Payback Time

This story appears in the September 2006 issue of Entrepreneur. Subscribe »

Steven Rothberg, founder of Minneapolis-based career site CollegeRecruiter.com, sees more companies offering paid internships to get a leg up on hiring in an increasingly tight employment market. Employers who face a talent shortage want to recruit more college grads. "The most economical way of doing that," Rothberg says, "is through a strong internship program."

It's difficult to know exactly how many paid internships are out there because more than 85 percent of paid internships are unadvertised, according to PLP Research. But one thing is certain: Companies see internships as an essential recruiting tool. A 2005 business survey by the National Association of Colleges & Employers, a Bethlehem, Pennsylvania, organization that provides information on the college-educated work force to employers and college career centers, revealed that 75 percent of employers see recruiting entry-level talent as the primary purpose of internships. "Twenty years ago, [internships] might not have been quite as important," says Camille Luckenbaugh, research director of NACE. "But today, everyone talks about internships."

Small employers still favor unpaid internships, says Rothberg. But as more employers start to pay their interns, it might put pressure on all firms to ante up.