Interns in charge in tight labor market

Instead of filling the office coffee, interns are increasingly assuming key roles in companies and taking home unprecedented perks--from tuition reimbursement to equity stakes in start-ups.

5 min read
Computer programmer Mike Randazzo receives full medical and dental insurance coverage, telecommuting privileges and 100 percent tuition reimbursement--standard perks at technology companies that can't hire enough qualified workers.

But Randazzo, who develops Web sites for Sterling Heights, Mich.-based BigNet, isn't a typical employee. He's a 22-year-old intern who will receive his undergraduate degree from the University of Michigan in December.

"I've had a say in things and have input in the company's direction. I feel involved in the decision-making process," Randazzo said. "I definitely feel like a full-time employee--just one who happens to be going to college."

Welcome to the summer intern class of 2000, where students are calling the shots. Instead of filling the office coffee pot or picking up a supervisor's dry cleaning, interns are increasingly assuming key roles in companies and taking home unprecedented perks--from tuition reimbursement to equity stakes in pre-IPO start-ups.

Several factors--the tight job market, record turnover and the technology sector's voracious demand for programmers and engineers--have conspired to make this a scorching summer.

Although some positions advertised on job Web sites are unpaid, few young techies toil for free. Recruiters and internship directors say the average computer programming intern in the United States makes $15 to $20 per hour, up from last year's $12 to $17. The average hourly wage in the United States for all workers is $13.65, according to the Bureau of Labor Statistics.

By far the biggest contributor to the intern boom is the near record unemployment rate, which was 4.1 percent in May. Unemployment rates for young men, prime candidates for technology internships, have also been dropping.

CNET TV: Worker shortage crisis
CNET TV: Worker shortage crisis

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According to the Bureau of Labor Statistics, the unemployment rate for males aged 16 to 24 was 10 percent in May 2000, compared with 10.2 percent in May 1999. Those figures include high school students, dropouts and others without college experience.

Some regions have even tighter job markets. According to the Association of Bay Area Governments, California's Silicon Valley has 1.06 jobs for every single employable resident, effectively creating a negative unemployment rate in the tech-heavy region. That means demand for all workers, even the most inexperienced interns, is heightened.

Claudia Trujillo, director of human resources for ConsumerReview.com of Sunnyvale, Calif., said her company's 10 interns are invaluable to the 66-employee start-up. Employment has doubled in the past four months, but many full-time employees still face crushing workloads.

"A lot of what they're doing is grunt work, but it's grunt work that I was doing before the summer," Trujillo said, noting that one intern has assumed most of the responsibilities of a full-time worker on maternity leave. "It's amazing how much work they can pump out."

Interns with staying power
Human resources experts say bolstering internship programs is also a shrewd long-term recruitment strategy. According to the National Association of Colleges and Employers Job Outlook 2000, employers rank internships as the third-best way to recruit new talent, up from seventh in 1998, because a high percentage of interns return for full-time jobs upon graduation.

Roughly half of IBM's interns return to the company after graduation, said spokesman Glen Brandow. IBM, which employs 150,000 people in the United States, has about 3,500 paid interns around the nation this summer. Most work in computer science or engineering departments.

Leo Chang, former chief technology officer at San Francisco-based Flyswat.com and now senior director of technology for NBC Internet, which acquired Flyswat in April, hired eight interns to assist the 57-person team. About half of them will be seniors in the fall, and Chang said each is in the running to get a permanent offer after graduation. (CNET Networks, publisher of News.com, has an investment in NBCi.)

More importantly, Chang said, the interns inject summertime vigor into the company. Six came from Massachusetts Institute of Technology--the alma mater of many Flyswat engineers.

"It's good for the office culture," Chang said. "We say, 'All the summer guys are here, so let's go to a ball game.' It's a rallying point."

Another reason interns are hot: Summer workers often outlast their "permanent" counterparts in the tech industry, where workers switch jobs with startling frequency.

Turnover has reached the point where the average tech worker leaves in just over a year. The technology industry averages about 25 percent turnover per year, and a significant portion of new hires quit within the first three months of work.

In that climate, the three-month intern isn't necessarily a short-term worker, said Joan Sills, CEO of BrassRing recruitment services of San Mateo, Calif. Employers increasingly view talented interns as temporary contractors, not inexperienced toadies with long learning curves.

"For an engineer in particular, someone who can come in and program on a distinct job for three months can make a real contribution," Sills said. "Some employers like the three-month period--it's a good thing to plan around. You can really design a fruitful three-month contribution that works both ways."

Playing with perks
Many tech companies have taken inventive approaches to keeping interns happy. Some start-ups offer stock options to employees willing to work for less than the $15 to $20 standard hourly wage. Many work with colleges so students get credit for their summer work. Others offer housing assistance.

Last week, ConsumerReview.com hosted a staff-wide barbecue to fete its new crop of interns, who make $12 to $15 an hour.

Joe Tone, a 21-year-old from Santa Clara University, picked ConsumerReview in part because the wages were higher than those from his other offer, which was from a weekly newspaper. He is now writing a style manual for ConsumerReview and editing freelancers' copy.

"I wanted to have the experience of working at an Internet start-up without a lot of the risks," Tone said. "I'm learning a lot about how they build themselves from the ground up."

Wooing interns is not unique to engineering majors. Peter Shankman, president of The Geek Factory, a public relations agency in New York specializing in high-tech companies, said he would literally jump out of an airplane for his two interns, who have direct strategic responsibility for some accounts in the 10-person firm.

Shankman is planning a skydiving trip, dubbed Webdive 2000, that interns helped create and publicize. He plans to foot the parachuting bill for his two summer interns--one of whom he babysat as a young boy, the other whom he met during a volleyball game at Club Med. The interns make $9 an hour but will get $1,000 bonus checks at Christmas if they get straight A's in the fall.

"The job market's incredibly tight, so my goal is to get them all four years," Shankman said. "They work their asses off. They're great employees. I can't wait to hire them when they graduate."