Four Economic Tools for Deciding on Your Next Internship
There’s constant debate in the blogosphere about internships and whether college students should take unpaid internships. I believe that all people should be paid a fair wage for work they do. But the reality is that the recession changed the structure of jobs in our country and as a result, there are few paid internships available these days. At the same time, the National Association of Colleges and Employers (NACE) reported in 2010 that students who had internships earned approximately $11,000 more when they graduated compared to those who didn’t have internships. What is a budding professional with limited financial means expected to do?
Before launching my career in recruitment and coaching, I received my Master’s in public economics and finance at New York University. Surprisingly, I find that I regularly use my economics training in my work with clients. Thinking about things through an economic lens helps people assign value to a decision across time and develop choices not clouded by temporary emotions. I own a small business so I know better than most people that cash is king. But in every market, you must sometimes sacrifice short-term cash to get long-term gains. Here are four concepts from economics college students and others considering free work can use to help with their decisions.
- Think about exchange value. Exchange value is the value placed on something that is exchanged with companies or others in a market. When we decided to go to college, we decided to defer four years of cash earnings because we believes our exchange value in the job market would be that much higher. You can use the same logic when making a decision about an unpaid internship. Will it increase your value in the full-time job market when you’re exchanging your labor for compensation?In markets, people act more on signals and not real knowledge about what you can do, meaning they look for things on your resume to signal to them that you’re worth hiring. If you can list five things that will increase your exchange value in the market based on an unpaid internship, that’s usually a good reason to take it. If no one is going to know the company you interned at and you can’t list anything on your resume beyond answering phones or filing, what is that going to signal? Think about these questions carefully.
- Think about barter value. If you can’t be paid for an internship, consider what a company can barter for your labor and time beyond cash. I usually have one to three interns working for me at any given time and I barter my time. I offer them all free, scheduled mentoring and coaching sessions, resume reviews and mock interviews in exchange for the projects they do and each project has a learning component (I am a former teacher-habits die hard). Without sounding disrespectful, what can you ask for from a company offering you an unpaid internship that is valuable and is in line with what you’re going to offer the employer? Don’t ask for a non-cash benefit that only senior executives get, but something that makes sense for your position.
- Think about capital. Economic research shows that people who have high levels of social capital do better in the job market. Social capital is measured by the number of people you know, including the number of well-connected people in that group who can assist in expanding your network. Will your unpaid internship bring you into contact with people who will continue to help you through your first full-time job search or will relationships be fleeting? These relationships do not have to be with the CEO — you’d be surprised how valuable entry-level and peer connections can be.Human capital, i.e., learning new skills, is also important, though unlike social capital and resume signals, economists haven’t found this to be influential in the job market. Go figure. You have to assume that life catches up with people who signal they can do something they actually can’t. I’d also recommend thinking about whether your intellectual capital will increase in your internship — will your perspective about the world change and what is the likelihood you’ll generate new ideas?
- Think about resource allocation. There are many people who have financial obligations and must earn money to pay their current bills, including tuition. Your time is a resource that must be allocated. Rather than focus on an unpaid internship OR a part-time job, can you make a plan to allocate your time to do both so it fits your needs as best as possible? One of my interns does two unpaid internships that take 35 hours a week and waits tables another 15 to pay bills. What about allocating your time so you interned 15 hours and worked part-time for 20 hours or some other combination?
When I was an undergraduate in the mid 90s, I was offered an internship in New York City that I knew would help me get a job when I graduated from college based on the company and social capital I’d acquired. After careful deliberation, I made the decision to put my $2,000 of summer housing costs at Columbia University on my credit card. It took me three years and eating lots of ramen to pay off that debt but it was a great investment because my jobs for the first five years were directly related to my decision to give up a good paying temp job that summer to move to New York City. I recouped my $2,000 debt 20 times over. Making that decision wasn’t a gamble, but a well thought-out economic decision. I encourage you to make your own informed decisions about your own internship and work using these frameworks.
About Tracy Brisson
I am the Founder and CEO of The Opportunities Project, an organization that helps young professionals meet their career goals quickly and confidently. Before starting my company, I most recently worked as the Director of Teacher Recruitment for the New York City public schools where I directed the recruitment efforts for up to 5,000 teacher vacancies across 1,600 schools each year. In addition to working as the Director of Project Management for The Princeton Review's K-12 division, I was also part of the founding managing team of the New York City Teaching Fellows and started my career as a Teach for America corps member in the Washington Heights section of New York City. I have a BA in Public Affairs from the Maxwell School at Syracuse University and an MPA from the Wagner School at New York University. I live in Brooklyn, NY and when I am not coaching or writing, I enjoy watching the NY Yankees, visiting Long Island beaches, and spending time with my loved ones.
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