(Bloomberg) -- Internships at Meta Platforms Inc., the Facebook and Instagram owner, are coveted for their selectivity, high compensation, lavish perks -- and most of all, the potential job offer waiting at the end of the summer. This year, that’s more elusive.
Meta told interns via email in early July that it would delay deciding whether to hire them, giving the company extra time to assess staffing needs, according to a spokesperson. It’s so far the most prestigious program to change or cancel plans to offer interns full-time jobs, but it’s not the last. Twitter Inc. also said it would be delaying hires, as did a number of startups.
As hiring slows and the risk of recession looms larger, companies are freezing recruitment, cutting jobs and tightening budgets. Nearly one-third of organizations polled last month by consultant Gartner Inc. said they’re slowing hiring, up from 15% in May. Limiting intern hires, like quietly taking down job postings, provides one way to avoid layoffs for full-time employees.
But internships are key for providing a future talent pipeline -- and for increasing the gender and diversity makeup of companies. Meta has said it will be a challenge to maintain its diverse workforce as recruitment slows.
The class of 2021 graduated into a robust labor market, as stocks soared. Just a year later, a weakening economy is forcing companies to reassess their growth.
At the end of May, Jenna Radwan, a recent graduate of the University of San Francisco, received an email from her would-be-employer Hirect, a hiring app. The message informed her that they could not longer offer her a position, just two weeks before her start date. “The rug was pulled out from under me,” she says.
Anthony Zhao received his fall internship offer from Shopify Inc. in June, conditional only on his reference check. Four weeks later, he received an email informing him they were no longer hiring for that position. At the end of July, the e-commerce company cut 1,000 workers, or 10% of its workforce.
The 20-year-old has since accepted a position at another company, and is still hopeful, he says. “It’s not great short term, but I think long term, if I play my cards right I can learn a few things and come out ahead.”
Despite Meta’s move, some recent graduates say they’re more likely to accept any offers from big tech companies and banks, which they see as more economically stable.
Representatives from Alphabet Inc., Google’s parent company, and Amazon.com Inc., which also recruit for entry-level positions out of their intern pool, said they do not plan on changing or scaling back their recruitment out of their internships. Representatives from similarly prestigious programs at Goldman Sachs Group, Inc., Citigroup Inc. and JPMorgan Chase & Co. told Bloomberg they plan to issue interns roughly the same number of return offers as in past years.
That continuation comes in spite of broader hiring slowdowns. Goldman Sachs said it will slow its hiring, while Wells Fargo & Co as well as Bank of America Corp. trimmed their staffs over the past year. Tech companies from Google to Microsoft Corp. have also said they will slow recruitment. During last week’s third-quarter earnings call, Apple Inc. Chief Executive Officer Tim Cook said they will continue to hire but will be “more deliberate in doing so, in recognition of the realities of the environment.”
One summer intern at Morgan Stanley said though it isn’t her dream to go into finance, she’s hoping for an offer before economic conditions worsen. Another intern at Amazon, who asked to remain anonymous, expressed a similar sentiment. He’s worked at Amazon for three summers now and figures he might as well stay for the security.
He’s grown nervous as big tech companies slow hiring and smaller ones cancel programs or retract offers. Coinbase rescinded job offers and announced a hiring freeze earlier this summer. Twitter also retracted offers in May amid the Elon Musk takeover bid.
Fewer jobs at top companies means that some top graduates will take lower-paying jobs with less-profitable employers, according to Hannes Schwandt, an economist at Northwestern University’s Institute for Policy Research.
“This year’s crop of interns is no worse than previous years,” Schwandt said. “This will bite them a little bit after, when the economy is doing better.” Relative to graduates who enter a stronger job market, so-called ‘recession grads’ make less money even once economic conditions improve.
Meta chose to delay hiring for the time being because junior level recruiting has outpaced senior level roles, Andrea Beasley, a Meta spokesperson, said. Meta will focus its hiring efforts on leadership and senior level positions, specifically those related to fields like machine learning and artificial intelligence.
One Meta software engineering intern explained that he and other interns were shocked by announcement, because the company has a reputation for generous offers. The intern, who declined to be named for fear of jeapordizing his career prospects, said managers had praised his work throughout the summer, and he became enamored with the big tech lifestyle --from the New York City office’s free sushi to the gym membership subsidies. He couldn’t wait to come back after completing his studies.
After Meta’s plans changed, he stopped dreaming about post-grad life at the company and started updating his resume.
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