Unpaid internships

[Mr Doe]

Human nature is such that a potential free lunch is easier to sell than a real option. (NNT)

We have the optionality, potential of getting a job at the company, connections, (ir)relevant experience; obviously, doing free work for several months is the premium you pay for this apparent "free lunch". Should one do this? Of course! It shows passion, commitment, it looks good on the resume etc.
Lets make this situation a real option; you come up to a guy a give him the money equivalent to the work to be done, and in return one gets the optionality. How many people would do this? I am sure not many people here would do it but in the end what's the difference between the first situation? Payoff is the same in both cases.

Oh, usually doing months of unpaid work requires parents with deep pockets. The premium of the option can't disappear.
In light of the discussion; Cash for internships: Tory backers pay party 2000k a time to buy their children work experience at top City banks and hedge funds.

 

[Anthony DeAngelis]

End of the day, you force companies to pay for interns and many of these unpaid opportunities will dry up. Yes, of course these places could afford to pay 7 bucks for someone. Question is "would they?". I don't think they would. These are really unneeded internships and if they start costing firms, they simply will not do them.

I had two good parents. Some people have two crappy parents, some have none. Such is life. Some people are born with ailments which prevent them from having a "normal" life. Deal with it. I look at successful people and I don't see people who ask others to level the playing field. I see people who go out and do it themselves.

I went to school and interned for free. I now have a great job because of it. Instead of lamenting on how "unfair" it is I sucked it up and got the job done.

End of the day I really just want to see other people succeed. I have a job and don't need to intern anymore. Mark my words though. The government will regulate this and these internships will dry up. Then see how hard it is to break into finance with a lower GPA or a less prestigious school. Complaining about a couple grand is trivial when you think of the earning potential a career in finance can provide. Unpaid internships are a valuable way to gain experience.

Here are some great words to live by. The only excuse is there is NO excuse. Whenever I hear people make up excused I simply stop listening. The person who didn't get the job or who came in second always has a "reason" why they didn't win. End of the day owning up to your own failures is much harder than blaming someone else. This might sound cold or d*ckish, but it is the way many people operate (especially in finance).

 

[Baller]

Couldn't agree more.

 

[DominiConnor]

Anthony, I can phone some people with really very impressive job titles and I guess one of them would give an internship to one of my kids even if they weren't geniuses. They can decide to not employ someone (like you) and take on my kid. Because of who my sons parents are they don't actually need to do this "work" thing at all, certainly affording $20K for a year in NY would actually represent a reduction in what they currently cost us.

So, my don with his vastly superior contacts gets the job you wanted, since >80% of the people who'd like me to owe them a favour that's not so terribly improbable.

Does your position that you should "Deal with it" apply ?
And would it still apply after the 5th job you couldn't get ?

As it happens I'm far less accepting of excuses than you are, my background was one which meant I was in the order of 20 times more likely to go to prison than university and being a pimp I meet people who've had problems that make the knife fight I had to deal with outside a maths class look pathetic.

But that's not the right question.
The right one in determining the involvement of the state is whether it makes for a better society.economy. That begs a lot of questions since we have different value systems, but almost no one has a value system that allocates good jobs on the grounds of parental wealth, and it certainly ain't economically efficient.

 

[Andy Nguyen]

Are we talking about IBD type internships where undergrad kids do report/pitchbook bounding/formatting/printing, getting coffee or such office jobs?
Or are we talking about quant type internships where MFE students do model coding, data cleaning, risk reporting, etc?

 

[bigbadwolf]

Are we talking about IBD type internships where undergrad kids do report/pitchbook bounding/formatting/printing, getting coffee or such office jobs?
Or are we talking about quant type internships where MFE students do model coding, data cleaning, risk reporting, etc?

I think the Irish blogger is talking more about the former than the latter. If the internship involves some real training, real learning, real exposure, I'm all for it -- regardless of whether or not it leads to a job at the end. If it involves none of these things, if the intern is treated as a freebie of no significance, treated with the contempt free things often are, and employed to get the coffee and do some photocopying, I'm more ambivalent. Likewise if the firm is using such unpaid work to keep labor costs down, while making deceptive claims on how the "opportunity" could lead to paid work in that firm or elsewhere because of the "exposure." If, as Anthony claims, many of the internships would wither away if the firms had to pay piddling minimum wage, one has to wonder whether those internships offer any real opportunity and exposure in the first place. In media, there's scant doubt that such free labor is being used to keep labor costs down in a fiercely competitive environment; it's also equally clear that competition for these unpaid internships is fierce; and it's clear that many of these internships lead absolutely nowhere.

 

[IlyaKEightSix]

End of the day, you force companies to pay for interns and many of these unpaid opportunities will dry up. Yes, of course these places could afford to pay 7 bucks for someone. Question is "would they?". I don't think they would. These are really unneeded internships and if they start costing firms, they simply will not do them.

I had two good parents. Some people have two crappy parents, some have none. Such is life. Some people are born with ailments which prevent them from having a "normal" life. Deal with it. I look at successful people and I don't see people who ask others to level the playing field. I see people who go out and do it themselves.

I went to school and interned for free. I now have a great job because of it. Instead of lamenting on how "unfair" it is I sucked it up and got the job done.

End of the day I really just want to see other people succeed. I have a job and don't need to intern anymore. Mark my words though. The government will regulate this and these internships will dry up. Then see how hard it is to break into finance with a lower GPA or a less prestigious school. Complaining about a couple grand is trivial when you think of the earning potential a career in finance can provide. Unpaid internships are a valuable way to gain experience.

Here are some great words to live by. The only excuse is there is NO excuse. Whenever I hear people make up excused I simply stop listening. The person who didn't get the job or who came in second always has a "reason" why they didn't win. End of the day owning up to your own failures is much harder than blaming someone else. This might sound cold or d*ckish, but it is the way many people operate (especially in finance).

Ever read Malcolm Gladwell's "Outliers"? While the book itself is drivel because it simply says "hey, this is a problem!" and gives absolutely no solution, that endless wall of text might as well be good for pointing out the fact that a lot of people's opportunity comes from factors outside their control. For example, Bill Gates had some very well off parents (and was born at the right time). Both of Sergei Brin's parents were (and still are to my knowledge) scientists/mathematicians. His mother IIRC is a senior atmospheric modeler at NASA, and his father is a professor of mathematics (STILL--despite the fact that odds are, Sergei could give him a rounding error amount of cash relative to his net worth and he'd be set for life). That kind of parenting is a lottery ticket in and of itself.

Look, as much as I'd like to believe that anything is achievable for anybody so long as they "make no excuses" and "deal with it", that's just not the case. There's stuff like genetics (EG why was one of my friends from Lehigh 6'2 and has no natural facial hair while I'm built like a 5'4" hobbit because of the worst mistake my mother ever made in her lifetime?), parenting (EG if I grew up with two loving and supporting parents instead of just my mother), connections (how many kids go to Ivy Leagues and other prestigious universities, or even prestigious companies based on parents being alums), and so on and so forth.

At the end of the day, sure, anyone can eke out an existence for themselves if they just keep pulling themselves up by their bootstraps, but even getting in the door of some places is a Herculean effort compared to what connected (or brilliant) parents can do for their children.

As for an unpaid internships, even if a company had to pay some nominal wage, they'd be far more valuable to a company than not hiring the interns for several reasons:

A) Would you rather risk hiring someone full time for some mid five figures guaranteed based off of a piece of paper and three hours of talks, or be able to observe them for several months? This is an option on the part of the employers.
B) If that intern does good work, well, let's do some math here...assume $15 an hour. Assume 50 hours a week. Assume 12 weeks. That's 750 a week * 12 weeks = $9000. Can that intern deliver more than $9000 of value in 12 weeks? If so, you've recouped your investment.
C) And if not, well, what kind of business are you running? Say you're running a trading shop. What happens if you lose $9000 in a day? Is that a massive, unacceptable loss, or is that just part of the business? Because if it's the former, what the hell are you doing running a trading shop?
D) Assuming you choose to move on and hire that intern, that intern will have now worked at your shop for several weeks and will have had a great deal of exposure to what goes on at the company than an entry-level employee that you need to pay full market rate yet spend the first several months training anyway.

The only reason that I'm morally against unpaid internships (though mine was nevertheless a good experience, as at the least, I made some very good friends there) is that the less-well-off do not have as good a chance because of the costs of living in a large city.

I mean look...if the employer partnered up with a local university to sublet a few dorms for the summer and provided breakfast, lunch, and leftovers for dinner for said intern, and a paid metro card, then sure, I'd have no problems with working for "free".

The entire bad taste comes from the fact that you have a company that can certainly pay for one more intern as part of its operating costs far more easily than an intern can pay for the costs of living.

Now, some people might live close to NYC and can commute there. For instance, when I interned for an actuarial firm, I took the PATCO from Cherry Hill into Philly. So they have no issues, (Not sure where you lived Anthony), and that's all well and good. But what if I had to intern for free in San Francisco now? Oh look, sorry, but I can't afford it. Who am I going to go to? My mother who makes ends meet teaching piano? (Yes, I have savings but for the purpose of argument, say I didn't.)

Okay, put it this way:

New regulation:

All internships must be, at the least, a net-zero financial outcome for the intern. That is, the intern should receive enough to cover room and board.

Would this suddenly dry up so many internship opportunities? That if you take on an intern, it's your responsibility to provide them a place to stay and make sure they have enough cash not to starve?

Edit: And IMO, if you're wealthy...you can already hire the best tutors for your children, you probably have an important job and know what works in the workplace and can give your kids a head start if you take time to be a parent...how much more of an advantage do kids with the most already need?

 

[bigbadwolf]

Look, as much as I'd like to believe that anything is achievable for anybody so long as they "make no excuses" and "deal with it", that's just not the case. There's stuff like genetics (EG why was one of my friends from Lehigh 6'2 and has no natural facial hair while I'm built like a 5'4" hobbit because of the worst mistake my mother ever made in her lifetime?), parenting (EG if I grew up with two loving and supporting parents instead of just my mother), connections (how many kids go to Ivy Leagues and other prestigious universities, or even prestigious companies based on parents being alums), and so on and so forth.

Veering off-topic, but while there are always reasons for failure, dwelling on them morbidly to no good end is futile, a waste of time, and sets you up for future failure. Learn what you can from each failure and then move on. An improving chessplayer, for example, keeps losing at the same time as his strength keeps improving: the difference between him and players who don't improve is that he subjects each of his losses to scrutiny, finds the root cause of the mistakes (lack of technique, emotion up or down, fatigue, carelessness) and tries not to repeat them. And his mistakes (which can never be entirely eradicated) grow ever subtler and it becomes harder to beat him.

As for genetics and all the other things beyond your control -- that's karma. You have to play the cards you've been dealt. If you've been dealt no aces and no trumps, you're not expected to make a grand slam.

 

[Anthony DeAngelis]

Lets just regulate fairness. That always works. Sorry guys, not going to happen. You force all internships to be unpaid and many internships that would otherwise give people a shot will disappear. All the places I interned at were 5-10 man shops (with the exception of the place I work). None NEEDED an intern, I just pitched it to them and was hungry so they said "sure thing". Had there been a cost associated with it they would of passed.

Facts of life. Many of my friends did unpaid internships and they all lead to jobs. None we rich, just hungry. I was more than happy to work for free and hustle because I looked at the long term goal.

@DC - No, it isn't fair that you could make a call and take a job from me. You know what, I accept that it is life, always has been and always will be. I would just look somewhere else. Honestly, what is my other option? Going home, brooding, complaining how unfair life if? Life sucks, deal with it.

Do anyone think that legislating minimum wage for all interns will stop some connected father from getting his son a hooked up internships? All it will stop is the random, hungry kid who cold emails someone and is looking for a job.

Always amazes me. People try and help, with the best intentions and it ends up screwing kids. Guess what, I would of paid whatever minimum was "forced" to be paid so that I could get the experience and not cost the company. It sucks, but instead of complained, I got it done. So did my friend and many friends of mine. The ones who refused to even get off the couch unless they were paid. They have crap jobs know. Just a coincidence.

Remember, just because someone CAN pay for something doesn't mean they WILL pay for something. Work a night shift job and intern 10-20 hours a week during the day. When you are 40 with a nice career those 3-6 months of hell will be a fond memory.

 

[Anthony DeAngelis]

Side note, my comments are directed only towards unpaid finance internships. Some other unpaid internships use the interns as menial, slave labor. That is something very different.

 

[IlyaKEightSix]

If you've been dealt no aces and no trumps, you're not expected to make a grand slam.

Exactly the point I was getting at. To go with your analogy that jumps two games at once...the idea of the American Dream (I suppose it's a dream because you have to be asleep to believe in it) is that so long as you're willing to continue playing and get dealt more at bats, you have more chances to hit that grand slam.

Anthony, the problem (in my experience) with interning at small shops is that you get very little guidance. Unless a company is so very new that it doesn't even have its infrastructure to profitably trade up yet, odds are, it can spare paying an intern enough to cover room and board. At the moment, I'm sort of in that sort of position about having to price myself very low to find my next gig, and the man who hired me at the last shop (he left two weeks after I started due to clashes with mgmt) is literally in the process of building a trading operation for a firm that just previously cleared futures trades and he himself is not taking home a salary yet because there is no revenue in the firm.

However, if you have a firm in which the managing partners are taking home some mid six figures, there is no excuse whatsoever, in my opinion, for not being able to cover an intern's room and board.

You act as though it's either "nothing" or "more than the firm can afford to pay". What about all of those "hungry" and "cold-calling" kids whose parents barely make ends meet, and can't just afford to rent out a studio in NYC or Chicago or San Francisco for their kid for 3 months?

Answer me that.

 

[Anthony DeAngelis]

Yes, some small shops are useless. One of my internships had me build a database. Sucked and I left after 2 months when I wasn't doing anything of huge value add. I did 2 days a week and even that was a waste. (I actually sell that list I created on my own and have made good money.

2nd internship was 3 days a week while going to school. That turned into a job.

3rd internship was 3 days a week, during school. Small RE IB. Got a good taste of the business. Helped on a deal. Nice bullet point on the resume.

These are unpaid so they are a hit or a miss. Even if they suck, you have something to talk about, you can put a name on your resume and you can use the contacts for your advantage.

I never said you should move for one of these. Find a small local shop, a PWM office, locate community bank. You have to make due with what you have. Most medium to small cities will have a CFA who has a family office and you can get some solid investment knowledge there. I lived in Philly so it was easier.

I completely and totally agree with you that is sucks and it blows. I'm telling you that these small firms will not pay money for an intern. They don't really NEED one. Does that mean you cannot leverage the experience? Absolutely not. But if you bring labor regulations down on these firms, they will not even talk to random kids emailing them. When you dont go to a top school or have connections, these random emails that lead to an interview or internship are key. Remember, no one is forcing you to work for free. Plenty of other jobs that don't require the internships and connections that banking does.

You force these companies to pay and they just won't bother with interns. No skin off their back. But what it will do is screw kids who would work for free and use this experience for a job.

 

[Yike Lu]

You act as though it's either "nothing" or "more than the firm can afford to pay". What about all of those "hungry" and "cold-calling" kids whose parents barely make ends meet, and can't just afford to rent out a studio in NYC or Chicago or San Francisco for their kid for 3 months?

Answer me that.

Gladly.

Save up money, work a second job, take out a loan, ask friends for help, live at the office. And if all else fails, beg.

This is the difference in mindset. You act as if there's nothing else a person can do to make something happen... instead of looking for ways to make it happen. You spend time thinking (and posting here) about why it can't be done instead of trying to think of ways that it CAN be done.

I once thought it was a cliche, a fantasy my parents fed me about what it takes to be successful. But really, the more I learn, the more I find it to be true.

 

[Anthony DeAngelis]

BTW, plenty of shops to intern at in small cities. If you live in the middle of North Dakota you are screwed, sorry. If you live near Cleveland, Atlanta, Charlotte, DC, Milwaukee,Rochester, Buffalo, Syracuse, Houston, Dallas, San Antonio, Portland, etc, there are tons of firms that you can get your foot in the door with.

That tiny, 5 man boutique IB that I interned at. Built a database, real boring, but I went over a couple CIM's, did some industry research and put a bank on my resume.

 

[Anthony DeAngelis]

Illy (and only Illy, please). PM me and I will get you a list of firms in your area to hit up.

 

[IlyaKEightSix]

Who says it can't be done? It was done in my case, and I'm sure other cases as well (as Anthony so preaches). However, what I'm generally against is the idea that you have an entrepreneur who's possibly on his second or third startup (starts one, sells it, starts another, sells it, starts a third, etc...) who's probably worth some tens of millions of dollars.

And then you have a kid, who might not come from the wealthiest background (if he did, why would he need to intern for a company that might not pay?), whose parent(s) don't have the easiest time making ends meet.

So rather than cover room and board for this intern who may indeed be bright, you have a guy that says "nope, not going to pay you, and if you can't find a place you can pay for, tough luck".

Now, in terms of saving up money: okay, so someone has a paid internship one summer, saves that money, spends it on books/other college costs, back to square one come next summer. What next? Work a second job? At the last job I had, I tried to put in as many hours as possible. That didn't work out because I started to get drowsy at certain parts in the day. There's a reason that we call an eight hour work day normal. Take out a loan: against what? You go to the bank, a kid with tons of college costs, who wants to take out a studio or a sublet in Manhattan, and say "oh hey bank, I need $5000". "How will you pay us?" "I hope I get this job." "What's your collateral?" Oops. No go. Live at the office: once again, not something I've ever had to do, but I'm not sure how kindly an employer would take to that. Ask friends: quick way to make a friendship go south borrowing money. Want to have that hang on a friendship? Beg: beg whom? Isn't that what an intern is already doing? Begging?

@ Anthony: Sure, a company that once took free interns now doesn't do it because it has to pay them. In the meantime, companies who can pay their interns will unabashedly get the best and the brightest.

There are two sides of a coin here--smart kids without connections who are willing to work hard and learn--and small companies who just don't have the resources to get their name out to get the best talent. I mean put it this way: if you're going to shop around for a guaranteed good employee (X years of experience, track record of doing Y, quantifiable metrics A, B, and C), odds are, said employee knows it and will demand compensation accordingly. Will a small, lean company be able to afford those kinds of individuals? If so, it should be able to afford an intern. If not, how's it going to get more employees? It can't pay the price of a guaranteed good one, so it has to be able to train one willing to learn.

Those are interns/entry-level employees. And to an entry-level, you have to make some sort of guaranteed salary offer (though I suppose you could just be ridiculously stingy, give a crap salary and an at will contract and say take it or leave it). With an intern, all you have to pay is basically how much a bartender or a kid at Starbucks makes. And in turn, you probably can get a lot of value out of that intern, relative to their cost.

I really don't get it--to live in NYC, it probably costs around $20,000 a year. Now assume a 3 month internship. That's around $5000. Are you saying that a small company can't get $5000 worth of value out of someone who has the proper background to learn what the shop has to teach them? Furthermore, are you saying that a company can't absorb that kind of cost? If you're running a trading shop, and you can't eat $5,000, you shouldn't be running a trading shop.

Edit: just to clarify--it isn't that I'm against doing unpaid internships. The one I had worked out very well for me, and if there was a better fit in terms of my background and the mission of that company, I would have been happily employed there for a long time now (there wasn't--they were pure tech, and I didn't really fit with my quant background). But I'm saying that there are other things to consider with unpaid internships.

 

[Anthony DeAngelis]

We are arguing in circles. End of the day, just because they have the money doesn't mean they have any obligation to pay for an intern they don't really need. Let the market sort this out. I mean getting a FO position in finance is not a right or necessity. I resent the government interfering with my choice of employment. If I want to work for "free" ( not free, just no pay), that is my right. Everyone will always have a disadvantage, that is life.

We are not equal. We are not special. Life is not fair. No one is owed anything. No one can force equality. One second spent complaining about these facts is a second not spent improving the lot you are given. Play your hand, don't worry about what someone else has.

 

[Barny]

Anthony post #4

I mean really, this post is so full of contradictions it's funny. You clearly see yourself as some sort of go-getting, alpha male who can make a success of himself despite having all the odds stacked against him, yet your perceived situation is far from your actual position, which is that you're fortunate to be middle class and have access to capital in the form of your family who can support you through education and unpaid internships.

The reality is that you're completely missing the point. In other posts, you've seemed like a decent guy, yet what you've just said here is that the world is unfair, and poor people deserve to be poor because of it, and those who are born into poor families do not deserve opportunities equal to those who have been born into rich families.

It's all well and good saying that moaning about not getting a salary when it could help you bag a $100k a year is pathetic, but the reality is that it is impossible to work for free if you're poor. Basic subsistence has a cost, and if you don't have any money, and no access to capital, that cost is simply too high to pay. So what you're suggesting is that even though smart poor people have had to fight against the odds to achieve a decent education despite the costs and difficulties they face in terms of inferior schooling, they should now be given a final kick in the teeth and told that they can't have access to jobs which will drag them and their families out of poverty because they're already poor. That's absurd, and in many ways, is far worse than the other problems poor people face.

At least governments recognise the impact poverty has on achievement at school - so poor kids are given free school meals, money to buy books and get the bus to school, free computers etc. (in the UK, at least), but stopping people from obtaining a job by removing all financial support for them whilst they try and make their break in an industry by refusing to pay them basic subsistence wages (which is actually the law) is perverse. The £1500 required to pay an intern minimum wage is peanuts to any large profitable company, such as those in the financial services sector, and that tiny amount of money is enough to stop discrimination against poor people. If you don't pay that, you are unfairly advantaging the middle-class, simple as.

It's disappointing that there are people so blinkered going into the echelons of high-finance, which I suspect is part of the image problem that bankers have in main street, particularly when they then shaft main street for their own greed and excesses. Do us all a favour and think a little more about the person you want to be rather than just the size of the pay-cheque you want to earn, because I find it really hard to believe that unless you're suffering from some sort of mental illness you really meant what you just said.

 

[Anthony DeAngelis]

Let me correct you pal. No one supported me through school. I worked way more than full time during my undergrad and I interned , for free, during both of my masters. I paid for every one of my degrees by myself.

The world is unfair. I never said anyone deserves to be poor. What I did say is that people deserve what they work for. Sorry that I don't rush to the government to solve all of my problems. If people WANT to work for free, let them. How dare you tell me that I cannot work for free if I want. The government has zero business interfering in these areas.

Also, all three internships I had, that were unpaid, would not of had an intern if they had to pay out of pocket. You might say that unpaid internships don't add value, well the paycheck I get every two weeks because one of those internships hired me is direct proof that there is value. My friend who is not an investment banking analyst, who got this position directly from his unpaid internship is another example.

You don't want to work for free, don't do it. Many jobs require less effort than front office finance. Banking, trading, quant roles are generally very high paying and require extra effort. Having a finance related internship greatly increases your chances of getting an interview.

I love how I get "lectured" when you have zero clue about me. I've worked at all types of blue collar jobs. I've worked in back office finance, middle office finance and now front office. I've seen my father lose his job from his factory going to Mexico and I've seen my mother work full time and put herself through school. Sorry that I still think work ethic is important.

Every job I have ever had I have has a steady series of promotions and wage increases. You know why? I shut my mouth, do the work and show up on time. I guess doing the simple things correctly is too much to ask.

 

[Barny]

Forgive me for being such a communist, I was only suggesting that people shouldn't be slaves by guaranteeing they receive a minimum subsistence wage. And so if you're as hard down by and hard-working as you appear to be, would you mind explaining to us/me how you were able to support yourself through your unpaid internships?

I'm not suggesting that unpaid internships don't add value - they do, and that's the problem. It gives people who have rich parents who can pay for them to do these things an unfair advantage. And guess what - other peoples parents work hard too! Not just your own, and they don't get shit for it. I saw my mum work 80 hours a week as a residential nurse just to pay the mortgage and put food on the table. Poor people don't necessarily have lazy parents. Another prejudice you seem to harbour.

I'm very pleased that your employment is going well. But I'm not sure personal bell-ringing is what this thread was intended for.