The Bad News on Unpaid Internships

College students are often anxious to get internships, especially as graduation approaches. A short stint working for an employer in some capacity that is related to your major can be a be an advantage when it comes time to look for a permanent job after graduation. But there is bad news on unpaid internships. Many students – unable to land paid internships – settle instead for unpaid ones. What’s the difference, right?

Plenty.

A recent report indicates that college students with an unpaid internship are no more likely to land a job after graduation than students with no internships at all. Paid internships (one way to make some money in college), by contrast, substantially increase your chance of getting a job.

The major difference it seems, has everything to do with whether or not the assignment is paid. If so, should you even bother to take an unpaid internship?

1. Unpaid internships aren’t always what they seem on the surface.

The theory behind unpaid internships is that, at a minimum, they provide a relevant line item on your resume. This would seem to be especially important for a new graduate who is about to join the full-time, permanent workforce. But there are a couple of significant reasons why an unpaid internship won’t provide the benefits that you are hoping for.

The work may not be related to your career field. In many unpaid internship situations, the employer has you working in functions that are not directly related to your career major. For example, they may have you working on non-critical tasks, such as clerical functions, that provide no form of hands-on experience. The only benefit you may have in this type of arrangement is the fact that you will have a previous affiliation with an employer in your field. But an affiliation is not true hands-on experience, and potential employers know the difference.

In the business world there’s a big difference between paid and unpaid. Pay is a powerful form of validation in the business world – being in a paid internship means that a competing employer considered your services worth paying for. In the business world, that connection is more than casual. An unpaid internship can be too closely associated with a volunteer effort, in which the employer did not think enough of your work to compensate you for it.

Unpaid internships do not usually lead to employment offers. If an employer assigns you to relatively low-level work – and doesn’t pay you to do it – it’s a completely one-sided arrangement. That being the case, they usually don’t see fit to extend an offer of employment after graduation.

2. Unpaid internships may be going away anyhow.

Unpaid internships are in danger of disappearing completely. In June of this year, a federal court ruled that they may violate federal minimum wage laws. Employers are bringing interns in to work for them, and not even paying them minimum wage. This arrangement completely favors the employer, while promising the intern neither compensation nor a promise of employment.

Alternatives to Unpaid Internships

If it is impossible to land a paid internship, and unpaid internships offer no tangible benefit, what are the alternatives if you’re looking to gain experience that will help you to get a full-time, permanent job upon graduation?

Find paid work in a related field. If you can’t find a paid internship that is directly related to your major, then look for something in a related field. For example, if your major is accounting, consider taking a seasonal job as a paid income tax preparer or even as a bookkeeper in a small business. The job doesn’t have to be an internship either. It can also be a part-time job that you use to help pay your expenses while you’re in school.

Find paid work in an unrelated field. Graduating from college without any previous paid work history can be a negative in general. Employers want to know that you have experienced the responsibility that goes with holding a job, since this is a very different environment than the school environment you have been in for the past few years.

Holding a job – just about any paid job – is an indication that you understand what it’s like to have critical work functions and deal the public. A skill as seemingly small as being able to answer a telephone in a professional manner can be important to potential employer. And once again, it’s important that someone was willing to pay you for the job you’ve done.

Start out as a temp. If you are unable to find paid work that is related to your major area of study, the next best move may be to work as a temp right after graduation. You may start doing simple functions, but it will be paid work that will get you a foot in the door and a chance of permanent employment. And even if the organization you work with on a temporary basis doesn’t hire you, you’ll have relevant experience to bring to the next job application.

What other ways can you think of – or have you used – to gain relevant experience during or after you finished college?

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.

All posts by Kevin Mercadante