Re-making markets with unpaid internships

From political proposals to street protests, unpaid internships have been making news in Canada. Rightfully so, as there is a litany of problems with unpaid internships. For individuals, unpaid internships can not only be a form of outright wage theft, they also help entrench class-based privilege that allows some the luxury of forgo income in exchange for work experience. Unpaid internships also distort the labour market and contribute to lower participation and higher unemployment, especially among young workers. For firms, of course, unpaid internships offer some real cost savings. There could, however, be another reason why unpaid internships are popular: they help remake the terms of the labour market itself.

To see this better, take a look at Bell Canada. Bell has a significant internship program that is reported to take on about 300 people per year. Let’s assume that the average intern works for 6 months at 30 hours a week, an annual total of 780 hours. At an optimistic $15 per hour – given that much of the work done by interns is actually not the lowest level work – this means that the company is saving $11,700 in salary per intern; including payroll taxes, benefits and rounding up, this amounts to perhaps $15,000 in total compensation. The total savings in labour costs brought about in this extremely rough calculation is $4.5 million.

Looking at Bell’s annual reports, this would amount to a not very significant 0.04% of its total costs. Even doubling the imputed wage that the interns would have made had they been hired as employees gives under 0.1% of costs. Compare these numbers with the $166 million Bell saved via cost-cutting and operational efficiencies in 2012.

Adding in the costs of administering an internship program, those associated with high intern turnover and relatively frequent on-the-job training, it may turn out that unpaid internships are not nearly the huge cost-savings that they are sometimes made out to be by proponents (and opponents). That unpaid internships are either illegal or of uncertain legal status in most provinces and that those who engage in hiring unpaid interns are taking on some risk of legal penalty only reinforces this fact, even given that labour laws are very ineffectively enforced. While the relative size of cost-savings brought on by “hiring” unpaid interns is smallest for the likes of Bell, Rogers, Walmart or the other corporate giants known to regularly use them, it is not that much different for smaller firms, for whom the real cost-savings may be relatively larger but who would also feel the potential losses resulting from legal action more acutely. There is indeed some evidence that large companies are more likely to use paid interns while small companies are more likely to use unpaid interns as well as evidence for differences along sectoral lines. This reflects the greater importance smaller firms and those in less profitable sectors may place on the cost-savings aspect of internships.

Overall, however, there is an enormous disproportion between the large costs borne by those who undertake unpaid internships and the small immediate gains flowing to many of the companies that use this tool. This disproportion gets at the heart of the matter. If unpaid internships are to be worthwhile for companies, they must serve additional purposes beyond simple cost savings. The key lies in the recognition that firms can potentially be creative of market conditions in all the markets in which they operate. And few markets are as special and as crucial as the labour market.

Internships are part of a pattern of work being made increasingly precarious and of this precarity moving further up the job ladder. Between 1992 and 2008 the proportion of US college graduates who had completed an internship (paid or unpaid) rose dramatically from 17% to about half. As more current and future members of the workforce are exposed to the uncertainties and stresses of precarity, the more precarious work becomes an expectation and a norm. While some of the work experience interns receive is valuable, some is decidedly not: low-skill tasks such as warehouse work, cleaning or routine administrative tasks often figure prominently in accounts of internships initially presented as high-skill opportunities. The point is not that low-skill tasks are necessarily worse or less necessary, it is that their inclusion in internships lowers expectations and acclimatizes to uncertainty. This is but part of how a market for precarious labour in higher skill work is created.

Another way of thinking about internships is as one more strategy of severing the link between work and income. As Miya Tokumitsu recently outlined in Jacobin, the “do what you love” mantra that is increasingly prevalent in workplaces also has this goal – loving your work makes it harder to set boundaries between what is work and what is not. Similarly, an internship makes it harder to see what is a job and what is not. Landing that coveted internship and buying into the notion that you have to love what you do hides exploitation and even naturalizes it behind a veneer of success and freedom. (The progressive potential in a break between work and income is made concrete in notion of a guaranteed basic income, though this strategy is not without its pitfalls, a topic to which I plan to return.)

A final piece of the puzzle is the selective ideology of cost-cutting as applied to government. The ideology is selective because at the same time that it supports cuts to the enforcement of labour standards – for example, in British Columbia, the Employment Standards branch shed a full third of its staff in a 2002 bout of reductions – it has no problem with internship programs subsidized by government or run directly by government. Here, too, a long history of measures tends towards the creation of and support for a particular kind of labour market – one constrained by low enforcement and productive of growth in internships.

Unpaid internships are part and parcel of much broader trends and working to slow their growth or eliminate them should take this wider perspective into account. The good news is that when this is done, working people can win. Like British Columbia, Ontario had long been slashing its employment standards enforcement budget. A successful campaign against wage theft organized by the Workers’ Action Centre was able to reverse these cuts and indeed increase funding via large-scale mobilization. The private sector recognizes that size and solidarity matter – not the solidarity of a nefarious plot or collusion in a smoky back room, but simple solidarity of working in the same interest.

We too can recognize the plasticity of markets and work to influence how they are structured. To do so, however, we too need solidarity, size and a will to act in small steps that have larger goals in sight.

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