Pressure and Credentials: The Harsh Reality Behind Students Working for Nothing in the USA

Royce Pan is a sophomore at London School of Economics doing a remote, unpaid internship for a boutique investment banking firm based in Washington, D.C. He was one of the about 25 remote interns who did research work for the firm for half a year from 2022 to 2023. He found this internship by cold-emailing the managing director because he was told that the company was looking for remote interns like him. And he needs an internship.

“Having an internship is as important as your life,” said Pan, “Without an internship, you don’t even get to survive at LSE.” Pan said an internship is what a person is evaluated for at the school, “you get remembered by your title and the company you intern at, not your name,” he said, “I am so tired of being an LSE student.“

Indeed, the pressure to gain work experience before graduation is increasing, according to Kyoungjin Jang-Tucci, Project Assistant at the Center for Research on College-Workforce Transitions, “The pressure to start earlier, pressure to do more during college,” she said.

And some students are paying a price.

"Credential Inflation"

Increasing competition has been pushing students to undertake at least some internship or training experiences as trainees before they step into the workplace as full-timers. In 2023, almost 80% of the students in the United States have experience doing internships or receive real-world training.

From 2010 to 2021, countries across the world have experienced a 10% increase in higher education attainment rate. The number of people between 25-34 years old completing a postsecondary degree is 17% higher than the generation that is 20 years older. The percentage is still increasing universally, according to Organisation for Economic Co-operation and Development (OECD) data.

As a higher education degree among job-seekers becomes more prevalent, students are no longer considered qualified with a mere college degree. They need more to prove that they’re worthwhile.

“This is called credential inflation, where having a degree is no longer enough,” said Deanna Grant-Smith, Deputy Director for the Centre for Decent Work & Industry. “You need experience. Then experience is no longer enough, so you need more experiences – experience at the right places, experiences for longer periods of time with more companies, and the bar just keeps getting raised higher, and higher, and higher.”

Michelle Kwong, a 2023 graduate of the University of Southern California, said internships are what her peers talk about when they hang out. “There’s really a lot of pressure to get an internship,” she said, “but landing a paid internship in the United States is like a pipe dream.”

Many educational institutions are making internships must-earn credits as a part of their graduation requirements, aiming to increase their students’ employability after graduation. However, most students remained unsupported. They work for nothing.

Carson Folio, a sophomore at Point Park University in Pittsburgh, where there is a one-credit requirement for an internship to be completed before graduation. “I would easily say like more than 80% are unpaid,” he said. These one-credit internships are often 13 to 16 weeks long. They do not receive any stipends.

The European Union voted to ban unpaid internships in 2023, and a regulatory reform in Australia, Australian Universities Accord, is on its way through the review of its higher education regulations, particularly on the unpaid internships that are mandated as part of a degree to do productive work.

However, unpaid internships are still legal in the United States. According to the National Association of Colleges and Employers, until 2023, 40% of the interns across the United States remain unpaid.

In the United States, the “primary beneficiary test” —a term that critics argue is intentionally vague— is adopted to determine whether an intern or student is, in fact, an employee. The main idea is as long as the employer can argue that the intern is “the primary beneficiary” in their internships, they can be unpaid.

“The law is intentionally being ambiguous in terms of receiving benefits or not,” said Jang-Tucci, stressing all transactions have benefits to both parties. “Even if they're emptying their trash can, that's some job that someone has to do.”

In 2017, the British government issued guidelines emphasizing that individuals who work as interns and perform tasks that would “otherwise be done by paid employees” should be paid. This has influenced how unpaid internships are perceived in the United Kingdom.

The fact that the legal definition of an intern is ambiguous and that unpaid internships have been normalized in the U.S. leads to little social and legal pressure for companies to bring in unpaid interns. Some companies even reach out to students to ask for their free labor in exchange for “experience.”

The Rise of Remote Internships During the Pandemic

The pandemic opened the door for students across the world to undertake internships from anywhere. Especially for the international ones, the standard onboarding process can even be bypassed as long as they have a laptop to do the work and are willing to go undocumented and unpaid.

However, a research survey shows that 93% of the students who did an online internship indicated that they faced challenges, the majority of which included lack of networking and socializing opportunities, lack of guidance, and lack of motivation. Many researchers and bigger companies have recognized that fully remote work isn’t working.

According to the data of the National Association of Colleges and Employers, the percentage of virtual internships has dropped from 22.2% in 2021 to 6.9% in 2023 as the pandemic has eased. It raises the question of who is still benefiting from the internships that stay online.

What Remote Internships Are Often About

All four students interviewed commented that their remote internships were repetitive, low-skill research work such as generating research reports and slides, reading academic papers and summarizing insights, and conducting news media analysis. They reported that they met with their supervisors only once every one to two weeks.

“I take care of some repetitive work and chores for them, and they give me a title, an experience,” said Pan, who does the research work for the boutique firm he works for.

Kwong did an unpaid internship at the U.S. Embassy in Singapore as an International Relations student. “There was no regular feedback, so I wasn’t really sure about my growth.”

Certain industries like investment banking, law, and consulting are hard to enter, which requires a massive amount of experience before they actually turn into real jobs in these industries.

“All my work comes from interns,” said Robert Edward (pseudonym), a managing director at an investment banking firm based in Washington, D.C., who has 50 unpaid interns working remotely for him in the past six months. “The interns are just a good free source of labor because it's very hard to get into the industry, ” he said, “It’s a 100,000 dollars difference (in salary expense).”

Calvin Shih, a Master’s Student majoring in Molecular and Cell Biology, said that the startup in California he now interns for reached out to him to offer him a paid internship. His role is called “Innovation Reader,” in which he reads academic papers for the company and helps them write pitches for government grants.

The interns in his current place of employment are seasonal, and for each batch, there are 18 interns working with two full-timers. “There isn’t too much organization,” he said.

Students interviewed generally find the elasticity of remote work favorable when they have control of their own working hours, can work when they travel, and are potentially gaining connections in the professional world.

Socialization in the workplace is the missing element that affects the remote experience the most, according to Professor Grand-Smith. And without this element, it is hard to argue that the interns are “primary beneficiaries.”

“A lot of it's supposed to be shadowing someone else,” said Grand-Smith. An intern, she continued, “Is supposed to be able to go to a meeting, watch what happens, learn without having to contribute so that you expand your knowledge base.”

“If you are sitting in your own bedroom doing work for them, not getting proper supervision, not meeting other people, not being socialized, that element of learning isn't there,” Grand-Smith said “So it easily falls into that productive labor bucket,” which makes the argument that the interns are the “primary beneficiaries” even weaker.

The Hungry Ones Have to Take the Unpaid Work

The interns who get the paid internships are largely socio-economically advantaged students or the students from prestigious universities who won the game by landing a well-designed, paid internship, according to the National Association of Colleges and Employers research. On the other hand, the disadvantaged students often end up taking the unpaid internships.

“What people fail to realize is that the ones who are doing it are the ones who are hungry. They're the ones who can't afford to eat. They're the ones who are sleeping on people's couches,” said Professor Grand-Smith.

In the United States, it is particularly the case for students who are socio-economically disadvantaged, immigrants, or international students to get pushed to take unpaid opportunities in the hope of social mobility in the future.

“It's pretty cut and clear that the Caucasian Americans from Harvard don't need my firm,’ Edward said when he talked about the demographics of his interns, “Whereas the Chinese or Indian students from Harvard might be more interested in working for me.”

“I get more American students from the state schools other than the Ivy Leagues,” he said.

Even the students who are not struggling financially are hungry for more experiences in the endless internship game. They are hungry enough for the titles and experiences on resumes to offer free labor without being the primary beneficiaries in these employer-intern relationships.

The experiences one has at hand decide a student’s value in their social circle. “Fame is built on big names,” said Leo Wu, a junior majoring in Finance at National Taiwan University who constantly cold-emails U.S. companies to offer free labor.

As he thinks through the situation, Wu rationalizes it by comparing the give-and-take with the “Net Present Value (NPV)” concept he learned in finance, which gives him a way to imagine the present value of his future job prospects.

“For me, it’s similar to going to MBA – and the difference is the MBA students pay a lot of tuition for their job prospects, and we do that by offering free labor,” he said.

“If the value of having a better job years later is way higher than the value of the free labor we offer now as a student, then I consider it worthwhile,” said Wu.