Latest / The Diversity Career Podcast with Fexingo: Inclusion, Equity, and Underrepresented Professionals / How One Company Paid All Interns a Living Wage
Transcript
- Lucas: So there's this question that keeps coming up in diversity hiring conversations — especially when we talk about pipelines into professional careers — and it's the unpaid internship. Luna: Right. The classic 'you need experience to get experience' trap. Lucas: Exactly. And for students from lower-income backgrounds, an unpaid internship isn't just inconvenient — it's impossible. You can't work forty hours a week for three months without a paycheck, unless someone else is covering your rent. Luna: So what does a company do if they actually want to fix that? Lucas: Well, one company I came across — a mid-sized tech firm in Austin called Cirrus Logic — decided to do something pretty straightforward. They eliminated unpaid internships entirely and set a minimum wage for all their interns. Luna: Cirrus Logic — the audio chip company, right? Lucas: Yeah, they make the chips inside a lot of smartphones and tablets. Not exactly a household name, but they employ about eighteen hundred people. And back in 2021, they made a change: every single intern would be paid at least twenty-five dollars an hour. Luna: That's roughly fifty-two thousand a year if annualized. That's a real wage. Lucas: It is. And it was a big shift for them. Before that, some of their internships were unpaid — especially in research and engineering roles where they treated the position more like an academic rotation. The new policy wiped that out. Luna: What was the reasoning? Was it purely about equity, or did they see a business case? Lucas: The head of talent acquisition at the time said it was both. They had been struggling to attract diverse candidates for their internship pipeline — specifically Black and Hispanic students, and students from first-generation college backgrounds. When they surveyed applicants, the number one barrier was financial. Students said: 'I can't afford to take an unpaid internship in Austin, even if it's great experience.' Luna: Austin's not cheap. Rent alone would eat up any savings. Lucas: Exactly. So they ran the numbers. They typically hired about sixty interns per year across engineering, marketing, finance, and HR. Paying all of them twenty-five dollars an hour for a twelve-week program — that's roughly forty hours a week — came out to about one point two million dollars annually. Luna: That's real money. But for a company of their size, it's not unreasonable. Lucas: Right. And they didn't just eat the cost. They reallocated some budget from external recruiting agencies and from signing bonuses for full-time hires. Their thinking was: if we invest earlier in the pipeline, we'll reduce how much we spend on later-stage recruiting. Luna: So it was a shift upstream. Pay now, save later. Lucas: Exactly. And the results were pretty striking. Within two years, applications from underrepresented minority students increased by forty percent. Their overall applicant pool got more competitive, and the conversion rate — interns who accepted full-time offers — went from about seventy percent to over ninety percent. Luna: That ninety percent conversion rate is huge. Retaining talent you've already trained saves a ton on onboarding and cultural fit. Lucas: Exactly. And those interns who converted — they tended to stay longer than hires who came through campus recruiting without an internship. The two-year retention rate for former interns was about fifteen percentage points higher. Luna: So the ROI is actually pretty clear when you look at it that way. But I imagine not every company has an extra million dollars lying around. Lucas: Fair point. But the lesson isn't that every company needs to pay exactly twenty-five dollars an hour. It's that the decision to pay a living wage — or at least a meaningful stipend — can be analyzed as an investment, not just a cost. Cirrus Logic didn't do it out of charity. They did it because they believed it would improve their talent pipeline. Luna: And it did. But let's talk about the unpaid internship problem more broadly. What's the current landscape? Lucas: According to the National Association of Colleges and Employers, about forty-nine percent of internships in the for-profit sector are paid. That means half still aren't. And the gap is worse in certain industries — media, fashion, non-profits, government. In tech and finance, paid internships have become the norm, but it's not universal. Luna: And those unpaid internships disproportionately exclude low-income students and students of color. A study from the Federal Reserve Bank of New York found that unpaid interns are more likely to be white and from higher-income families. Lucas: Right. So when a company like Cirrus Logic makes this move, it's not just a nice gesture. It's a structural change that opens the door to a broader talent pool. Luna: I want to dig into one detail: how did they decide on twenty-five dollars? Why not minimum wage, which in Texas is seven twenty-five? Lucas: Good question. The CHRO at the time said they looked at what a livable wage in Austin would be for a single person with no dependents — including rent, food, transportation, and a small buffer. Twenty-five dollars an hour was what their analysis landed on. It was also benchmarked against what other tech companies in the area were paying interns. Luna: So it was market-driven and needs-based. Lucas: Yeah. And they didn't stop at the wage. They also provided a housing stipend for interns who didn't live in Austin — something like fifteen hundred dollars for the summer. Because even with twenty-five dollars an hour, paying for a short-term lease in a city like Austin can be tough. Luna: That's a really thoughtful add-on. I've seen some companies offer a 'relocation bonus' for interns, but it's usually not enough. Lucas: Right. And this gets at the heart of what makes a diversity initiative actually work. It's not one policy. It's a bundle. The wage removes the financial barrier. The housing stipend removes the geographic barrier. And then you also need the actual work to be meaningful — not just fetching coffee. Luna: Did they change the nature of the work too? Lucas: Yes, actually. Part of the program redesign included giving each intern a real project with a clear deliverable, and assigning them a mentor who was not their direct manager. That mentor was someone from a different team, to broaden their network. Luna: So they were thinking about retention even during the internship. Smart. Lucas: And it worked. They surveyed interns at the end of each cycle, and the top reason cited for accepting a full-time offer was 'the quality of the work and the mentorship.' The pay was a factor, but it wasn't the main driver. Luna: That's a great example of how compensation enables other things to matter more. Lucas: Exactly. If you're not worried about making rent, you can focus on learning and building relationships. If you are worried, that's all you think about. Luna: So what's the takeaway for a smaller company that can't afford a million-dollar internship program? Are there alternatives? Lucas: Absolutely. One approach is to partner with a non-profit that subsidizes intern wages — organizations like Career Spring or the Emma Bowen Foundation. Another is to offer a smaller number of paid internships rather than a large number of unpaid ones. You can also make internships part-time during the school year, so students can work while taking classes, and you only pay for the hours worked. Luna: So it's about being intentional, not necessarily about having a huge budget. Lucas: Right. The principle is: if you're asking someone to work, you should pay them. And if you can't pay them, you should question whether the internship is truly valuable enough to exist. Luna: That's a high bar, but I think it's the right one. Lucas: Look, if this episode was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. We keep this show ad-free, and listener support is what makes that possible. Luna: Yeah, it's a small way to say this content matters to you. Totally optional, but appreciated. Lucas: So back to Cirrus Logic — they've now run this program for five summers. They've hired over three hundred interns, and the diversity of their early-career hires has shifted measurably. Their VP of people told me that the internship pipeline is now their single largest source of diverse talent for entry-level roles. Luna: That's a concrete outcome. And it's replicable. Lucas: It is. And the key is that they didn't treat it as a one-off initiative. They built it into their talent strategy as a permanent line item. That's the difference between a program and a policy. Luna: So for our listeners who are in HR or talent acquisition — what's the one thing they should take away? Lucas: Run the math on your internship program. Look at what you're spending on external recruiting, on signing bonuses, on early turnover. Then model what a paid internship program would cost — and what it could save you in the long run. You might find the numbers work out better than you expect. Luna: And if they don't, you can start small. One paid intern is better than none. Lucas: Exactly. It's about making the choice to invest in equity, not just talk about it.