To pay or not to pay? How to properly compensate interns

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Dr. Meghan Stidd, College of Business, Colorado Springs Business Journal


While it's true that internships are beneficial and provide meaningful work experience, there are several negative side-effects to unpaid internships.


Problem: I would like to hire interns, but I am not sure how to compensate them. I know some organizations offer unpaid internships while others pay interns more like they would their employees. How do I know if I should pay my interns and, if I do, what should I pay them?

Internship compensation is incredibly complex and can be difficult to navigate. While technically it is legal to hire unpaid interns if certain criteria are met, it is better for the intern and for your organization to pay them.

Many organizations seeking unpaid interns believe that the experience the intern will gain is valuable, meaningful and provides enough benefit that the internship doesn’t require monetary compensation. The experience is the compensation. While it’s true that internships are beneficial and provide meaningful work experience, there are several negative side-effects to unpaid internships.

First, unpaid internships drastically reduce your applicant pool. According to the U.S. Census Bureau, nearly half of all college students work part-time to support themselves through school, and 20 percent work full-time. With rising tuition costs and increased student debt, many students are not able to afford an unpaid internship. This is evident in reports indicating that unpaid internships receive fewer online views and fewer applicants than paid internships. Students are seeking paid opportunities.

Second, unpaid internships limit your recruitment to students with a higher socioeconomic status — students with enough financial resources that they can afford to work for free. Students in lower socioeconomic brackets, and a disproportionate number of minority students, will not be able to consider unpaid internships due to their financial constraints.

Third, it is no surprise that students seek paid internships first. If you offer an unpaid internship, your organization becomes their second or third choice. As a result, top talent will be drawn to other organizations. If you want to attract a wide, diverse and talented pool of candidates, a paid internship is a better option.

Several studies suggest that paid interns report a more positive experience. Paid interns are more driven to perform. Challenging work coupled with a paycheck results in interns who are engaged, motivated and able to pay their bills resulting in less stress and greater productivity at work.

There are three steps you can take to ensure that you are properly compensating interns...

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