Still trying to rebound from the recession, American workers competing for scarce jobs are facing a new enemy: a youthful, eager and educated army willing to work for free.
In numbers up to 2 million, the increasingly dominant presence of unpaid or low-paid interns in the workforce is taking much-needed entry level jobs away from salaried employees.
"It's not like give and take, it's more like just taking," said Army veteran Eric Ortiz, 41, who worked as an unpaid intern at a publishing company from September 2012 to May 2013. Doing graphic design work in exchange for college credit, Ortiz said the company continually added extensions on to his contract with the implied promise of a future paid job.
"They'd say, 'Things are looking up, but we can still use your help,' so I hung around, hoping they'd make me an offer. It turned out to be just a lot of empty promises."
Ortiz and David Tejada, 29, are both Army veterans who recently found work as computer software testers in a special trainee program for returning veterans. Before that, each endured long bouts of unemployment.
"I was unable to get an entry-level position because [employers] want someone with experience, and the only way to get experience is to work for free," said Tejada. "I couldn't do that. I have a family to take care of."
Though Tejada said he would have accepted even a low-paying job, he was still unemployed when his son was born. "I volunteered to go to Afghanistan in 2011 to 2012. I did it to support my family."
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It's easy to see why unpaid interns are replacing salaried employees at some companies. Employers know they can fill vacant positions with a virtually unlimited supply of bright, hard-working young helpers, and at the same time try them out risk-free for future paid positions. Many interns said they benefit from the arrangement as well, by obtaining valuable on-the-job training and greater employability.
But a recent survey found the advantage seems to apply almost exclusively to paid internships. The National Association of Colleges and Employers reports that 63 percent of paid interns wind up securing a full-time job afterward (with a median starting salary of $51,930). Unpaid internships, meanwhile, only led to employment 37 percent of the time (with a median starting salary of $35,721.)
In fact, students who worked at unpaid internships were arguably no better off than those with no internship experience at all, who were hired at a slightly lower rate (35.2 percent) but with a higher starting salary ($37,087).
Beyond that, some economists said the prevalence of intern labor in the workplace may be actually harming the economy at large. Analysts point out that interns who earn little or no wages cannot contribute to economic growth because they have no buying power. Not only are they unable to pay taxes and contribute to Social Security, they drain the resources of parents and supporters who may be financially weakened by the recession themselves.
"It's slowing the recovery from the recession because people have less money in their pockets to spend on goods and services provided by other businesses," noted Ross Eisenbrey, vice president of the Economic Policy Institute, a liberal think tank. "These young people are delaying their saving for retirement, their ability to accrue capital to buy a home—all of the things a middle-class person does.