If Your Company Was Financially Hit During COVID-19, Is It Okay to Offer Unpaid Internships?
The global pandemic has certainly made it more difficult for some companies to make ends meet. However, there is still work to be done. If this sounds like your company, you may have thought about offering unpaid internships to save money.
Unpaid internships are a bit of an ethical debate. Some believe that everyone deserves to be financially compensated for their hard work, while others think the real-life experience is compensation enough. To help you organize your thoughts on this issue, we’ve gathered some pros and cons of unpaid internships for you to consider.
The Pros of Unpaid Internships
Despite the controversy, unpaid internships have their perks. Not only does your company save money, but there are some benefits for your unpaid interns too. Here are a few of those pros:
Pro #1: Interns Can Recieve College Credits
While you might not be able to give your interns money for their work, they may be eligible to receive college credits for the work they are doing. Students need credits to graduate, so this is a good way for them to accomplish two things at once. Some colleges or universities even require students to complete an internship in order to graduate. Students will need to be careful and confirm with their school that what they are doing for their unpaid internship meets the requirements for college credits.
Pro #2: Valuable Experience
Experience in the workplace is extremely important for college students, as it allows them to build their resume before finding a job after graduation. That means that while they might not be getting paid for their work, they can still learn and make themselves a stronger candidate for jobs post-graduation.
Pro #3: Networking
Working with your company could give interns the opportunity to meet new people within the industry. They will not only get to practice interacting with industry professionals but also have a wide variety of people to reach out to for help. Once again, this can benefit them further down the road when they’re looking for a job after graduation.
The Cons of Unpaid Internships
As you decide whether or not to offer an unpaid internship this spring or summer, here are a few drawbacks to keep in mind.
Con #1: Potentially Limits Diversity and Opportunities
Not every college student can afford to work for free, especially while we are in a global pandemic. This limits the pool of applicants willing to take on your unpaid internship and could affect the diversity of your company in the long run.
Con #2: Negatively Affects the Student Debt Crisis
It’s no secret that as the cost of higher education increases, the harder it becomes for students to pay back their loans. If these students end up taking unpaid internships while in school, it could limit their ability to start saving - potentially setting them back even further post-graduation when it comes time to start paying back their loans.
Con #3: Could Actually Be Harmful to the Economy
With companies trying to save money, it could be tempting to fill an entry-level job with an unpaid intern or two instead of recent graduates.
Recent college graduates between the ages of 21 and 24 are unemployed or underemployed at rates higher than they were 20 years ago. Now, five percent of college graduates are unemployed, compared to only four percent in 2000. Additionally, 10 percent of college graduates are underemployed - again an increase from 6.5 percent in 2000.1 While it’s not the sole cause, taking opportunities away from those looking for full-time employment could be making an impact on the ability for recent graduates to get a job.
In the right circumstances, offering an unpaid internship may make sense for you, your business and eager college students. But as you decide whether or not this is the right move, you’ll want to keep some of the drawbacks shared above in mind.
This content is developed from sources believed to be providing accurate information, and provided by LJAKE Financial Group. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
