More and more employers are moving away from unpaid internships across a wide range of industries, including the trades. While some jurisdictions are outlawing the practice, in Ontario unpaid internships remain legal as long as a series of conditions are met. Despite their legality, many employers who continue to offer unpaid placements have not factored in the hidden cost that is present in every unpaid internship. Specifically, the cost is that the primary eligibility criterion for unpaid internships is not talent or ability. In this blog, we explore this cost in more detail, and show why paid internships are actually better for growth-oriented and progressive businesses, whether they are in the trades or other sectors of the economy.

For non-growth companies, unpaid internships provide one major benefit

We have talked with several non-growth-oriented employers as we build out our network of Trade Smart certified companies. These employers usually articulate one key reason for favouring unpaid internships. They want free labour for casual or occasional work. In some cases, employers have told us outright that they will not keep our student on once their internship is over. We have been surprised by, but we appreciate, their bluntness because it makes it easy for us to decline to work with them.

There are several well-known problems with unpaid internships, in every industry including the trades. Perhaps the most important one is that because they are not paying wages, companies often put less effort into ensuring that the intern is engaged in worthwhile learning experiences. Interns are confined to the most casual and menial work, without any understanding why this work is valuable to the overall project. This in turn creates a revolving door of people through the company, increases turnover costs, and discourages new people from getting into the industry. An intern who isn’t mentored and doesn’t have a chance at a job after their internship is justifiably frustrated and is unlikely to stay in the industry. When we are so desperate to get more people into the trades, unpaid internships are hurting the whole industry.

The hidden filter of unpaid internships 

Internships, usually four to eight months long, are integrated into the curriculum of a specific college or university program. If they are unpaid, that means the student must be able to cover their living costs, plus any costs related to their internship (commuting, tools and equipment, uniforms, etc). On average, a student will need over $10,000 to complete a 6-month internship. The vast majority of students cannot cover these costs on their own. They will need to rely on family members to help them with room and board, and the costs of daily living, either by having them live at home or paying for it directly.

What this means for companies is that if they only offer an unpaid internship, the pool of people who can take on that opportunity is heavily filtered. And it is not filtered by the skills and abilities of the intern, but rather by the ability and willingness of the intern’s family to pay their living costs. Some families, regardless of how rich they are, will not provide a cent towards a student’s internship. Others, who may be quite poor, will sacrifice everything to give their kid a shot. The point is, with unpaid internships, employers are really getting access to students based on characteristics of their family’s financial choices, not the student’s ability.

Family wealth is a poor predictor of work ethic

Some employers may be aware of this filter, and may continue to use unpaid internships as a proxy for hiring a particular class of people. For instance, they may want wealthier kids for a variety of reasons, but this comes at a cost. Whether it is intentional or not, unpaid internships also shrink the pool of candidates by gender, ethnicity, and a range of other factors. This doesn’t make sense to us, because the point of our internships is to give anyone who is willing to work and wants to learn, a chance to get into a trade. Luckily, we have a large number of employers who want these kinds of people coming into their organization.

For an entry-level position in the trades, one of the must-have characteristics is a decent work ethic. Arguably, this is one of the most fundamental requirements in any trades job. 

When we look at the evidence, we find that having a strong work ethic is broadly distributed across all classes of individuals, regardless of their economic, gender, ethnic or other characteristics. Indeed, the small differences in work ethic by gender, social class and ethnicity that have been found, favour the very people who are left out of unpaid internships – women, racial and ethnic minorities, and people from lower social class backgrounds.

The knock-on benefits of paid internships

There are ripples of benefits that result from the fact that paid internships draw from a pool of candidates defined by their abilities, not their family’s level of support. With more capable people, the quality of work can be higher. Even in entry-level jobs, the best workers can be 3 to 5 times more productive than those at the bottom. This can lead to longer employment relationships and reduced turnover costs, which currently run about $10,000 per lost employee in the trades. 

There are two other benefits of reduced turnover. First, it creates longer lasting productivity improvements for the company as better employees become more versed in company systems. Sure, employees can be poached by other companies, but the familiarity of good company processes and colleagues can ward off some of this. 

The second benefit is to the industry as a whole. The highest points of attrition in the trades are getting the first job and getting signed as an apprentice. When a more capable employee gets a chance to prove themselves for a first job through an internship, more good people will stay in the trades. If we are ever going to solve the labour shortage in the trades, paid internships with a partner like Trade Smart College will need to be part of the solution.

Conclusion

Paid internships offer a cascading series of benefits to trades companies. When you start with better candidates, who are chosen because of their ability and work ethic rather than how much their family might pay, they will be more productive. This will lead to greater commitment to the job from both the employer and employee, and reduce turnover costs and lost productivity. In the end, this will keep more good people in the trades, and begin to address the crushing labour shortage in the industry. At Trade Smart College, we are always looking for more trades employers who want better entry-level employees. Reach out to us if you want to learn more about our “8 to Great” program that can help you build prepared, focused and reliable teams.