Category: Uncategorized

A Housing Reform Test Drive

Posted on by The Progressive Policy Institute

U.S. housing officials are preparing to reduce the government’s abnormally large footprint in mortgage markets, one of the most visible remaining legacies of the subprime lending crisis. It’s the right move at the right time.

The Wall Street Journal reported Monday that the Federal Housing Finance Authority will order Fannie Mae and Freddie Mac to cut the size of mortgage loans they will guarantee. The idea is that with the government backing nine out every 10 loans, taxpayers are bearing too much risk, and it’s time for private capital to step in and take on a greater share.

That’s the right call, but it will meet resistance from the housing industry and consumer advocates who worry, quite reasonably, that it might mean even tighter credit for middle-income homebuyers in certain high-priced markets (typically found along the coasts), such as San Francisco, New York and Washington, D.C. Such advocates of maintaining the status quo say the recovery is still too shaky and investors are still leery about buying and making loans to any but the most affluent, low-risk borrowers.

But private mortgage investors, on the other hand, are likely to applaud the FHFA’s move. Investors and securitization firms like Redwood Trust and Two Harbors have been eager for the opportunity to show what they can do when they don’t have to compete with the federal government. They say there is plenty of appetite for private lending, so long as they aren’t undercut by the ultra-low rates the government can offer. Continue reading “A Housing Reform Test Drive” →

Let Everyone Bid in the Spectrum Auction

Posted on by The Progressive Policy Institute

In our new paper released today, we examine the economics and policies related to an upcoming spectrum auction by the Federal Communications Commission, illustrating that a more efficient regulatory system that facilitates competition and innovation can also provide essential consumer protection.

The auction, which the FCC hopes to conduct next year, is designed to enable continued expansion of mobile broadband and other wireless services by buying back spectrum now belonging to TV broadcasters and making it available to wireless service providers. As often happens in Washington, there’s a fight over how the auction should be structured—specifically a push by some smaller competitors to limit bidding by the largest providers, AT&T and Verizon. Such limits would effectively set aside a portion of low-frequency spectrum for the smaller rivals at discounted prices.

But we argue that such regulatory structures would needlessly complicate the auction process, undermine competition in the overall broadband marketplace, and make it difficult to meet consumers’ expectations for wireless service. Moreover, putting a thumb on the scales of the auction process is unnecessary. Rather than achieve the goal of enhanced innovation, we show that the rules proposed by smaller competitors could make innovation more difficult. Continue reading “Let Everyone Bid in the Spectrum Auction” →

The FCC’s Incentive Auction: Getting Spectrum Policy Right

Posted on by The Progressive Policy Institute

As the Federal Communications Commission (FCC) considers how to allocate the broadcasters’ spectrum in the upcoming “incentive auction,” it should be guided by economic principles designed to maximize social benefits. To date, the spectrum policy debate largely has been driven by considerations of the private benefits of carriers such as Sprint, T-Mobile/MetroPCS, U.S. Cellular, and other small carriers (collectively, the “smaller carriers.”).

In April, the Department of Justice (DOJ) weighed into this debate by advocating “rules that ensure the smaller nationwide networks, which currently lack substantial low-frequency spectrum, have an opportunity to acquire such spectrum.” Although it is natural instinct to root for the little guy, ensuring the livelihood of smaller carriers is not an appropriate policy objective, as that would counsel a range of subsidies and tax credits for handpicked competitors. Indeed, maximizing the number of wireless competitors is not the appropriate objective either; using spectrum allocation as a tool for reducing wireless concentration would require divvying up the spectrum in such thin slices as to render the resulting allocation virtually useless. The problem with these narrow objectives is that, if pursued to their logical extreme, the resulting policies would sacrifice massive (and growing) economies of scale associated with providing the capacity needed to support mobile video, telemedicine, distance learning, and a host of other bandwidth-intensive applications that consumers and small businesses are demanding from their mobile devices.

The spectrum policy debate must be informed by the tradeoffs inherent in spectrum aggregation: more (smaller) firms versus more robust wireless networks. As wireless consumers increasingly demand that their wireless devices support bandwidth-intensive applications such as mobile video, the optimal allocation of spectrum tilts in favor of more robust wireless networks. Focusing narrowly on reducing wireless concentration could result in a spectrum allocation under which wireless carriers lack the incentive to deploy next-generation technologies. If policymakers fear that “too much” spectrum in the hands of any one carrier raises anticompetitive issues, there are several ways to address those concerns that do not undermine investment in next-generation wireless broadband networks, and the attendant innovation that such investment engenders.

Download the entire backgrounder.

How a Regulatory Improvement Commission Can Improve SBA’s Disaster Response

Posted on by The Progressive Policy Institute

Last week, New Jersey Governor Chris Christie blasted the Small Business Administration for being a “disaster” in providing disaster relief to New Jersey’s businesses after Hurricane Sandy.

At issue? According to the Governor, SBA’s disaster loan programs were too complicated for residents and business owners that needed a fast, simple funding stream to recover and rebuild. The Star Ledger article noted these words from Gov. Christie to a Jersey Shore crowd:

“Basically, the Small Business Administration is a disaster,” he [Gov. Christie] said to an appreciative crowd. “We should send FEMA to the Small Business Administration to clean up after the disaster that is the Small Business Administration and what they did to small business people in this state.”

“The good news is the Small Business Administration has left New Jersey and we are stationing troopers on every border to make sure they do not come back,” he added.

Does the Governor have a point – are there too many rules and regulations on SBA disaster programs hampering the effectiveness of the federal government’s disaster response?

An effective federal disaster relief system is essential to having economic continuity after a disaster hits. If the disaster loan application process is overly cumbersome, and not being utilized while residents and businesses flounder, it’s worth taking such claims seriously.

A quick look at SBA’s website shows 80 rules (consisting of 7 subparts of Title 13, Chapter 1, Part 123) in the Code of Federal Regulations that apply to their disaster loan programs, and SBA’s Standard Operating Procedure for disaster loans is an impressive 269 pages. Of course, federal loans backstopped by taxpayer money should enforce responsible lending and credit-checking criteria. But in times of disaster it may be sensible to simplify the process.

It’s examples like this why PPI proposed Congress authorize a “Regulatory Improvement Commission” (RIC), an independent Commission with the explicit purpose of reviewing outdated or duplicative federal regulations. The Commission, authorized only on an as-needed basis, could review the rules and regulations that govern SBA’s disaster loan programs and provide suggestions to improve or remove them. Their recommendations would then go to Congress for an up-or-down vote.

In the case of SBA’s disaster loan programs, the RIC could improve the speed at which disaster aid is distributed while still protecting taxpayers. For example, perhaps the number of required application forms – 6 for businesses – and corresponding financial documentation could be consolidated. In times of disaster, especially natural disasters like Hurricane Sandy, local business owners may not have immediate access to all of the required documentation which could impose major delays in aid. Likewise, some legal restrictions on disaster loan eligibility may not be feasible or practical and merit review. For example, requiring borrowers in designated “special flood hazard areas” to purchase flood insurance to be eligible for aid may be prohibitively expensive.

There is currently no effective process in place on the federal level to retrospectively review and improve such regulations. Yet the build-up of regulations over time is plaguing many U.S. businesses, and in cases like this, homeowners, which could have long-term economic affects. The RIC would address this problem, and as an independent body would do so in a politically viable way.

The Right Way to Shrink the Digital Divide

Posted on by The Progressive Policy Institute

Writing about the importance of making broadband accessible for all in The Huffington Post, Former Congresswoman Eva Clayton cites Ev Ehrlich’s recent PPI policy paper that outlines the best steps forward:

Recently, economist Ev Erlich, former Undersecretary of Commerce in the Clinton administration, and the Progressive Policy Institute released a must-read paper on broadband policy, “Shaping the Digital Age: A Progressive Broadband Agenda.” The paper outlines an agenda that would return broadband policy to its progressive roots by:

“(F)inishing the job of creating a truly national high-speed network, using the remarkable capabilities of broadband to improve education, health care, government, and other social sectors, creating the terms on which more connectivity can be created (for example, liberating spectrum), and protecting the individual right to privacy using both legal means and market forces.”

What do all of these policies have in common? They will deliver real benefits to Americans in both urban to rural America. Expanding broadband availability and improving adoption rates should be at the heart of any progressive broadband policy agenda.

Ehrlich also advises progressives to keep their eye on the ball and not let debates over divisive issues like “net neutrality” distract from more important goals, as this issue “does nothing to address the leading obstacles to a ubiquitous broadband Internet: Indifference and the absence of computers.”

Read the entire piece at The Huffington Post.

Regulation Nation: Obama rule-making seen as deeply flawed

Posted on by The Progressive Policy Institute

The Hill quotes PPI’s Diana G. Carew in a recent piece on federal regulation and cites PPI’s Regulatory Improvement Commission proposal being championed by Sen. Angus King.

Democrats, unions and public interest groups, meanwhile, say agencies are already hamstrung by existing restrictions on their authority, and argue that open-ended White House reviews have led to a pattern of delays in important protections.

“It’s definitely the way you approach the issue,” said Diana Carew, an economist at the Progressive Policy Institute, which aligns itself with pro-business New Democrats.

“So what’s basically happened is that nothing’s happened, and now we see this massive buildup of regulation over time, and it is actually causing a hindrance on business and business growth, and for small businesses.”

Read the entire piece at The Hill.

More Evidence That Ending Fannie Mae and Freddie Mac Is a Mistake

Posted on by The Progressive Policy Institute

Last week, I argued against Congressional proposals to “get government out of housing” by killing government backed mortgage firms Fannie Mae and Freddie Mac. Now comes fresh evidence that buttresses my view that the private sector just isn’t ready to take up the slack if the two mortgage giants are eliminated.

This week, Redwood Trust, one of the largest issuers of private residential mortgages, released details of its latest securitization package. The good news is that it was Redwood’s 11th deal of the year, which shows private investors are coming back into the mortgage market totally dominated by Fannie and Freddie over the past five years. The bad news: A close reading of the package shows that private investors are still looking for ultra-safe, plain vanilla loans to pool and sell as securities. And they’re harder to come by.

No one doubts that since Fannie and Freddie were taken into conservatorship in 2008, private capital in mortgage markets has been scarce. Having lost billions when the housing bubble burst, private investors were in no hurry to resume lending. That’s why Fannie and Freddie were forced to expand their lending, from roughly 40 percent of the market pre-crisis to 77 percent in 2012.

Everybody knows we won’t return to “normalcy” in housing until their footprint shrinks and that of private investors expands. But House Republicans, who imagine that housing markets can get along just fine without the government guarantees Fannie and Freddie offer, might want to take a good look at Redwood’s latest package. It offers insight into the current appetite of private investors for mortgage risk.

Continue reading at U.S. News and World Report.

The Young and the Jobless

Posted on by The Progressive Policy Institute

New York Daily News cites PPI Director of Young American Prosperity Project Diana Carew’s recent research on youth employment in a piece on the economic struggles of young people:

As of July, just 36% of Americans in that age group who are not enrolled in school were working full-time. Among the young people hunting for work — 23.5 million, or 60.5% of the total of 38.86 million — the unemployment rate is a whopping 16.3%.

And, like the overall unemployment figure, even that too-high figure conceals profound structural problems.

As Diana Carew, an economist at the left-leaning Progressive Policy Institute, put it: “ young Americans appear stuck in their post-recessionary state.”

Read the entire piece here.

Can Obama Redefine the Role of College?

Posted on by The Progressive Policy Institute

President Obama’s speech in Buffalo yesterday launched a new conversation on the role of higher education as a platform for social and economic mobility. The speech represents a major policy shift on higher education policy toward a performance-based funding approach that holds colleges accountable for how graduates do in the job market. Though it is true such a formula for assessing college performance may be imperfect, changing how colleges think about their role in workforce preparation is essential. For young Americans to succeed in today’s global economy we must smartly invest in higher education that will enhance our competitiveness.

In the speech, President Obama finally acknowledged the current structure of the federal student aid program – a structure that now doles out over $100 billion in new loans annually while asking few questions – is unsustainable. In this context he unveiled a new proposed strategy for federal student aid distribution that holds both colleges more accountable by creating a new ranking that rewards schools for low student debt levels and high job placement rates. Students will also be held more accountable by having to show good grades from the year before to get next year’s loans.

President Obama is right to propose drastic changes to the federal student aid program. Federal aid for higher education has quadrupled in size over the last decade, yet the program itself remains essentially unchanged from its establishment in 1965. And now is the right time: the Higher Education Act, the legislation that determines eligibility criteria for federal student aid programs, is set for reauthorization at the end of this year. Hopefully this new proposal sets the tone for a serious review of current programs.

The current federal student aid party cannot go on forever. Doling out essentially unlimited federal aid to colleges will only delay an industry reorganization and consolidation that is both necessary and inevitable, especially at second and third tier schools. In its current form federal student aid subsidizes ineffective schools and transfers those costs to its graduates, who likely will struggle most to repay the average $26,000 per borrower student debt. The fact that President Obama reckoned the government would end up footing the bill for these schools shows he probably agrees. It’s time for higher ed to fully embrace the cost-saving education technology revolution that is finally gaining traction.

Early dissenters of the proposed changes to federal aid distribution, including the American Council on Higher Education, a major higher ed lobbying group, are concerned the ranking will overemphasize college’s role in job preparation. But isn’t that exactly what college’s major role is, and what colleges should be held accountable for?  Perhaps such dissenters should explain their view to the 50 percent of young college graduates who are currently underemployed or unemployed and try again.

RealClearWorld: A Tipping Point in Syria?

Posted on by The Progressive Policy Institute

As political violence engulfs the Middle East, the White House seems to sink deeper into incoherence and passivity. Will reports of a massive chemical attack on Syrian civilians finally rouse President Obama from his torpor, or will they become just the latest outrage du jour in the region’s never-ending horror show?

The Syrian opposition claimed that forces loyal to Syrian dictator Bashar Assad used chemical weapons to kill over 1,000 civilians in the Ghouta suburb of Damascus. Buttressing these reports were harrowing videos of people struggling to breath and photos of scores of bodies that born no outward signs of injury. If confirmed, the poison gas attack would put Assad in the same league as Iraq‘s Saddam Hussein, who used chemical bombs to wipe out 5,000 Kurds in the town of Halabja in 1988.

The alleged massacre coincides with the arrival in Syria of a UN team charged with investigating reports that the regime unleashed small-scale chemical attacks against opponents last spring. The timing suggests how little Assad worries about crossing the “red line” President Obama has drawn against the use of chemical weapons. Or perhaps it’s a veiled warning about what he’s prepared to do if Western powers intervene in Syria.

Although warmly applauded by foreign policy “realists,” the administration’s resolve to stand aloof from crisis has been a strategic and moral failure. What began as a civil uprising has morphed into something worse: a full-fledged proxy war that is inflaming the region’s sectarian divisions. As Shia Iran and Hezbollah fight to save their ally Assad, Sunni jihadis — some marching under the banner of al Qaeda – are pouring into Syria. This makes it easier for Assad to posture as a protector of Alawite and Christian minorities and a bulwark against the very Salafist terrorists that keep U.S. intelligence agencies awake at night.

But this is emphatically not a case of “the enemy of my enemy is my friend.” America has no interest in the survival of a homicidal tyrant and war criminal like Assad, even if his fall presents openings to Sunni extremists in Syria. And in truth, the United States isn’t very good — thankfully — at the kind of cold blooded realpolitik that counsels standing by while Assad, Iran and Hezbollah and Sunni fanatics bleed each other in Syria.

Continue reading at RealClearWorld.

Can US Hold Its Lead on 3D Printing?

Posted on by The Progressive Policy Institute

Everyone is abuzz about 3D printing. President Obama gave it a shout out in his most recent State of the Union address. The Economist hailed it as a harbinger of a “3rd industrial revolution.” UPS is putting 3D printers in its retail stores. Some analysts think it’s the key to reviving advanced manufacturing in America.

With 60% of the global market, there’s no doubt that U.S. firms dominate the fledgling market for 3D printers. But as with other breakthrough technologies hatched in America, there’s no guarantee that our competitors – yes, especially China – won’t catch up and eventually surpass us. After all, China is a manufacturing powerhouse that desperately wants to move up the value chain, and has few scruples about filching U.S. technology.

Although 3D printing is still in its infancy, Washington needs a strategy for maintaining U.S. leadership as other countries strive to catch up. Its key elements should include robust public investment in 3D research, and beefed up safeguards against intellectual property theft. Continue reading “Can US Hold Its Lead on 3D Printing?” →

Tax Reform – Make It Simple, Use Common Sense

Posted on by The Progressive Policy Institute

Our tax code is broken. It’s a simple fact, yet year after year our government leaders fail to address it. Meanwhile, the consequences of the overly complex and poorly designed system are felt by middle-class families and entrepreneurs alike. They benefit little from the existing array of incentives and loopholes, which are mainly targeted to special interests and the wealthy.

This week, House Ways and Means Chairman Dave Camp, R-Mich., and Senate Finance Committee Chairman Max Baucus, D-Mont., are visiting San Francisco and Santa Clara to hear directly from the California high-tech community about the inefficiencies of the system, and the potential effects of several of the proposed reforms.

One thing everyone agrees with is the need for simplification, especially simplifying everyday provisions that would make tax reform real for most taxpayers. Not only would a simpler code reduce red tape, it would also create a better economic environment for businesses of all sizes, raise revenues for deficit reduction and incentivize urgent investments in our nation’s future.

Simplification, however, should never abandon the principle of progressive taxation. One example of a misguided reform is what’s called the “flat tax.” It sounds simple, but in order to keep tax revenue stable the rate would be considerably higher than the 15 percent rate most taxpayers pay today. That means the majority of Americans would pay higher taxes in the name of simplification.

Also in the mix are political gimmicks such as “return-free filing,” in which the IRS would calculate your taxes for you. Such a system would only hide the inefficiencies and dysfunction of the system from many Americans, reducing support for desperately needed reform. In addition, there is an inherent conflict of interest in having the tax man do your taxes: If there’s any question about how to apply the tax code, the IRS is likely to choose the interpretation that brings in more taxes.

If Congress and the Obama administration are serious about simplifying the tax code, any plan must:

Promote economic efficiency and growth to help speed economic recovery, bring down unemployment and shrink the national debt.

Reduce the number of tax incentives to rebuild the nation’s revenue base. Each tax loophole is fiercely guarded by the special interests whom it benefits. Closing tax breaks en masse will not be easy, but it is essential both to lower tax rates for middle-class families today and to whittle down public debts that impose harmful tax burdens on our children tomorrow.

Maintain progressivity. Most tax incentives today make it less progressive, not more. Eliminating many tax incentives and using the savings for lower rates can, in conjunction with maintaining (and maybe even expanding) the Earned Income Tax Credit, maintain or improve progressivity in the tax code.

Reduce errors and avoidance. Tax law complexity often leads to perverse results. There are 14 different incentives for college, 11 types of IRAS, and three major incentives to help defray the cost of raising children. Common-sense simplification would make tax reform meaningful for average working American families.

Better align federal and state tax rules. Simplification will never be maximized unless federal and state governments can work together to reduce paperwork, streamline the filing process and create less opportunity for gaming the tax system.

There is a moment of opportunity in this Congress and this administration to do great good in making our tax system more rational, understandable and effective. We need to seize it.

Find the article at San Francisco Chronicle.

The Foolish Push to Scrap Fannie Mae and Freddie Mac

Posted on by The Progressive Policy Institute

It appears that Washington is finally getting around to grappling with the largest unresolved question left over from America’s housing meltdown: What’s to become of the government-backed mortgage giants, Fannie Mae and Freddie Mac? Their fate has been in limbo since the federal government bailed them out and put them in conservatorship in 2008.

Now, however, the two government-sponsored enterprises (GSEs) are reaping enormous profits as housing markets rebound. This has gotten lawmakers’ attention. House Republicans have introduced a typically radical bill that would eliminate Fannie and Freddie altogether.  A bipartisan Senate proposal would wind down Fannie and Freddie over five years and replace them with a similar functioning institution that charges a fee to insure loans in the event of catastrophic losses.  And President Obama weighed in recently as well, saying it’s time to end Fannie and Freddie “as we know them.” Though widely misinterpreted as a call to eliminate the GSEs, this artfully ambiguous formulation actually left the president a lot of wiggle room.

Continue reading at U.S. News & World Report.

Experts Project Home Values Index to End 2013 with Prices Up by 6.7 Percent

Posted on by The Progressive Policy Institute

On Thursday, Zillow released its quarterly Home Price Expectations Survey showing forecasters expect the website’s Home Value Index to end 2013 with prices up 6.7%. The numbers surveyed from 106 real estate experts across the country (I am a panel member), showed a significant jump from the 5.4% reported by the survey last quarter.

While price appreciation looks like it will show continuing strength through the end of the year, panelists mostly agreed that the sharp rise in prices we have seen over the last 12-18 months will begin a slower pace through 2017.

“Short-term expectations for home value appreciation through the end of this year are consistent with a nationwide housing market recovery that is both strengthening and widening, but still coping with high levels of negative equity, high demand and low inventory. Combined, these factors will continue putting upward pressure on home values for the next few months,” said Zillow Senior Economist Dr. Svenja Gudell. “But the days are numbered for these kinds of market dynamics, as investors begin to pull out of some markets, mortgage interest rates rise and more inventory becomes available. Over the next few years, these trends will help the market stabilize and will bring home value appreciation more in line with historic norms. As long as mortgage interest rates don’t rise too far and too fast, most markets should be able to absorb these changing dynamics while still remaining healthy.”

Panelist were also asked if a recent rise in mortgage rates, almost 100 basis points in the last 3 months, posed a serious threat to the recovery. A whopping 88% said no, and of those more than 60% said rates would need to hit 6% (currently around 4.5%) to reverse the bullish trend.

PPI Releases New Report on U.S. Energy, Motor Vehicles Attracting Foreign Investors

Posted on by The Progressive Policy Institute

U.S. Energy, Motor Vehicles Attracting Foreign Investors

WASHINGTON — Seeking to capitalize on America’s shale gas boom, foreign companies are making major investments in the U.S. energy sector, a new PPI study shows. And while foreign investors still see making motor vehicles in the United States as good business, they seem less willing to place their bets on America’s greatly heralded manufacturing renaissance.

These are key findings of “Non-US Investment Heroes: Foreign Companies Betting on America” by PPI Economist Diana G. Carew. In the first study of its kind, Carew identified the top non-US based companies in three key industries – energy, motor vehicles, and industrial manufacturing – by their level of U.S. investment in 2011 and 2012.

In energy, the top company investing in America by their cumulative 2011 and 2012 capital expenditures was BP, followed by Shell, Statoil, and Total.

In the two remaining industries, we could not produce a ranking due to limitations in publicly available financial data. Still, we identified six motor vehicle and industrial manufacturers that had significant U.S. investment in 2011 and 2012 (listed in alphabetical order): BMW, Honda, Robert Bosch, Samsung, ThyssenKrupp, and Volvo. To obtain these results, PPI analyzed publicly available financial statements.

In general, the report found that foreign direct investment in the United States is still well below its pre-recession high of $310 billion. “We need investment from overseas to propel the U.S. economy, but we continue to be stuck in an investment drought,” Carew says.

However, as Carew notes, a paucity of good data on investment from many non-U.S. based companies, particularly those outside of the energy sector, presents a challenge for designing effective U.S. investment policy.

This report is part of our “Investment Heroes” series, and follows from our 2012 report “U.S. Investment Heroes: Who’s Betting on America’s Future?”

Unpaid Internships Aren’t so Black and White

Posted on by The Progressive Policy Institute

Does having a paid internship make the difference between getting a job and sitting home after college? It depends.

Unpaid internships have been criticized as a waste of students’ time,  effort, and money. Now it appears holding an unpaid internship won’t even help a student on the job market. An upcoming study from the National Association of Colleges and Employers (NACE) on the graduating class of 2013 found 63.1% of graduating college students who had paid internships received a job offer, compared with 37.0% of those who took only unpaid internships and 35.2% of students who had taken no internships.

However, although job offers may seem like a straightforward measure of an internship’s impact, but the reality is not so black and white. There are many factors that influence whether a college graduate has a job offer at graduation, of which internships are just one. Moreover, there is also a wide variety of internships, and an equally diverse number of reasons students chose to take them.

Certainly not all internships are created equal.  For some employers, internships are explicitly used as a screening process for new hires. These employers may invest more time and effort to see which interns would make good employees, and so provide interns with substantive tasks and compensation.

Such ‘screening’ internship programs make the most sense for employers who continually need new hires with a technical skill set. So it is little surprise that the majority of paid internships are for majors who are typically hired in large numbers at entry-level. As the chart below shows, engineering majors, computer science majors, engineering technology majors, and business- related majors were far more likely to have a paid internships- with comparatively high wages- than other majors. The data is from Intern Bridge’s 2012 survey of college students.

But by itself this chart can be misleading.  Some majors’ career paths are inherently different than others, and this is not reflected in either the Intern Bridge or NACE data. For example, neither one reports the percent of students who intend to go straight to graduate school rather than enter the workforce. For some students, the primary purpose of an internship is not to receive an immediate job offer, but rather to build a professional network or explore a particular field of work.

The reality is the payoff for participating in an internship – whether paid or unpaid – varies from student to student. The greatest benefit of an internship is not measurable in wages, but by how much it furthers a student’s career aspirations. It would be a mistake for college students to use the NACE and Intern Bridge survey results as an excuse to sit home and do nothing. That will almost assuredly hurt their job prospects.