How Internships Replaced the Entry-Level Job

6 minute read

In the middle of the summer internship season for many companies in the U.S., Thursday is — at least according to WayUp, a job-hunting platform for college students and recent grads — National Intern Day. As part of the company’s celebration of interns, six people will earn a $750 cash prize for intern excellence. That’s a significant amount of money, though it’s dwarfed by the thousands of dollars it may cost to do an unpaid internship, in terms of living expenses.

But that hasn’t put a damper on interest in internships. More than 62% of the Class of 2017 reported doing an internship at some point during their college years, compared to about 50% in 2008 and 17% in 1992.

So how did internships become essentially the new entry-level job?

The answer varies by industry, but the idea of something similar to an internship — a training position set apart from regular employment — has a very long history. The most obvious and frequently cited parallel is the apprenticeship, an idea that dates back to the Middle Ages. Young people would learn a craft from an expert and earn access to a guild, which would often supervise these apprenticeships. The analogy isn’t perfect: many apprenticeships provided food, boarding and clothing, whereas today’s interns are usually on their own for all of that.

“Economic historians have studied apprenticeships and looked at the contracts for apprenticeships way back into the 1700s and 1800s, and you see enormous amount of heterogeneity,” says Alan Seals, labor economist and professor of Economics at Auburn University and an expert on the internship market. “Some families get together money to pay craftsman to allow a son to intern. And the terms varied dramatically.”

As for the term “internship,” it’s long been associated with medicine, as the skills needed to succeed in that field can only be learned by getting your hands dirty. (The term “internship” today is often still used for professional, rather than trade, training.) Before law schools became the only way to become a lawyer, people like Abraham Lincoln and Thomas Jefferson acquired that kind of training by reading up on law with a mentor.

In American history, one turning point for the establishment of the modern internship came in the 1940s. Though the right to minimum wage and overtime was established by the Fair Labor Standards Act of 1938 (FLSA), in 1947 the Supreme Court ruled that a company didn’t have to pay railway brakemen for their roughly week-long training program, an exemption that has been cited as the loophole that helped future employers justify unpaid internships, as Intern Nation author Ross Perlin has previously written for TIME. After that — all the way up to 2018 — a job that met six requirements could legally qualify as an unpaid internship. As TIME summarized in 2012:

1. The internship must be similar to training that would be given in an educational environment;
2. The internship must be for the benefit of the intern;
3. The intern does not displace regular employees;
4. The employer derives no immediate advantage from the intern;
5. The intern is not entitled to a job at the end of the internship; and
6. The intern understands that he or she is not entitled to wages.

But these requirements didn’t immediately impact a large market for interns. In fact, another three decades or so would pass before the idea of an unpaid internship became significant in the American economy.

The key change was the rate of college attendance: by the 1970s, there were more students graduating college than ever before, and that trend continued. Moreover, those new college graduates in the 1970s were entering a tough labor market; increasing the number of internships available was seen as a positive step toward helping those graduates find work. The number of universities offering programs that let students split their time between interning and classwork increased from 200 in 1970 to 1,000 in 1983, as TIME has previously reported. The job market would never be the same.

“Roughly in the 1970s, one in ten people had a college degree, now that’s one in three,” says John Nunley, a labor economist and expert on the internship market who co-authored the paper “College Major, Internship Experience, and Employment Opportunities: Estimates from a Résumé Audit” with Seals. “Jobs are just fundamentally different. Production and routine tasks are no longer demanded at the rate that they were. Firms are looking for people with problem-solving skills. Internships offer people a glimpse of those skills and abilities.”

Eventually, doing an internship as one’s entrée into many industries — rather than starting as an employee — came to seem normal.

But in the 21st century, the idea of the unpaid internship changed again — this time because interns, now representing a substantial enough group to wield some power, fought back. Two unpaid FOX Searchlight interns who worked on the $300 million blockbuster film Black Swan sued in 2011, claiming they should have been paid for tasks essential to the production process. After they won the lawsuit in 2013, when a judge ruled they should have been paid based on the six-factor test, other unpaid interns followed suit.

But the decision was overruled in 2015, when the Court of Appeals for the Second Circuit in New York declared that “the proper question is whether the intern or the employer is the primary beneficiary of the relationship.” If it’s the intern, then the internship can be unpaid. The Department of Labor released updated FLSA guidelines in Jan. 2018 based on this ruling, featuring seven looser factors for unpaid internships; unlike the six-factor test, the new items don’t all have to be met for the internship to be allowed. It’s “a flexible test, and no single factor is determinative,” the guidelines say. “Accordingly, whether an intern or student is an employee under the FLSA necessarily depends on the unique circumstances of each case.” Some lawyers say these terms help employers more easily justify unpaid internships.

But while the number of unpaid internships is growing, the number of paid internships are growing, too, some surveys show. Research on the internship market by Seal and Nunley suggests that roughly 70% of internships are part-time and 60% are unpaid.

Whether they’re paid or not, internships are here to stay. In a simulation that Seal and Nunley worked on, in which fake résumés were submitted to employers in business-related fields, résumés with internships were 14% more likely to lead to an interview request or some kind of callback than résumés that didn’t list such experience. As Eleanor Townsley, a sociologist at Mount Holyoke College summed up the findings of her recent study on the impact of college internships on post-graduate outcomes, “participation in multiple internships in college helps students to secure employment or enter graduate school within six months of graduation.”

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