- Wall Street interns leading the way. An analysis by Levels.fyi found that Wall Street firms are offering higher-than-usual compensation to their interns this summer.
- Not isolated to the finance sector. While Wall Street firms are paying more of a premium, experts note that intern pay is up across industries as employers look to expand entry-level talent pools.
- Incentivizing in-office work. Higher paydays for interns could be part of a strategy by some employers to incentivize in-office work for college graduates set to enter the workforce.
- Go beyond compensation. While competitive pay is a good starting place for interns, organizations should focus on the internship experience being worthwhile for both parties to support the organization’s future hiring efforts and overall brand.
Interns at Wall Street firms are receiving bloated paydays this summer, as finance sector employers are looking to lure talent from the tech sector, which has been in a steep layoff mode of late.
Levels.fyi, an entity that analyzes compensation data, found that U.S.-based median intern pay jumped 19% at 16 top firms it tracked.
With that Wall Street scenario as context, is the higher pay trend for interns isolated to the finance sector?
John Bremen, chief innovation & acceleration officer at WTW said that while it may be most pronounced on Wall Street, it extends to other industries as well.
Following several years of labor market disruption and talent shortages due to the pandemic and long-anticipated demographic shifts of early career workers — that is, lower birthrates of Generation Z workers when compared to Millennials — leaders in several industries have been working to expand entry-level talent pools. These industries include financial services, as well as others such as business services, life sciences and defense, Bremen said.
He also noted that offering generous merit pay to interns now also will improve the odds of attracting future interns. He said that due to social media and communication patterns within and across college campuses, for example, word gets around quickly about which employers are most favorable for interns and entry-level hires.
“Popular internship programs are good for a company’s employment brand and for increasing overall talent pools,” he said.
Incentivizing In-Office Work
Higher paydays for interns may also be an added incentive to satisfy the growing demand for an in-office push, Evidence suggests that interns appreciate being in the office to take in the full employee experience, he noted, making connections to more senior business contacts and relating to other interns.
“That said, many internship programs — even in financial services — have hybrid components, which interns also often appreciate,” he said. “In many ways, this is a modern form of the ‘realistic job preview.’”
Bremen said that organizations should consider determining their compensation packages for interns as they would for any other role, adding that organizations should base pay packages for interns on competitive market factors and industry considerations.
“Companies that want top candidates pay at the higher end of competitive ranges,” Bremen said.
He noted that in many cases, pay for interns mirrors what the interns might receive on an annualized basis for full-time work. Many companies also offer interns signing bonuses, housing allowances and/or transportation allowances depending on their location.
However, the most coveted benefit of an internship program for many students is a return offer for the next summer or for full-time work after graduation.
Providing a Great Intern Experience
At Kodiak Building Partners, a Highlands Ranch, Colorado-based building materials distribution firm, internships are primarily compensated with a competitive dollar value. The organization also places near equal value on a fully immersive engagement and a few special perks, according to Jenny Vasquez, senior director of HR.
Vasquez said that while an exorbitantly high hourly rate may be enough to lure some candidates into an office, most interns are more interested in finding a combination of being paid a reasonable rate in addition to the experience provided within the office. The company’s intern program runs approximately 2.5 months, year-round.
Vasquez and Kodiak are non-believers in the unpaid internship model — conscious of its reputation at the schools where they recruit. The value of the full experience they’re offering, however, is taken into consideration when determining the pay scale, Vasquez said.
“Paying people more isn’t necessarily going to incentivize them to come into the office. Culture has a bigger impact where collaboration is valued, and everyone feels heard and part of the team,” she said. “There is no benefit to being paid more if you’re still miserable coming into the office.”
Kodiak approaches its internship program as a strategy to support fueling full-time positions at the company, as well as a responsibility to helping grow and shape future talent whether they stay at Kodiak or elsewhere in the building-materials industry.
Vasquez said Kodiak supplements its intern compensation with culture-building activities such as attending Colorado Rockies baseball games, volunteering in the community and more.
As for determining the compensation package for Kodiak interns, Vasquez considers the current market, but that isn’t a sole factor, she said.
“We offer our interns an hourly rate that aligns with that of our full-time staff because they are much more than an admin or coffee fetcher,” she said. “They are hands-on, tactical and doing the work.”
“We also offer housing for those who need it, and they receive the same perks all Kodiak employees enjoy, with the exception of those provided to salaried staff like insurance and retirement plans.”
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