NOTE: All numbers here are for approximations and assumptions to the cost of an internship program for a mid-level company that is somewhat successful in its field. Salary and other numbers are based on rough averages, as illustrated below. Internship program costs are based on an informal survey of several former interns at various companies.
Are unpaid internships fair to the interns and their employers, or is it a one-way street? Dust off those TI-83+’s, kids, because it’s time for some math!
Let’s say that your company pays its base-level employees a salary of around $37,000 per year, low-level management gets $43,500, and mid-level managers get $50,000. These numbers apply to all departments.
Your company has 200 applicants for 5 internship positions, meaning that there is one eventual intern out of 40 applications. You have two base-level employees spend a week sorting through resumes. The cost of this activity is $1423.08 ((37000/52)x2).
Of the list of 200 applicants, they cull the number down to 20. There is one prospective intern out of every four applicants now. Low-level managers take over, and two of them call each of the prospective interns and conduct a one-on-one phone interview with each of them that takes around 10-15 minutes each, with an additional 7 minutes of annotations and data entry regarding the calls (we’ll average time per call to 12.5 minutes, plus 7 minutes for 19.5 minutes per applicant). The cost of this activity is $135.94 ((19.5×20)x(43500/124800*)).
Mid-level managers are called in to give the final assessment. Three of them spend a meeting (let’s call it 2 hours) going over the applicants and the notes made during the interviews to come up with the list of the final 5 interns. The cost of this activity is $144.2 ((50000/124800)x120 minutes x3 people).
Now, let’s introduce the interns to the company.
The cost of printing orientation materials is about $125 (about $25 for each packet).
Time spent training interns is one week of the time of 5 base-level employees for one-on-one shadowing, or $3605.77 ((37000/52)x5), two lower-level managers for team-building, or $1673.08 ((43500/52)x2), and one mid-level manager for oversight, or $961.54 (50000/52). This brings our training total to $6,240.39 for that first week.
Throw in the extra money for utilities (water, electric, etc.) and amenities (coffee, occasional lunches, etc.) that the five interns are now consuming, which is $375 (let’s bring that to a total of about $75 per intern for the program’s duration). Assuming that there are no other costs involved, how much do five unpaid interns end up costing the company?
$8,443.64**, or $1,688.73 per intern. If this is a summer internship that goes on for 3 months (90 days), that’s $18.76 per day (8 hours), or $2.35 per hour.
Experience is worth quite a lot, especially to students and recent graduates. But with the federal minimum wage at $7.25, is it really worth losing 2/3 of that money each hour just for experience?
So if this company paid its interns each $1,000 per month, they would still be saving $528 per intern versus the national minimum wage, and that’s including all of the costs listed above.*** And their total costs for paying the interns would be $15,000 for a rough equivalent of 15 months’ work (3 months x 5 interns), well below the yearly cost for a base-level employee.
When you get right down to it, interns are a cheap source of labor, and can reap huge rewards for the company. So why don’t those companies give a little back? It costs a lot less than they might think.
* This is the cost per low-level manager per minute – 260 days of work (365 – 104 for weekends; salaried pay makes holidays paid time off in this example), working 8 hours per day, or 480 minutes (ignore vacation, early days, late days, etc.) and no weekends is (260×480) 124,800 minutes
** 6240.39+375+125+144.23+135.94+1423.08
*** (7.25-2.35)x8 hours x90 days = $3,528
