Hoping to boost her odds of landing a good job upon graduation, Pamela Wexler started hunting for an internship while a sophomore at New York's Binghamton University.
The accounting major attended myriad recruiting events on campus and eventually honed in on Ernst & Young LLP, where she interned the summer after her junior year. She kept in touch with the firm — and joined its New York offices as a full-time auditor in September 2012.
Such is the path top college students increasingly follow: Pursue internships early and aggressively, and use them not only to gain experience but also to forge vital links to prized employers in a protracted era of sluggish job growth.
Businesses are just as keen to develop such ties. Managers, aware that their opportunities to hire new people are fewer than in past boom years, want to make sure they fill positions with top candidates. They can use 10- or 12-week internships to evaluate prospects and woo high performers to commit to the firm before they look at other opportunities.
"Being able to hire the best and brightest early on in their careers is great for the firm," said Daniel Black, director of recruiting at Ernst & Young.
63% Of Grads Were Interns
Among this year's graduating seniors, 63.2% took part in an internship or cooperative education assignment, according to a national survey of college students by the National Association of Colleges and Employers. That is the highest rate since NACE started tracking it in 2007.
The rate of converting interns to full-time employees also has risen, says Edwin Koc, director of strategic and foundation research at NACE. He cites a separate survey of the association's employer members, which tend to be larger companies with dedicated college recruiting programs. The survey shows the conversion rate shot up to 50% last year from 35% in 2005.
"More employers have realized internships are a phenomenal investment in the organization," said NACE Executive Director Marilyn Mackes. "They allow employers to identify and develop talent early, and so more employers are making the investment.
For Wexler, her internship "was honestly the biggest factor for me" in deciding to join Ernst & Young.
"It foreshadowed what my life would be like," she said.
Step To Full-Time Hires
Black says about 50% of Ernst & Young's full-time, entry-level hires now come from internships. Such hires can hit the ground running, tend to perform better and have longer tenures than others, he says.
Internships "are a relatively low-risk way for both sides to kick the tires," he said. "It's low risk and often high reward.
Ernst & Young conducts a "demanding and thorough" screening process to identify the best intern prospects, then works hard to develop them and cultivate their interest in the company. More than 95% of its interns get a job offer, and of them more than 90% accept. That's up from 75%-80% in the 1990s, Black adds.
The exceptionally high rates make Ernst & Young a pace-setter, but such figures are on the rise across corporate America.
At Enterprise Holdings' Enterprise Rent-A-Car, internships are a way to maintain "a full pipeline of future leaders," says Marie Artim, vice president of talent acquisition.
And with so many other companies investing in interns, "We need to make sure we are too so we don't miss out on great talent," she said. Artim estimates Enterprise's conversion rate is 50%.
Internships began to be viewed less as a way to help college students gain experience and more as a tool to evaluate potential full-time hires around 2005, when competition for top recruits was boiling.
Employers wanted to lock in coveted candidates before they could test the market elsewhere, Koc says. This started in the financial sector and spread across various professions, from engineering to health care management.
Even when hiring dropped during the recession, the share of full-time hires from internships rose, to 45% in 2009 from 30% in 2005.
The top industries for interns include professional services fields and health care.
But internships are increasingly viewed as a must for all college majors. Even when they don't lead to a job with the same employer, the lack of such work experience on graduates' resumes is thought to cost them interviews later.
While both unpaid and paid internships remain common — 52% were paid in 2013, according to NACE — the latter is poised to increase, recruiters say.
Paid internships are more likely to attract the most promising students. The best candidates expect to be paid, "and we fully believe they should be," said Artim at Enterprise.
Also, a spate of lawsuits over the past two years will likely influence more firms to pay their interns in coming years, recruiters say. The suits span a range of industries but generally center on the argument that the law requires for-profit firms to provide an educational environment if they don't pay interns.
While most companies would argue they provide just that, money paid to interns could be well spent if it avoids the risk of legal action.
Pay varies widely by position, company, college major and geography. But according to NACE's 2013 survey, average pay for undergraduate interns was $16.26 per hour. For graduate school interns, average pay was $21.90 an hour.
Students have a strong incentive to find paid internships, and not just for immediate financial gain.
NACE's 2013 student survey found that 63% of paid interns had at least one job offer on the table when they graduated, while only 37% of unpaid interns did. Unpaid interns fared only slightly better than those with no internship, 35% of whom got a job offer by graduation.
Universities Push Internships
Larry Burns, director of the Career Development Center at California State University in San Bernardino, says universities are working to attract more companies and to push students to pursue internships early in their college years. This year, California State San Bernardino hired a full-time internship coordinator. Internship opportunities are up about 15% over last year.
"The attitude now is that you really have to have an internship," Burns said, and preferably a paid one not only for the money but also because it demonstrates your appeal. "If you don't get one, you're really doing yourself a disservice. That's the culture now.
Many employers look past applicants who lack internships or similar on-the-job experience, he says.
Cynthia Billington, associate director of MBA career education and advising at Texas A&M University's Mays Business School, agrees. She says that for graduate students, internships are simply vital — and they pay returns.
Last year 100% of the school's MBA students sought internships, she says, and more than half received offers from the company at which they interned. That's roughly double the level that the school saw a decade ago.
"They want to get you signed on and get it taken care of," Billington said. "We are definitely seeing an increasing number of our students returning from internships and in very short order getting offers.
Graduate or undergraduate, she adds, "Today an internship is imperative."