No one’s talking about this major benefit when making the business case for paying your interns
As likely anyone would agree, there are countless approaches that we as a country can take to address these issues. However, the approach I have spent the last several years on, and have raised tens of millions of dollars to address, is around inequalities in the workforce, specifically among entry-level candidates.
After years of research and millions of data points, many in my field have agreed that employers paying their interns is a simple yet effective change that makes a huge difference in driving more equality in the workplace.
Let’s take a step back.
In January 2018, under the Trump administration, the Department of Labor issued a new set of guidelines to help companies navigate the legalities of unpaid internships. To put it simply, the courts reinstated the “primary beneficiary test,” which meant that for a company to not need to pay its interns, all it had to do was prove that an intern “benefited more” than the organization from the internship. That’s all.
If companies did that, they didn’t need to pay their interns. (This replaced the 2010 DOL law that set forth a “six-part test” which made it more difficult to not pay your interns.) What this doesn’t take into account is the cost of one college student to have an unpaid internship over the summer. According to 2016 estimates from the National Association of Colleges and Employers, that number is $6,800.
Consider which students can afford to not make any money and, instead, spend $6,800 working? Typically, it’s people who come from money. What this means is that there is an entire group of internships that are essentially designed only for students who come from financially advantaged backgrounds. And in the U.S., “financially advantaged” likely means you’re white.
This is just one of the many reasons why unpaid internships perpetuate systemic inequality, especially when you consider that 56% of interns wind up landing a full-time job directly from their internship. It should therefore be no surprise that people of color make up a much larger percentage of those recent graduates who are unemployed despite their college degrees.
Paid internship programs are a critical way to address the diversity gap because, unfortunately, “experience” simply does not pay the bills, nor does it cover student loan debt. (Guess who owes the most in student loans? People of color.)
Paying your interns isn’t just beneficial to underrepresented minorities either. For companies, hiring diverse interns (and paying them) will help increase your diversity in the short term, and it’ll help your recruitment efforts further down the road. Why? Because data shows that an employee hired from an intern program is 20% more likely to stay more than one year longer (full time) than someone hired who didn’t intern at that company.
The truth of the matter is, the diversity workforce gap is growing (and grew even more in 2020), and with 4.43 million Gen Z students graduating this year, our country has a real opportunity to put more underrepresented minorities into the workforce—right at the beginning of their careers. After all, Gen Z is now the most racially and ethnically diverse generation and on track to be the most well-educated generation, and 83% of them have said that a company’s commitment to diversity and inclusion is important when choosing an employer.
So if companies really want to be a part of the solution in closing the diversity gap and making the workforce more inclusive, they need to address their diversity issues head-on or risk losing top talent and widening the gap even further.
There’s still a lot of work to be done, but I believe companies are finally waking up and becoming more open-minded to making serious changes. If they’re not, they’re going to fall behind—losing employees, losing revenue, and—most important—losing integrity. While there are many reasons companies haven’t been hitting their diversity hiring goals in the past, there are no longer any excuses not to prioritize these goals moving forward.
While internships will be split between virtual and in-person offerings this summer, my company, WayUp, is looking forward to honoring the companies who are stepping up and doing their part in hiring diverse early-career talent. (We’ll be highlighting those very companies on our annual Top 100 Internship Programs List.)
You see, we know that internships are not just “nice to have” on a student’s résumé. They are a real opportunity to change the makeup of the workforce for years to come. Think of investing in a diverse internship program as investing in the future of your company. Because to close the diversity gap, create more inclusive teams, and give more diverse voices a seat at the table, hiring diverse interns is one of the best steps a company can take.
After all, the interns of today are the leaders of tomorrow, and what you do today will directly shape our future.
Liz Wessel is the cofounder and CEO of WayUp.