While the past recession was severe across the broader U.S. economy, it has been devastating for the construction sector. Since the last AIA report in 2008 on compensation trends at architecture firms, construction activity has plummeted. The downturn in construction activity has affected those serving the industry, with architects particularly hard hit.
Payroll employment at U.S. architecture firms was in excess of 240,000 at the end of 2007. By the end of 2010, firm employment levels fell to under 156,000, according to the U.S. Department of Labor, producing more than a 25 percent decline in payroll positions over this period. As revealed in the full report, declining demand for architectural services and the resulting downturn in business conditions rendered compensation at architecture firms was commensurately weak over the past three years.
Average total compensation for architecture positions-including base salary, overtime, bonuses, and incentives-hardly budged between 2008 and 2011, climbing a mere $1,600 over this three-year period, according to the top graph above. Contributing to this weak growth in compensation were salary freezes or reductions, decreases in hours worked, the conversion of full-time positions to part-time or contract positions, and mandatory furloughs or other unpaid leave. Many firms also reduced benefits offered to their employees.
Weak compensation gains plagued many salaried employees during the economic downturn. However, employees at architecture firms fared worse than most. For example, the U.S. Department of Labor's Employment Cost Index for all private workers, as well as for professional and related staff, both increased about 5.5 percent overall between early 2008 and early 2011, far outpacing the modest gains for architectural positions.
Over the past decade overall, however, compensation gains for architectural positions have more than kept pace with other professions. Architecture compensation increased 32 percent between early 2002 and early 2011, compared to 27 percent for all professional and related staff in the economy, and 25 percent for all private workers. Architect compensation increased faster than economy-wide compensation during the period of strong economic growth between 2005 and 2008, but slower during the economic downturn, as seen in the second graphic above.
Compensation remains higher at larger firms
At all experience levels, larger architecture firms offer higher compensation on average for architect positions. Compensation at firms with fewer than 10 employees was generally 20 percent or so below average. Compensation at firms with 100 or more employees was generally about 10 percent higher than average.
Part of the difference in compensation levels by firm size results from the non-guaranteed portions of total compensation being higher at larger firms. For firms with 100 or more employees, an average of 7 percent of compensation came from overtime, bonuses, and other incentive compensation, with the remaining 93 percent as base salary. For firms with fewer than 10 employees, over 95 percent of total compensation was from base salary, with less than 5 percent non-guaranteed.
Incentives for higher compensation
Despite the extreme downward pressure on compensation at architecture firms in recent years, most firms do offer higher salaries to attract or retain desired credentials and skills. For example, over half of firms offer a salary premium for a master's in architecture degree (MArch), as compared to a professional bachelor's degree. Additionally, over 70 percent of firms offer higher salaries for applicants or staff who have successfully completed their architectural registration examinations and become licensed. Finally, almost a third of firms offer higher salaries for staff that have expertise in building information modeling (BIM).
Even though compensation at architecture firms essentially remained flat between 2008 and 2011, professional design staff benefits as a percentage of base pay declined on average over this period. In 2008, benefits averaged just under 17 percent of base pay at smaller firms, rising to about 27 percent at larger firms. By 2011, benefits at small firms had stayed the same, while large firms' benefits dropped to 23 percent of base pay. For all employee categories, benefits are higher on average at larger firms, as evident in the third graph above.