These are the best and worst conditions for internships

As companies send out acceptance and rejection emails for the upcoming summer internship season, not every intern is compensated equally.

New data from CashNetUSA shows that states vary widely in average intern compensation and whether or not they offer monetary compensation versus college loans.

States like Wyoming, New Mexico, Louisiana, and Alabama pay the least dollar amounts for internships, while Washington, California, Connecticut, and Nevada pay the most.

About 25% of internships in California, home of tech-heavy Silicon Valley, are unpaid, although the state compensates paid positions well.

Meanwhile, Delaware has the highest percentage of unpaid interns, with a third of intern positions having no minimum or base pay.

According to Matt Pelkey, senior lead content strategist at CashNetUSA, it’s still legal for employers to offer unpaid internships — despite minimum wage laws — because of the “principal beneficiary test.”

“Their purpose is to measure who benefits more from the internship — the employer or the intern,” Pelkey ​​told Yahoo Finance. “If an intern is determined to be the ‘primary beneficiary’ of the relationship, they may not qualify as an ’employee’ under the Fair Labor Standards Act. As a result, minimum wage laws would not apply.”

In lieu of financial compensation, some internship programs offer college loans. Nonetheless, unpaid internships have contributed to widening the national wealth gap as students from more affluent backgrounds have the means to undertake unpaid internships.

Potential employers meet with students at Barnard College's career and internship fair in New York City.  (Photo by John Moore/Getty Images)

Potential employers meet with students at Barnard College’s career and internship fair in New York City. (Photo by John Moore/Getty Images)

An internship on your resume increases your chances of getting a higher-paying job. In fact, students who did an internship received 14% more job offers for full-time positions. However, unpaid internships reduce these opportunities for low-income students and increase such disparities.

According to the report, the financial industry had the most unpaid internships in 2022, followed by retail and professional services.

Finance internships are known for burnout culture and 98-hour weeks. Despite this strong reputation, Goldman Sachs (GS) saw a 17% annual increase in applicants for its internship program in 2022.

“While a competitive job market creates a more competitive economy for internships, internships on Wall Street 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 — some interns make over $10,000 a month.”

Although the finance industry has the most unpaid internships, it also pays the second-highest amount to its paid interns, averaging $18.10 per hour.

Tanya is a data reporter for Yahoo Finance. Follow her on Twitter @tanjakaushal00.

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance App for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, flipboard, LinkedInand youtube