Internships: paid or not?

Richard Romer, an incoming senior at St. Mary's College of Maryland, took an unpaid internship with the State Superintendent of Schools in Baltimore this summer, an experience he feels is paying huge dividends in work experience and contacts.

Lindsey Johnson, a marketing major who will start her senior year at Santa Clara University this fall, turned down an unpaid internship with a cruise line in Seattle despite wanting experience in the travel industry. Her bottom line: She needs the cash she earns by answering phones this summer in the catalog department of Nordstrom.

In different ways, Ms. Johnson and Mr. Romer are trying to negotiate a new fact of economic life: The bursting of the 1990s bubble has hit young workers hard. Both students have the same goal.

In a weakened economy with fewer jobs, competition from more experienced workers, and predictions of lower salaries, these students want to leave college with a competitive résumé and an ability to hit the ground running. An internship has increasingly been seen as an important tool for students about to move into the world of real work. But those same economic realities have led some to rethink an internship's worth.

For students like Romer, a political science and economics major who will receive college credits for his experience, a prestigious internship is worth the cost of a summer with no income.

"Most of my friends are ... focused on getting experience before entering a job market as tight as this one," says Romer, who was rewarded with a stipend through his college to pay for the credits he will earn. "And the connections I have made this summer? Priceless."

Johnson's decision to pass up an internship in a business that is suffering a slump was pragmatic. She needs money for her off-campus housing, and she's eyeing the college loans that will take up part of her budget after graduation.

"It was really frustrating," says Johnson of her search for a paid internship. Many of her friends who had paid internships last summer were told by firms that budget cuts mean fewer hires and no interns.

Paid internships do exist. David C. Kelzenberg, internship coordinator at the career center of the University of Iowa, reports that most of his students pursue paid internships, though he notes a dip in the number available this summer.

"I can create a better pool of students when interns are paid," he says. "[Students] need to be making money."

"A lot of businesses have cut back on paid internships," says John Challenger, chief executive officer of Challenger, Gray, and Christmas, Inc., an outplacement firm, who considers the decision to cut back shortsighted. While these firms consider internships a luxury they cannot afford, Mr. Challenger says that, at least in this case, a penny saved may not be a penny earned.

Internships, he says, can be just as important for employers as for students.

The relationship is often like an extended job interview, a chance for both to get to know each other. It can lead to full-time positions. "Microsoft is one of the firms that is not giving up, which is smart," notes Challenger. "They know they need to have the talent coming up through the ranks."