Losing money on interns - myth?

So during this search for internships I’ve heard a few times “we don’t have money for interns right now”, and some owners of engineering firms I know tell me that for them interns, in general, are a net loss rather than gain, but they offer them as a form of charity. I’ve also heard from some places that even their paid interns are underpaid for the rate their work is billed out at.

Having done three internships already, my personal experience is as follows:

First internship
Major client lost while I was there, not enough work for me, cost more than I earned for the firm.

Second internship
80-90% billable following the second week, albeit, slower than full time workers, let’s say 75% efficiency.

Third internship
Government funded research facility, no profits to be generated, but was almost 100% “billable” after the first two weeks at full worker speed.


So, here’s my sort-of-serious-but-would-never-have-the-courage-to-actually-say-it internship proposal for a profit-neutral intern:

I completely understand you don’t want to take a risk on an unproven intern, so here’s what I’ll do. You don’t have to pay me. In fact, I’ll pay you hourly for any help you give me! Nothing I do is presented without your approval, but I get to take home the client bill-out rate for my work.
Worst case scenario intern result: I take up all of your time with questions and do no work. You get paid for that time anyway. (I realize this leaves client work undone, hurting reputation, but if it was perfect I’d be using it :stuck_out_tongue:)


Curious to hear your thoughts. Do you lose money on interns you take? All interns or just the bad ones? Could it be fixed with different hiring practices, payment methods, etc.?

In the media industry (news organizations, radio, tv, etc.) all internships are unpaid. So it’s not an off base proposal by any means.

Offering to pay out of your pocket is a little crazy though. Do you really want a bill for $500 a week?

Personally, I’d rather get a raise or better insurance than pay an intern.

I don’t think your proposal or math adds up.

For one, you aren’t accounting for the difference in billable rate vs. salary which is overhead/profit for the firm. If the billable rate is the same as the cost, in the end you lose money as the firm has to pay the lease, heat, buy pencils, coffee, etc. Normally a firm will bill out at 2x the cost rate (ballpark).

Secondly, there is no way you would pay for the hourly rate of the person training you. That would be very nice, but crazy. Let’s say you have a senior training you, meanwhile he’s not spending time working on billable hours…therefore to net an equal opportunity cost for the firm, you’d have to pay him his billable rate, which might be $120 an hour.

I’ve never hired an intern in my consultancy now, but have been considering it. I don’t think it’s a losing proposition, if done correctly.

Ideally, you hire an intern (or junior, or anyone), so that more senior and higher billable people can do more work at a higher rate, therefore making net profit greater and increasing the differential between cost and billable.

ie. It doesn’t make sense to have a senior grab 100 pics from the web for research and pay him his $50/hr for it (you’d have to bill your client at $120/hr for it to make sense which client would balk at), but no problem to pay an intern $20/hr to do the same job, while your senior is designing something you can bill full rate for.

Also, depending on location you can get government offsets for the wages of university students which can make it quite beneficial.

R

For the love of god, do not pay for being an intern! Under no circumstances.
It is bad enough that some firms insist on not paying their intern at all.

Grabbing 50 pics of the web might seem like a low level task but it still is a task that has to be carried out by someone who has allocated time for this and knows what to grab, i.e. has gotten an education.
In what world should this person not get paid for it? The intern hasn’t come to the firm to grab pics. He does it to pull his wait but the point of having interns is not to make the firm money.

If the seniors within the design firm have to a spend a few minutes extra of their time to explain this or that to an eager, motivated and talented intern, so what? I strongly believe that there is an obligation for established designers and leadership to help the up-and-coming gather the needed experience so that they are ready when the time comes to pass the torch.

If you have inters where the teaching is tedious and it isn’t fun to see the interns grow and get stronger by the minute, ether recruitment screwed up and hired a bad intern or you aren’t a good teacher and leader.

I was never suggesting outright paying to do an internship. I know unpaid internships have been debated enough on these forums as is, but I was curious if the case for interns could be made from a purely capitalist perspective.

To answer your question Chris (using your numbers combined with Richard’s). If I could take 4 hours of advice a week from a senior designer at a rate of $120/hr, for a total of just under $500 per week, but then turn that advice around into work that’s worth $1000 to the client, and pocket that, I’d be up $500 a week, which is about the same as I made in my previous internships. Basically if a firm is making $1000 a week off of an intern’s work, and paying them $500, the cash flow and work remains the same, but the risk is shifted from the firm to the intern. If the intern is confident enough in their abilities that they know they can produce at that rate, then I don’t see the issue.

As for that raise, if you had enough work to justify it, why not invest the money in additional personnel, leading to additional profits, and double the raise? I guess you’re assuming in this case that the intern is a net loss and therefore the money won’t come back around?

Richard’s response was more along the line of what I was getting at. I hadn’t thought of the fact that the pure monetary input/output of the intern could be a net loss, but when factored into the ecosystem of a studio could generate a net gain.

I think any employee is not really up to speed until after 6 months. That’s why I believe interns can’t really be profitable.

Also, when you’ve hired some people and made some mistakes, you know it’s hard to find good employees in general. There are a lot of crazy people, thieves, creeps, etc. out there.

I think if you could prove to me that you aren’t a criminal, you’d be 60% your way to interning. The other 40% would be timing rather than money.

I like your thinking though. It’s creative and a little out there. Having said that, when you called me up with this proposition, I would tell you not to do it. However, it might lead to a very interesting conversation that would keep your name in my head. Maybe that alone is worth the try…

You can get interns to be productive immediately, if you find a small task that aligns with their talents and way of thinking. Basically, just choose an intern based on those tasks. This is something that some new companies in the IT sector have done really well. I wonder why can’t some design studios do this as well.

I don’t think it is just that easy. Hiring someone has a cost, hiring someone for a short period (like an intern) means this cost takes a larger chunk of what profit they’ll make you (but to be fair I guess the process of hiring an intern isn’t as thorough as for hiring someone on a more permanent basis). Finding the right small tasks within what the intern is capable of means someone else have to take the time to do this. What might work in some sectors doesn’t necessarily work in others. If I were to find small tasks within projects that I could tell someone to do for me, I fear it might be just as much work to admin this than to just do it myself. But I guess it could be done for some.

I would guess IT has more of the “we’ve written the pseudo-code, or generally spec’d this part of the program… now someone just needs to write the actual code” types of jobs.

I fear it might be just as much work to admin this than to just do it myself.

Or as my dear old mother used to say to me, “Here, let me do that, I can do it while you’re thinking about it.” She had a way with words. :wink:

Hey folks,

For those who missed it, there was a recent ruling on (un)paid internships:

http://www.nbcnews.com/business/fox-searchlight-should-have-paid-interns-judge-rules-6C10292323

Internships might work better for larger companies with the resources (extra desks, computers, staff, etc.) to allocate towards managing the intern(s). For small companies like myself, (just me), it’s a more challenging value proposition. There should be balance so the relationship is mutually beneficial for both parties.

w

from The Court Ruling That Could End Unpaid Internships for Good - The Atlantic this is the test applied by the judge:


The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

The internship experience is for the benefit of the intern;

The intern does not displace regular employees, but works under close supervision of existing staff;

The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

The intern is not necessarily entitled to a job at the conclusion of the internship;

The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship



I don’t understand this fully. I think it means that an internship can be unpaid if all the above points are met.

I think this is key.
In other words, the intern has to be completely untrained and incapable of producing anything of value to the company.

In my opinion, as soon as there is a portfolio review necessary to get the internship and there has to be an interview to test the interns skill set, which put him/her above other applicants, the internship has to be paid.

According to this above, the company is not entitled to any expectations as to the quality of the interns work.

Or put another way, if you do an unpaid internship, by definition the experience you receive/ work you produce is of no value.

In light of this, I wonder if it is worthwhile including unpaid internships on a resume, as you are basicially saying “here is evidence that I’m worth nothing”.

It doesn’t say the experience must be of no value to the intern, just to the company, and that the experience has to be similar to that of an educational institution.

For example:
An intern working out of the office on their own theoretical projects, under the supervision and guidance of a senior designer would fit well into this model, and I think that’s what was envisioned. For the intern it’s basically the same experience as school but with more personalized guidance and no tuition.

You put your school on your resume, and I feel like this would be a better learning experience than school because of the personalization. Though I don’t see where the incentive for companies is.

I dont think it necessarily means the company is not allowed to use the interns work, but that the works can not be immediately taken from the intern and submitted as work done by a paid employee. The company would need a paid employee to look it over and review the interns work so that it is up to par with company standards. This would theoretically mean that the time spent by the paid employee to review the work would negate the benefit of the intern doing the work.

Sounds good in theory, but doesn’t really happen in practice…

I have always paid our interns, some have been less useful than others but if you are paying minimum wage, how much of a hit really is that on a business? The worthless intern is an excuse, interview your candidates better, and if they suck, fire them. The problem is there is an acceptance of this interns as free labor in design, and that wont go away until students stop taking those positions.

I know most of the big name designers don’t pay interns, and students with means flock to them anyways because it is a good name on the resume. Using an army of unpaid interns for boutique production is the new hot thing in D2C companies, and they aren’t even doing design work. Nendo takes in as many interns as they can, you work unpaid for 12-14 hours a day for 6 days a week (they provide some sort of housing). Obviously the work standard in Japan is different than here, but that is a sweat shop.

Dezeen recently quoted the Japanese Starchitect Fujimoto saying that unpaid internships are a “nice opportunity”.
The comment section is filled with disgust and outrage but there is also some good discourse and background information about the “open desk” policy in Japan.

…aaaand Dezeen is at it again.

This time, quoting a maybe more relatable figure for us IDers: Dick Powell of SeymourPowell fame:

“Offer anything, do anything,” said Powell. “Work for nothing, make tea, carry bags, and learn, learn, learn.”

His statements are shocking enough but considering the context of him acting as the chair of a charity and giving this speech to recent graduates, makes this even more baffling.
I do understand the general point. Don’t give up, do what it takes, work hard but the problem is that the industry is reading his statements very differently and forcing unpaid internships on recent graduates. It is getting increasingly more difficult to land a junior design position without experience.

Powell, a leader in the field, should probably chose his words a bit more carefully.

That is quite a disappointing speech. I’ll grab one comment from the dezeen article:

“If you have enough work to give six young designers then you have fee income to pay them, don’t dress up exploitation with the word ‘intern’.”

I’ve always thought of design as a pluralist profession- you need the widest background and experiences in order to get the best results. Turning it into a privilege-class occupation (only wealthy people with means to support themselves unpaid, in one of the most expensive cities in the world) is short-sighted.

I guess if you graduated from RCA, what’s a little extra debt? :wink:


I think this is a really good point. Those who have paid their own way through college often have much more life experience than those who haven’t, but none of the financial support. If an employer claims that they can’t pay interns because of quality of work, it may be because the interns that can afford the unpaid positions they’re offering are also the ones with lower quality work. (no offence meant to anyone who has received financial support, it’s an over-generalization, not an indictment)