False incentives mean fewer AP interns

Posted: December 31st, 2010 | Author: | Filed under: journalism | Tags: , , , , , | View Comments

Photo courtesy of Douglas Muth

As 2010 comes to a close and the journalism industry counts losses from another year of sliding revenues, the Associated Press has decided to put its internship programs (and some other recruitment efforts) on a one-year hiatus. In the professional journalism world of late, cost-cutting matters almost as much as reporting the news. And despite controversy about the role of interns and the merits of paid versus unpaid in the industry, the program is low-hanging fruit.

Proponents of paid internship programs point to several functions they deem essential to education, training and growth in the industry: that internships grease the wheels for top journalism talent, and that without payment, positions would be available only to those wealthy enough to sustain themselves without pay for the position’s duration.

But incentives matter, and they aren’t well aligned to push the AP to continue the program.

Interns don’t have much to offer by way of experience in the newsroom. And requiring a certain level of pay curbs the number of interns the AP can take on because the company must find the money in the budget to pay them, which means diverting funds away from other areas of operation. Under their current program, the AP pays unskilled, inexperienced interns at the same rate as entry-level employees but only receives a fraction of the productivity. And after their training, interns are under no obligation to stay – they become the sole beneficiaries of the internship. In low-revenue years, it’s in the AP’s best interest to either hire a larger proportion of experienced entry-level workers or to decrease intern wages.

But federal minimum wage laws require at least some price floor on paid internships. On the other hand, federal law also requires that companies offering unpaid internships receive no benefits from the trainee. The company is required to pay the costs of processing and training a worker without any expectation of productivity. The law actually offers negative incentives for unpaid internship programs when strictly enforced.

There is certainly a case for the middle ground. Considering the number of communications students clamoring for limited internships, the AP could offer more positions at a lower wage if not for minimum wage restrictions. The students who want into the industry most would be willing to work for low wages and perhaps take on a semester’s worth of debt. Through their work they earn not only the wage, but also benefit from experience. In this case, the company and intern incur the costs proportionally according to benefits received.

However, the middle ground is only possible under the very unlikely assumption that minimum wage laws do not apply. In competitive markets, such laws increase unemployment among low-skilled and inexperienced workers with the result that unskilled laborers are less likely to gain the experience necessary to find better paying jobs in the future. Allowing them to negotiate their own wages offers access to experience and the opportunity for future growth and investment in their own human capital in the same way that students of higher education put off wages and pay high fees for the prospect of higher future earnings, or perhaps a position in an industry they love.

Robert Fisher is a first-year master’s student at Northeastern University’s Department of Economics. His background is in economics and applied math, and he spent a number of years in journalism as a freelance photojournalist and a Web producer. He blogs at The Land of Opportunity Costs and tweets at @rfisherphotos.

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