As companies send out acceptance and rejection emails for the upcoming summer internship season, not every intern will be equally compensated.
New data from CashNetUSA reveals that states vary widely in average pay for interns and whether or not they offer financial compensation versus college credit.
States like Wyoming, New Mexico, Louisiana, and Alabama pay the least for internships in terms of dollar amounts, while Washington, California, Connecticut, and Nevada pay the most.
Roughly 25% of internships in California, the home of tech-heavy Silicon Valley, are unpaid even though the state compensates well for paid positions.
Meanwhile, Delaware has the highest percentage of unpaid interns, with one-third of intern roles having no minimum or base pay.
According to Matt Pelkey, senior lead content strategist for CashNetUSA, it's still legal for employers to offer unpaid internships — despite minimum wage laws — due to the "primary beneficiary test."
"Its purpose is to measure who benefits more from the internship — the employer or the intern," Pelkey explained to Yahoo Finance. "If an intern is determined to be the 'primary beneficiary' of the relationship, they might not legally qualify as 'employees' under the Fair Labor Standards Act. As a result, minimum wage laws would not apply."
Instead of providing financial compensation, some internship programs provide college credit. Still, unpaid internships have contributed to the widening national wealth gap, since students with wealthier backgrounds have the means to take on unpaid internships.
Having an internship on a resume increases the chances of employment with higher pay. In fact, students with an internship received 14% more interview offers for a full-time job. However, unpaid internships reduce those opportunities for low-income students, increasing such disparities.
According to the report, the finance industry had the highest number of unpaid internships in 2022, followed by retail and professional services.
Finance internships are infamously known for burnout culture and 98-hour workweeks. Despite this reputation, Goldman Sachs (GS) saw a 17% annual increase in the number of applicants for its internship program in 2022.
"While a competitive labor market creates a more competitive economy for internships, Wall Street placements are notoriously grueling," Pelkey said. "Record numbers of graduates continue to apply, and less than 2% of candidates are hired, but the rewards are great — with some interns earning over $10,000 per month."
Despite having the highest number of unpaid internships, the finance industry also pays the second-highest amount to its paid interns, averaging $18.10 an hour.
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Tanya is a data reporter for Yahoo Finance. Follow her on Twitter @tanyakaushal00.
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