I vividly remember my first internship and the whopping $5-an-hour salary I was offered and readily accepted. That sounds like a ridiculously low salary by today’s standards until I asked the CPI Inflation Calculator to tell me how much that would be in today’s dollars — $48.69!
If only that were the case for interns today who are averaging $15-18 an hour, according to my recent random survey of agencies and confirmed by ZipRecruiter.
Fortunately, most for-profit organizations are paying interns today and salaries have increased since I first advocated for better internship salaries some 18 years ago when I started writing this blog. Back in 2008, paid agency internships ranged between $10 and $15 an hour. And back then far too many internships were unpaid–an unfair practice that has mostly been eliminated except at smaller nonprofit organizations.
So I decided to get back on my soapbox after a friend called to inquire on behalf of one of his mentees if $20 an hour for a major New York agency internship was “normal.” His jaw dropped when I confirmed that appears to be the going rate for many agencies, if not a couple of dollars more than most.
“You are kidding me,” was his response. “How can they live in New York for that?” I told him about one of my former students who accepted an internship in New York 12 years ago for $15 an hour and had to share a 3-bedroom apartment with 11 other interns. Thankfully, that former student was quickly and often promoted and now enjoys a highly successful career. He also recently purchased his own townhouse in Brooklyn. By the way that $15 in 2009 is equivalent in purchasing power to about $22.06 today — surprisingly in step with inflation and the high end of the last year’s intern compensation study by the National Association of Colleges and Employers (NACE).
By the way, my friend who made the inquiry runs a boutique Chicago agency that only occasionally hires interns — usually a graduate student with prior experience. He acknowledged paying his current “intern” $75 an hour, noting the value being returned to the agency was well worth that salary level. I was blown away by that number, explaining that the highest internship salary levels I found last year ranged between $22 and $38 at corporations, with a couple of Silicon Valley employers paying $45 an hour (and housing allowances) for top talent.
Why Internships are so Important
Paid internships are a path to full-time work, they are important to both students and employers, according to Shawn VanDerziel, NACE executive director.
“Many employers use their internship programs to feed their full-time hiring efforts. Providing pay not only enables the employer to give the intern ‘real work’—and therefore be better able to gauge the student’s abilities for full-time work—but it also means the employer can attract a larger, more diverse and inclusive pool of candidates for their internships. This is critical to the employer’s ability to diversify the workforce,” he says.
For students, paid internships not only enable them to gain real-world experience—important in today’s job market—but are also an avenue to a successful career.
“Our research consistently shows that students who participate in paid internships not only get more job offers than their peers in unpaid internships, but we also see a relationship between a paid internship and a higher starting salary,” explains VanDerziel.
Among respondents to the 2023 Student Survey, paid interns averaged 1.4 job offers and unpaid interns averaged 0.9. The survey also found that that those who had gained experience in a paid internship earned a median starting salary of $67,500 compared with a median of $45,000 for those who had taken part in unpaid internships.
Thanks to better college PR programs than decades ago, interns today are better able to hit the ground running. While it is very true that internships provide valuable learning experiences, they also are a source of cheap, profitable labor for most agencies.
Bottom Line: If an employer is financially benefitting from the work being performed by an intern, then pay them accordingly. Is it a pure learning experience being offered or is the employer benefitting from the work performed?
Consider using the same salary models and “mark up” percentages as entry-level employees. If interns are billed out at $75 an hour, then $25 makes sense. If billability is less or more than this example, then be transparent with interns about how they are being compensated and billed out to clients.