Comparison of paid and unpaid internships

Paid vs. Unpaid Internships

The culmination of the educational experience in the fashion industry is the internship. This is where students see how theory translates into practice. They also get to try their hand in the chosen profession and to know the ins and outs of what goes on behind the scene. The internship can be considered to be the most important phase of the educational process. It is intense on-the-job training and students often find that this period makes or breaks everything that they have worked for in the past several years of their life.

Many major companies do not hire interns, as they do not feel that the experience and knowledge of the student justifies the risk involved in having an inexperienced employee. The potential for mistakes is a given, as students attempt to learn the tricks of the trade. This research will explore the feasibility of universities offering both paid and unpaid internships in order to entice the fashion industry to hire interns and provide them with a chance for this valuable step in their career preparation.

Students would have more options if they were able to choose paid or unpaid internships. Some universities, such as Miami International University of Art and Design, require their students to do unpaid instead of paid internships. The central problem of this research will be to explore why universities such as this choose to take this approach to internships.

Employment Expense

It is easy to see the advantages that an internship has to offer for the student. They have nothing to lose, but valuable experience in their chosen profession. However, from the company's standpoint, they have much to lose. Regardless of whether the intern is paid or unpaid, the company has many risks, simply due to the presence of another employee. The following will explore employment issues for both paid and unpaid employees.

The most important factor that the intern receives for their time is education and experience in the field. Monetary compensation is secondary, but in most cases, some compensation is customary (Texas State University, n.d.). Salary and compensation are typically negotiated between the employer and the student.

The hiring costs, training costs and liabilities, such as sexual harassment and discrimination suits, are the same as they would be for any other employee. The type and extent of training that the employee receives are dependent upon the type of position and whether it is for a special project, or an extended term (Western Washington University, n.d.). From this standpoint, whether an intern is paid or unpaid makes little difference in the total costs of an additional employee to the employer, the risks are similar to any other new hire. According to Florida Law, interns are subject to minimum wage laws, and the Fair Labor Standards Act, just like any other employee (Broward University, n.d.).

The costs of the internship may be the same for a paid and unpaid intern in many respects. However, in the area of worker's compensation, it may be a different story. For the paid intern, they are treated just like any other employee for the purposes of worker's compensation. If a paid intern is hurt on the job, they are entitled to worker's compensation benefits as long as they follow the procedures set forth by the company for making a claim (New York State Worker's Compensation Board, 2009). Worker's Compensation rates for interns do not have a standard set amount and are dependent on the contract negotiated with the insuring agency.

Treatment of unpaid interns differs from state to state. Some states, such as New York, consider the training that an intern receives as if it were "cash payments" (New York University, 2009). The question, in this case, is who receives the greatest benefit from the relationship. Although, the employer receives many benefits, such as new ideas, help with special projects and the potential to train a future employee from the ground up, the student will receive the greatest benefit,. The student will profit from the training and experience that they receive for the rest of their life, whether they stay with the employer or choose to move on. Experience is considered compensation; therefore, the employer is often required to provide worker's compensation for the student even in an unpaid relationship (New York University, 2009).

The difference between an intern and a "volunteer" is that the intern expects to receive some sort of benefit from their time with the employee. In this case, the intern receives valuable skills that they can take with them into the world. The volunteer performs services with no expectation of compensation of any sort. They perform services simply for the good feeling that it gives them (New York University, 2009). This difference in definitions is at the root of the legal compensation issue for interns. The intern contract should specifically address the issue of whether the position is "volunteer" or a true internship position (New York University, 2009).

The cost for worker's compensation insurance for an intern depends on the agreement between the company and their broker (New York University, 2009). The terms, length and duration of the arrangement define the costs and compensation under worker's compensation. The most important tool for the intern, the employer and the educational institution is the intern contract (New York University, 2009). This instrument is the defining authority in terms of any legal issues concerning the intern and their relationship with the employer.

There is not set legal format for the intern contract. The terms and definitions are individual and are unique to every intern and every internship opportunity. In some cases, the educational institution and the employee have prearranged programs that include a mandatory educational element. Some companies specialize in providing internship packages with a standard curriculum (University of Dreams, 2009). There are many different arrangements available, some paid, some not. Some are long-term and some are short-term and occur in a variety of locations around the world.

Each internship is different and it is difficult to find a standard set of legal circumstances that will apply to a majority of the cases. The terms depend on finding a match between what the student wants and what the employer is willing to offer. In terms of legal liability, the interns is the same as any other employee. However, it is difficult to obtain any realistic estimate of the actual costs involved for a paid or unpaid intern due to the uniqueness of the circumstances involved. The financial advantages and disadvantages to the employer differ according to the circumstance.

What is the Advantage for the Student?

The benefits of the internship for the student are clear. They will receive experience and training that is an essential step in preparing them for the hands-on world of the fashion industry. If their internship is paid, they will receive monetary compensation as well, although, many times interns are not paid what they will make when they become full employees. The benefits of paid internships are tangible. However, the intangible benefits of the unpaid internship can be more valuable in helping to establish the student's long-term career.

They question is if students benefit from educational institutions that offer both paid and unpaid internships. Like the answer of legalities, this question has many variables that are difficult to address in a manner that would provide an overall view of the "average" industry perspective on this topic. The real question behind this central issue is what the employer has to gain by having an intern around. They must have an incentive to sponsor an intern, whether they are paid or unpaid.

In an exploration of the costs and legalities of paid and unpaid interns, it was found that both paid and unpaid interns were comparable in risk to the company. The salary paid to interns is often lower than that of regular staff. This cost is typically negligible compared to the cost of training and worker's compensation insurance. They average salary for the intern in New York City is $55,000 as of June 25, 2009 (Simply Hired, 2009). However, salaries in the fashion industry vary widely according to company, location, industry, and experience (Simply Hired, 2009). Therefore, the monetary costs and benefits for the company vary as well.

It does not appear that cost alone, or legalities shed any light as to whether offering paid or unpaid internships would increase the chances for landing an internship in the fashion industry. Other factors appear to be more important than these factors, as they are comparable to hiring any other employee. If cost is not an issue, then one must ask what would increase the number of internships being offered by top companies in the fashion industry.

The Advantages and Disadvantages of Hiring an Intern

The weight that costs play in the decision to hire an intern depend on the size of the firm. One could expect costs to play a bigger role in the decision for smaller companies than for the bigger players in the industry. A multi-million dollar corporation is less likely to be concerned about the costs of interns than the potential to find new talent to bring into their firm. The fashion industry thrives on changes in societal attitudes and fast moving trends. An internship in the fashion industry will be an excellent opportunity for the student, but what about for the company?

Hiring an intern has advantages and disadvantages. Like the costs and legalities, the advantages and disadvantages often depend on the individual situation. The key is finding the right match. If the intern is a good match for the firm, the internship will have the advantage of bringing fresh new ideas and creativity to the firm. The intern will enhance the firm, as would any employee that had the right "spark." An intern can help to fill a temporary vacancy in the company, either to be later hired themselves, or to hold the position until a permanent employee can be found.

Another advantage to hiring an intern is the both the company and the intern can "test drive" each other to see if they are a good match without making a more permanent commitment. This can be a key advantage in the fashion industry, as the competition is stiff and there is little room for error. Firms do not have the time to waste with people that do not fit into their brand or their corporate culture. Internships can also be used in a competitive fashion. The company can bring on several interns and they can compete for the permanent positions that are open. The flexibility of internships allows them to be used as a major tool for building the company and enhancing their brand.

Internships have several advantages for the company that makes them an attractive option from the company's standpoint. However, just as there are advantages to hiring an intern, there are also disadvantages as well. Hiring the wrong employee can have a negative impact on the company. This principle still applies to interns. The intern that does not pull their weight can harm the company and the brand that they wish to promote.

Interns are inexperienced and are bound to make mistakes. This is part of the learning process. The relevant question is which mistakes will be made and how detrimental they will be to the company. Interns represent a risk and companies often must consider who will supervise them and how closely they need to be supervised in order to minimize the damage that is caused. This is another key factor in the decision to hire an intern. Interns are beginning level, at best, they have a lot to learn and for most, this will be their first stint into the fashion industry. They cannot be expected to be as valuable and productive as the experienced employee.

Another key disadvantage to the company is that they often do not receive the value from the intern that they receive from a long-term employee. Aside from the experience and potential for mistakes mentioned earlier, the employer must consider the time and expenditure of the training time. Trainees are not as productive as experienced employees. However, the employer expects that in time, the permanent employee will become a productive member of the workforce. This may or may not be true with the intern. The intern may become a permanent employee, or their internship may end before they reach the point of independence and productivity. The company may never see the return for their investment.