the right company can be of greater long term value than a paid experience that ends up being a summer job and nothing more. That is why we will continue to post such opportunities and, in some cases, encourage our students to accept them. 

Someday the job market will pick up (Friday's report was encouraging, but let's wait and see what happens to government jobs this summer).  At that point companies with unpaid internships will have to change their practices.  Even you, SAS Institute. 

Caution on unpaid internships

Today's NYT reports that more employers are offering unpaid internships (old news) and some states are starting to prosecute these employers for violating labor laws (new news). Six conditions have to be met for an unpaid internship to pass muster: (1) training similar to a vocational or academic institution must be provided; (2) training is for the benefit of the intern; (3) trainees do not displace regular employees; (4) the employer obtains no immediate advantage from the trainees' activities; (5) trainees are not entitled to a job at the end of the training period; and (6) wages are not expected to be paid or received. The article reports some interns spending their time doing unskilled, menial tasks like making coffee or cleaning door handles. NC State's career services staff does its best to make sure that listed internships meet these standards.

The economic logic behind these internships: students should be willing to pay for training that enhances their marketability to a broad range of employers. No one has any problem with students paying tuition to vocational schools, community colleges, and universities to learn such skills. In an unpaid internship, the employer provides training and experience that is valued by the student in return for the option value of employing that student in some future period. Some unpaid internships would probably be paid if not for minimum wage laws that put a wage floor above the net productivity of the intern.

If federal and state attorneys start prosecuting employers who provide unpaid internships, do not be surprised when the employers respond by starting to charge interns to participate in a "summer academy." And this will make the students better off?