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EconomicPolicyInstitute April 23, 2010

EPI’s recent work highlighting the inadequate regulation of student internships has had a widespread impact in the media, at the U.S. Department of Labor, and among companies that hire interns.

In February, EPI staff met with officials of the Labor Department’s Wage and Hour Division to discuss the growing prevalence of unpaid internships and the need for the federal government to provide clearer guidance for employers, colleges, and students, along with much stronger enforcement of the wage and hour laws regarding internships.

The Labor Department recently posted a fact sheet on its Web site to help employers determine whether interns must be paid for their work. The fact sheet states that “interns in the for-profit private sector most often will be considered employees who must be paid minimum wage and overtime.” It also states that interns may be unpaid only if “the intern does not displace regular employees but works under close supervision of existing staff,” and that “the employer that provides the training derives no immediate advantage from the intern’s activities.” BNA’s Daily Briefing Report stated that the fact sheet was issued “shortly after the April 5 release of a policy paper from the Economic Policy Institute, which criticized Labor Department regulations on internships as being vague, outdated, and laxly enforced.”

EPI’s recent policy memo, Not-So-Equal Protection, proposed a new procedure for ensuring that interns do not take the place of regular paid employees. That memo also proposed extending basic workplace protections to interns, including protections against discrimination and harassment.

More than 25 newspapers, blogs, and television news shows, from The New York Times and The Huffington Post to FOX News and The Daily Princetonian, have covered the topic in news stories or editorials. An editorial in The Washington Times reported that the Solicitor of Labor, the top law enforcement official at the Department of Labor, is now targeting companies that give young people unpaid internships, claiming a widespread violation of labor laws. In addition to Fox News, EPI Vice President Ross Eisenbrey has been interviewed by MSNBC, Southern California Public Radio, and KPFA in Berkeley.

Not-So-Equal-Protection, by EPI researchers Kathryn Edwards and Alexander Hertel-Fernandez, showed that while internships are a critical way for college students to gain the experience needed to find jobs after graduation, the general lack of regulation has fostered the growth of unpaid internships in which many low- and middle-income students could not afford to participate.

In its coverage of the paper, The New York Times cited multiple anecdotes from current and recent college students who worked for free at tasks, such as sweeping floors and cleaning door handles, which brought no valuable educational experience.

At least one employer, meanwhile, has agreed to change its policy and stop hiring unpaid interns after reading news coverage stemming from EPI’s work. Atlantic Media, which publishes The Atlantic, the National Journal, and other publications, said it would begin to pay its interns and would also provide retroactive pay for its interns from last year. Atlantic Media said in a statement that the New York Times’ story, which cited EPI’s research, had led it to revisit its practice of not paying interns. “We had thought this was the way to structure unpaid internships, but if it sits near a grey zone, it’s not for us,” the company said.

EPI’s Eisenbrey says the issue of how interns are treated in the work place is important for several reasons. “First, internships have become an important entry point to professional careers, so students who can’t afford to work for free are denied career opportunities,” he said. “Second, it degrades labor standards generally and makes it more acceptable that even adult dislocated workers will be forced to take unpaid ‘internships’ as try-out employment. And third, the interns are sometimes doubly exploited, working without pay while paying for college credit, yet receiving no instruction or education.”

Social Security and the federal budget deficit
Increased attention to the large U.S. federal budget deficit has raised concerns about possible cuts in Social Security. A new EPI paper, Social Security and the Federal Budget, by Economist Monique Morrissey and Researcher Anna Turner address these concerns and stresses that there are better ways to bring down the deficit than to cut entitlement programs such as Social Security. The authors recommend that policy makers reverse Bush-era tax cuts for the wealthy and the build-up in defense spending.

Is Race to the Top unfair?
EPI Research Associate Richard Rothstein has co-authored a critique of the Department of Education’s Race to the Top program for awarding states federal funds for education reform. Two states—Delaware and Tennessee—were recently named the winners of the first round of the competition, receiving a combined $600 million. But as Rothstein and William Peterson explain in Let’s Do the Numbers, the point system established for selecting winners is complex but not very precise. They recommend the Department of Education adopt a simpler selection system for future competitions that denies valuable funds only to those states that are “patently contemptuous of the reform process.”

Upcoming events
EPI Economist Josh Bivens and Policy Analyst Ethan Pollack are both participating in the Green Jobs Conference, May 4-6 in Washington D.C. Bivens will host the panel, “What and Where are the Green Jobs?” while Pollack will release a paper on the environmental and economic benefits of investing in freight rail. For more information, visit www.greenjobsconference.org

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