Those highly coveted paid internship positions may have a value beyond the small salaries they purport to pay college students. A survey by the National Association of Colleges and Employers (NACE) found that paid internships are more likely to lead to a job offer and a higher salary than internships that didn’t pay.
The NACE’s Class of 2015 Student Survey explores college students’ post-graduation plans, what they look for in jobs, and what resources they use to find them, how much they expect to earn vs. what they actually get offered, as well as their internship experiences.
The survey was given to NACE’s college members, 9,184 of whom were bachelor’s degree students who were graduating members of the Class of 2015.
Overall, the report indicated that 60.8% of the class planned to enter the workforce, more than graduates between 2012 through 2014. They also experienced the highest job offer rate—50.6%—of any graduating class since the recession. Among those, 62.6% received one offer, and 27% received two offers. Degree holders in the areas of accounting, computer science, engineering, and finance were most likely to have landed a job.
It makes sense that an employer would be more likely to offer a job to a student prior to graduation if they had an internship. With one, employers know that the student spent some time in the trenches of a "real world" workplace. The NACE report found that the gap in offer rates between those who had internships and those who didn’t rose from 36.5% in 2011 to 56.5% in 2015.
Drilling down deeper, the NACE survey found that paid internships at private, for-profit companies were more likely to offer interns full-time work. The report revealed that 72.2% of those students received job offers. By comparison, less than half (43.9%) of students who were working with private for-profit companies who didn’t pay them received offers.
This didn’t only happen at private companies. Offer rates were similar across several different kinds of employers. Among them nonprofits (51.7% from paid positions vs. 41.5%) for unpaid work and federal government sectors (61.9% vs. 50%). The biggest disparity was at state/local government employers who offered 50.5% of their paid interns jobs vs. 33.8% for those who were unpaid.
The trend played out in starting salaries as well, according to the report. Respondents reported that a paid internship with a private, for-profit company yielded the highest median offer at $53,521. The median offer for students who took unpaid internships with a private, for-profit company was $34,375. The same held true across industry sectors including nonprofit ($41,876 vs. $31,443), state/local government ($42,693 vs. $32,969), and federal government sectors ($48,750 vs. $42,501).
Close to a third of internships in the United States are unpaid, according to the most recent estimates from Michigan State University’s College Employment Research Institute. Back in 2013, it seemed as though unpaid internships might become illegal. That’s when a federal district court judge ruled in favor of unpaid interns at Fox Searchlight films who were tasked with "copying and scanning documents, tracking purchase orders, and fetching various items, including a pillow for the director," according to a report in InsiderHigherEd. However, a new appellate court ruling could overturn that decision.
An employer’s ability to hire an unpaid intern could also be subject to legal restrictions under the Fair Labor Standards Act. The Labor Department’s Wage and Hour Division states that an unpaid internship is legal only if "the employer that provides the training derives no immediate advantage from the activities of the intern," among other requirements.
If making copies and fluffing pillows don’t seem to be transferable skills, the NACE report suggests that employers agree. Mimi Collins, NACE’s director of content strategy says the research asked students specifically about the nature of their experience and what job tasks and duties were involved.
Overall, she says, the higher offer rate to paid interns is driven by the fact that employers who pay their interns can provide them with "real" work. "The employer can ‘test drive’ the intern as a potential employee, and see how the intern performs," she explains. "Many employers use their internship programs as a means of feeding their full-time hiring efforts," Collins says. Consequently, they pay their interns so that they can see them in action. "Unpaid interns, in general, do not have the same ability to demonstrate their on-the-job effectiveness," Collins adds.
Related: How to Make Your Intern Experience Sound Like a Real Job