Summer Intern Candidates Facing Bidding Wars

Summary

WSJ Your Money Briefing: Summer Intern Candidates Facing Bidding Wars
Podcast Summary | March 4, 2022

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Episode Overview

This episode explores the growing trend of intense competition for summer internship candidates, particularly in high-demand fields like technology and engineering. The discussion covers students’ newfound leverage in the job market, the practice of reneging on accepted internship offers for better ones, and how companies are responding to this shift. The episode features firsthand insight from Naja Chambless, a Georgia Tech senior who switched internships for a more lucrative opportunity, and in-depth analysis by WSJ reporter Lindsay Ellis.

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Key Discussion Points and Insights

1. The Intern as Hot Commodity

• Pandemic Effects: The tight post-pandemic labor market means companies are vying fiercely for qualified interns. This is causing students to receive multiple offers and, at times, accept better offers after committing elsewhere.
  • [00:36] J.R. Whalen: “Competition for interns has gotten so fierce that some who've gotten and accepted offers are reneging on them to take a better deal elsewhere.”

2. Firsthand Experience: Naja Chambless’ Internship Journey

• Securing an Initial Offer:
  • Naja describes applying to and landing a defense industry internship through LinkedIn or Handshake, leveraging past experience to secure the offer.
    • [02:54] Naja Chambless: “I figured I would have a pretty good chance ... because I had previously interned with the defense company.”
• A Better Offer Appears:
  • Recruited via LinkedIn by Microsoft, Naja went through the interview process and received an offer with higher compensation and benefits.
    • [04:38] Naja Chambless: “I'm not able to disclose the numbers, but let's say it was definitely double what the defense industry was offering me.”
• Reneging on a Commitment:
  • She emailed the defense company to withdraw, receiving no response but noticing her portal reflected her withdrawal.
    • [05:05] Naja Chambless: “I do apologize for having to do this so late in the game, but unfortunately, I have to renege my offer, and I actually did not get a response.”
• Recruiter Initiated Contact:
  • Naja was surprised and encouraged by the direct outreach from a Microsoft recruiter—a factor in pursuing the opportunity.
    • [05:57] Naja Chambless: “I have never had a Microsoft recruiter DM me on LinkedIn … So I kind of had a good feeling about this process…”

3. Why the Increased Leverage for Interns?

• Talent Pipeline:
  • Companies see internships as vital for recruiting future full-time employees, making the competition more intense.
    • [07:41] Lindsay Ellis: “Companies look at their summer internship programs … they're thinking, who can we identify among this cohort of interns that a year from now we're going to want to bring back or we want to hire full time after the program.”
• Fields Most Affected:
  • The trend is especially pronounced in technical and engineering disciplines.

4. Risks and Ramifications of Backing Out

• Potential Penalties:
  • Some universities, particularly business schools, impose penalties for reneging on internship offers. Examples include fines up to $2,500 (Cornell) or mandatory service hours (Berkeley).
    • [08:42] Lindsay Ellis: “Cornell's business school … reserve the right to fine you up to $2,500.”
    • [09:04] Lindsay Ellis: “…at UC Berkeley's business school, one of the possible sanctions is a 16 hour service project.”
• Reputation Management:
  • Risk of “burning bridges” in a small industry; recruiters move between companies, and schools can restrict career platform access for repeat offenders.
    • [09:46] Lindsay Ellis: "It's a small world and a small job market in a lot of ways. Recruiters move from company to company. Someone who you interact with when you're 22, you might encounter ... a few years down the line."

5. Institutional and Corporate Responses

• Keeping Students Engaged:
  • Companies are engaging interns through “keep in touch” campaigns, including virtual meetups and sending holiday cards, to maintain interest and reduce dropouts.
    • [11:53] Lindsay Ellis: “Liberty Mutual told me about their Keep in Touch campaign, including interns in get togethers ... holiday e-cards ... different tactics ... to keep them engaged.”
• Adjusting Recruitment Strategies:
  • Firms benchmark pay and benefits, and some (like General Mills) overhire to anticipate inevitable withdrawals.
    • [13:06] Lindsay Ellis: "A few companies... plan to overhire ... hoping a few more candidates than they want accept, expecting that a few ... are maybe going to back out..."
• Challenges with Virtual Recruitment:
  • Less personal connection may make it easier for interns to renege.
    • [13:49] Lindsay Ellis: “…maybe students feel less of a strong connection with us as a company and with the recruiters in the team overall.”

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Notable Quotes & Memorable Moments

• Double the Pay Draws Interns
  • [04:38] Naja Chambless: “…it was definitely double what the defense industry was offering me …relocation stipend…and a stipend to help with moving expenses…”
• On the ‘Small World’ of Careers:
  • [09:46] Lindsay Ellis: “Recruiters move from company to company. Someone who you interact with when you're 22, you might encounter in a totally different field, you know, a few years down the line.”
• “Keep in Touch” Tactics:
  • [11:53] Lindsay Ellis: “…coffee chats, get togethers, holiday e-cards…to keep them engaged with what's going on.”

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Timestamps for Key Segments

• Student Perspective: Naja Chambless’ Story: [02:48] – [06:42]
• Industry Trends and Analysis (Lindsay Ellis): [06:42] – [14:40]
  • Penalties for Backing Out: [08:37] – [10:00]
  • Career Ramifications: [09:38] – [11:44]
  • Corporate Strategies: [11:44] – [14:36]

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Summary Takeaways

• The current labor market has given interns unprecedented negotiating power, leading to “bidding wars” among companies for top talent, especially in tech.
• Some students are motivated by significantly better offers and more prestigious names, even at the risk of burning bridges or facing penalties.
• Companies—aware of the potential for reneging—use creative engagement campaigns and, sometimes, overhire to hedge against dropouts.
• Both colleges and employers are adapting rapidly to this new, much more fluid recruiting reality.

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This episode provides a candid look at how shifting market dynamics have altered the internship recruitment landscape, combining personal stories and expert analysis into an engaging and informative discussion.

Transcript

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Retail Industry Advocate]

Inflation is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Advocate]

they need while increasing megastore profits. They deserve it, don't they?

[Lindsay Ellis]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.

[J.R. Whalen]

Here's your money briefing for Friday, March 4th. I'm J.R. whalen for the Wall Street Journal. We've told you how the pandemic helped create a job seekers market with millions of workers leaving their jobs for better pay and companies struggling to fill open slots. But that's also happening among students who are trying to land summer internships. Competition for interns has gotten so fierce that some who've gotten and accepted offers. Are we negging on them to take a better deal elsewhere?

[Lindsay Ellis]

Just like a lot of job seekers, there is demand for people to come in the door. Companies look at their summer internship programs and they're not just thinking about that summer. They're thinking, who can we identify, you know, among this cohort of interns that a year from now we're going to want to bring back or we want to hire full time. After the program on today's show, we'll

[J.R. Whalen]

discuss the growing leverage students have in the competitive world of summer internships with our reporter Lindsay Ellis. Plus, we'll hear from one student who reneged on an internship offer and see how it turned out. That's after the break.

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Retail Industry Advocate]

Inflation is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Advocate]

they need while increasing megastore profits. They deserve it, don't they?

[Lindsay Ellis]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.

[J.R. Whalen]

For college students, an offer for a summer internship can mean getting their foot in the door and launching a career track. But amid the tight labor market, more students are walking away from offers they've already accepted to take an even better one. In a moment, we'll hear from WSJ reporter Lindsay Ellis about this growing trend and the competition for entry level talent. But first, let's bring in one of those in demand intern for a firsthand account. I'M joined now by naja Chambless. She's 21 and a senior at Georgia Tech University, majoring in computer science. Last fall, she began applying for internships for this coming summer. Hey, Naja, thanks for being here.

[Naja Chambless]

I'm glad to be here.

[J.R. Whalen]

So, Naja, back in October, you landed a summer internship. Tell us about how that went.

[Naja Chambless]

Yeah, so I was applying for internships, and I had found this opportunity on, I believe, LinkedIn. It was either LinkedIn or Handshake, I believe. And so, yeah, I went ahead and applied, and I figured I would have a pretty good chance of getting this internship because I had previously interned with the defense company. And so I thought, you know, getting this internship from this other defense company would be, you know, not too bad. And I also wanted to intern somewhere else other than this previous company, which is why I was applying for other companies. And so, yeah, I applied, and it took a little while to get back to me, but I ended up interviewing with them once. And then I heard back from them about a month later, I believe, saying that I received an offer.

[J.R. Whalen]

All right, but then earlier this year, your plans changed. What happened there?

[Naja Chambless]

Yeah, so in. At the end of November, my recruiter reached out to me on LinkedIn, also asking me to apply for a Microsoft internship.

[Retail Industry Advocate]

And.

[Naja Chambless]

And I had already accepted the defense internship, but I was like, you know, it's Microsoft. I've applied for them before. Most of I haven't been accepted previously, so, you know, this would just be an extra step for practice for when I apply again for the next recruiting season. So I filled out the application she sent me, and then I went through the first round of interviews, which wasn't too bad, thank God. And then I got pushed to the final round, and I received an offer after that.

[J.R. Whalen]

Oh, so what did Microsoft offer you?

[Naja Chambless]

I'm not able to disclose the numbers, but let's say it was definitely double what the defense industry was offering me. And then they were also giving me a relocation stipend and a stipend to help with my moving expenses and stuff like that. So it's a pretty great deal.

[J.R. Whalen]

So you eventually had to go tell the defense company that you had accepted a new opportunity. Opportunity. And how'd that conversation go?

[Naja Chambless]

So it's actually pretty funny. So I sent out an email to I believe she was my onboarding HR person and stating that, you know, I do apologize for having to do this to you guys so late in the game, but unfortunately, I have to renege my offer, and I actually did not get a response for them. I had sent them an email, and I never received an email back, but I did look at my portal and. And it had said that I was no longer being considered for the position. So I don't think they received that information in the best way. But, yeah, that's what happened.

[J.R. Whalen]

So when you first got the word from the recruiter that there was a Microsoft internship out there to try to go after, how did you feel about that process at that stage? I imagine you had firmed up the defense company internship and had signed some papers, right?

[Naja Chambless]

Yeah, I thought this opportunity was different, mainly because I had never been had a recruiter directly from a company, you know, DM me or specifically for Microsoft. I have never had a Microsoft recruiter DM me on LinkedIn asking me to apply for a position. So I kind of had a good feeling about this process, and that's kind of what made me be like, okay, even though I've already accepted this offer, this. This might turn out differently. So let's try it.

[J.R. Whalen]

All right, that's Naja Chambless, a senior at Georgia Tech University with us. Naja, thank you so much for taking the time to chat.

[Naja Chambless]

Thank you for having me. This is my first podcast experience, so I'm very grateful. Thank you so much for this opportunity.

[J.R. Whalen]

We really appreciate it. Thanks a lot.

[Naja Chambless]

No problem.

[J.R. Whalen]

So what's driving this cutthroat competition for interns? And what are companies doing to keep potential interns interested? For more on that, I'm joined by WSJ reporter Lindsay Ellis. She's been looking into it. Lindsay, thanks so much for being here.

[Lindsay Ellis]

Thank you so much for having me.

[J.R. Whalen]

So, Lindsay, these bidding wars for interns, like we just heard with Naja, is that something new?

[Lindsay Ellis]

So interns, especially in in demand fields like computer science, engineering, and the like, you know, they've always had, you know, some competitive offers, but the level of competition that I heard from interns seemed just really striking. Campuses and companies are saying that they're seeing competition over interns in a way that feels different than prior years, especially the last two years. The first, with the pandemic really sinking in, and last year, with everything in a much different hiring market than we are right now.

[J.R. Whalen]

So why do interns suddenly have this kind of leverage in the job market?

[Lindsay Ellis]

Just like a lot of job seekers, there is demand for people to come in the door. And I think that for interns emerges in a couple of ways. The first is companies really want applicants, and they want qualified applicants, and that inherently gives the people who are applying who have strong resumes, who have the skills that they're looking for an edge. I think the other reason is companies look at their summer internship programs and they're not just thinking about that summer, they're thinking, who can we identify among this cohort of interns? And that a year from now we're going to want to bring back or we want to hire full time after the program. And so this is sort of a key pool for companies to look at their entry level workforce. And so there is more demand in hiring the right people. When, you know, this could be my pipeline six months from now, a year from now.

[J.R. Whalen]

Is there ever any kind of a penalty if a student backs out of an internship that they've already accepted?

[Lindsay Ellis]

It can vary from campus to campus, but yes. Cornell's business school, if you're an MBA student and you accept an offer for the summer and then you go out and interview and accept a different one and back out of that first one, they say that they reserve the right to fine you up to $2,500.

[Retail Industry Advocate]

Wow.

[J.R. Whalen]

I mean, for a college student, that's a lot of money.

[Lindsay Ellis]

It is, yes. And for those two, those were specifically for business school students, so perhaps a little later in their career. But these are people that don't necessarily have income coming in every month and yet still might be on the hook. There are other penalties that are also significant. At the University of California, Berkeley's business school, one of the possible sanctions is a 16 hour service project. So that can be a significant amount of money, certainly, and time if you're caught kind of backing out from this.

[J.R. Whalen]

But, you know, a student might consider switching to a different internship that could better jumpstart their career. Right, but is there a danger of them burning their bridges behind them?

[Lindsay Ellis]

Colleges say that there is. I mean, they are quick to remind students that it's a small world and a small job market in a lot of ways. Recruiters move from company to company. Someone who you interact with when you're 22, you might encounter in a totally different field, you know, a few years down the line. They also sort of put in place their own regulations that could hamper a student's trajectory as they continue through their education. Some schools at the undergraduate level will restrict the use of a platform called handshake, where a lot of jobs are listed for students who are caught backing out. I think students who I talked to who have considered this or who have done this, you know, look at the name on the resume, they look at the salary that they could be bringing in and importantly, they look at the experience that they think that they're going to get at these preferred internship programs. And in a lot of cases, that's a very strong counterweight to a more nebulous idea of possible ramifications. You know, there's another side to that coin as well, which is the relationship between the college and the company. And many campus career offices are really cognizant of that relationship and don't want to do anything to stress it or damage it. Their fear is that if a number of students back out from opportunities that they've already accepted, might that influence whether a company wants to come back next semester, next year and knock on their door and recruit future classes? And so one aspect of, you know, could this be hurtful is thinking about what is the next student who comes around, what's going to be their experience. And colleges are really, you know, have that front of mind now.

[J.R. Whalen]

There's usually several months between the time somebody lands an internship and when they actually start. So what are companies doing to prevent people from backing out?

[Lindsay Ellis]

There usually are several months between, between these dates. And one thing that really surprised me in reporting this is that in some cases there are many more months than I had anticipated. People were telling me that they were interviewing for these summer internships while they were doing a different summer internship. So companies need to keep students warm is what they say, make sure that they're front of mind for these candidates that they've worked hard to recruit. Liberty Mutual told me about their Keep in Touch campaign, including interns in get togethers that are held, virtually, some coffee chats and the like, to kind of keep them engaged with what's going on. One logistics company that I talked to mentioned sending holiday E cards to the students who had accepted. So there are different tactics, some with video engagement and when possible, in person engagement, but others just really leaning into the messaging.

[J.R. Whalen]

And so how are the companies responding to this trend of interns backing out of offers? And, you know, how are they thinking about their internship programs more broadly to keep people interested?

[Lindsay Ellis]

So some of them are looking at pay benchmarks and making sure that this very basic aspect of it, this critical aspect of it, is competitive with other organizations and external benchmarks. Some of them begrudge the trend and, you know, they. It's sort of, you know, you kind of throw your hands up in the air and it's a little bit of a kids these days reaction. But the thing that I think that most stood out to me on this was a real focus on what can we do as an organization to prepare for the summer, just kind of accepting that this might take place. So a few companies, including General Mills, told me and have mentioned that they plan to overhire, basically extending a few more offers than they typically would and hoping that a few more candidates than they want to accept accept, expecting that a few of them are maybe going to back out between now and the summer. And I think they are also thinking about how they recruit and how they build relationships with students. One common refrain I heard from recruiters was in this virtual environment, maybe students feel less of a strong connection with us as a company and with the recruiters in the team overall. How can we build that up and keep them feeling close? And so that sort of speaks to some of the strategies, the keeping in touch efforts and the like.

[J.R. Whalen]

All right, that's Wall Street Journal reporter Lindsay Ellis with us. Lindsey, thanks so much for being with us.

[Lindsay Ellis]

Thank you for having me.

[J.R. Whalen]

And that's your Money briefing. I'm J.R. whalen for the Wall Street Journal.

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Retail Industry Advocate]

Infliction is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See, banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Advocate]

they need while increasing megastore profits. They deserve it, don't they?

[Lindsay Ellis]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.