Like the broader design and construction industry, compensation levels for architecture positions tend to be volatile. Depending on construction market conditions, there can be periods of strong growth, followed by periods where architecture positions see no compensation increases, and potentially even declines.
The past few years have produced healthy increases in compensation across the profession. Spurred on by a record-long economic expansion, the national unemployment rate is near a 50-year low, and spending on nonresidential construction has increased 40% over the past seven years. As a result, U.S. architecture firms have been expanding their staffing. Payroll employment at firms has grown by an average of 7,500 positions a year over the past six years. The AIA estimates that approximately 4,500 of this average annual increase is for architectural positions. Given the retirement trends among aging architecture staff, architecture schools have not been able to generate enough new graduates to meet this expanded need for staffing in recent years. Therefore, firms have had to employ a range of strategies to attract new workers and retain their current employees, including:
- Increasing overall compensation levels across the profession. - Relying more heavily on sign-on and retention bonuses to attract and retain staff.
- Increasing willingness to hire candidates without professional architecture degrees for architectural design and paraprofessional positions.
- Increasing training programs and productivity-enhancing technology investments in an effort to make their staff more productive.
- Increased benefits to staff when possible, while adding additional benefits that enhance the culture of the firm, help make it more employee-friendly, and generally promote greater levels of sustainability.
In addition to increased compensation and paid benefits to employees to attract and retain staff, many firms have increasingly relied on other benefits aimed at improving the worklife experience and enhancing the culture of the firm in the eyes of current and potential employees. For example, most firms offer telecommuting and flex-time options, as well as casual dress options, while a growing number of firms are offering a child-friendly or pet-friendly office, shorter summer or seasonal hours, and paid time to volunteer.
Compensation for Architecture Positions Nearing Record Growth Pace
Average total compensation across all architectural staff positions averaged in excess of $92,000 at the beginning of 2019, up more than 6% per year from early 2017 levels, according to the recently released 2019 AIA Compensation Report. This pace of growth matches the strongest annual rate seen over the past two decades. However, it is a cautionary note that the last times architect compensation reached an increase of 6% per year—1999 and 2008—the economy and the construction sector were either starting to enter national economic downturns or were just about to do so.
While some of the growth in compensation merely offsets the pace of inflation in the cost of goods and services, average architectural compensation has seen substantial growth beyond mere inflation over the past two decades. In 1990, average architecture compensation was just over $70,000 (in 2019 dollars), so real compensation for these positions has increased by almost a third over this two-decade period.
There continues to be wide variation in salaries between smaller firms and larger firms, but data from the 2019 report indicate that junior and entry-level positions had measurably lower variations in salaries across firm sizes. This is in contrast to managers and department heads, which had more than a 40% difference in average salaries for most positions in those categories, and a difference of more than 80% for some of the most senior-level positions. Many positions continued to see an increase in the share of their salary that is nonguaranteed (e.g., overtime, bonuses, profit sharing, and other cash compensation) versus guaranteed (i.e., base pay). Managing principals now have the largest share of their salary as nonguaranteed pay.
Where You Work Matters
Even with the general staffing concerns facing architecture firms, the compensation pressures are much greater in some areas of the country than others. For example, of the 27 metropolitan areas detailed in the 2019 AIA Compensation Report where architectural compensation levels are estimated, average compensation in early 2019 (base salary plus incentives and bonuses) for unlicensed recent graduates of architecture programs was almost 20% above the national average in some areas, and close to 20% below the national average in others. However, these compensation disparities likely reflect cost-of-living differences as well as local area competitive pressures.
For example, average compensation for an unlicensed recent college graduate at architecture firms in San Jose was $65,880 in early 2019, almost 45% higher than the $45,800 average starting compensation in Pittsburgh. In general, metro areas with higher starting compensation were on the Pacific Coast or along the Northeast seaboard, with firms in Los Angeles, New York, San Francisco, San Jose, Seattle, and Washington, D.C., reporting the highest average compensation for unlicensed recent college graduates.
However, the firms in metro areas that offer the highest starting compensation may be forced to do so to compensate employees for the higher cost of living in these metros, particularly in regard to housing costs. For example, the unlicensed recent college graduates in San Jose that recorded the highest compensation also were faced with some of the highest rents in the country. The median rent in 2017 in the San Jose metro area was over $2,100 per month or $25,400 annually according to the American Communities Survey conducted by the U.S. Census Bureau. As a result, the average rent burden (the median annual rent divided by average annual compensation for unlicensed recent college graduates) in San Jose was 38.5%. The federal government considers any household to be rent burdened if rents account for 30% or more of income. With no additional wage earners in the household, the typical architecture college graduate in San Jose would be rent burdened, even with its top compensation levels.
By contrast, in Pittsburgh the median annual rent was $7,800, or about $650 a month. With an average compensation of $45,800, the average rent burden for a recent college graduate would be 17.1%, one of the lowest burdens for any of the metro areas covered by the AIA’s recent compensation report. In general, areas with higher average starting compensation also tend to be areas with higher average rent burdens.
Benefits Shifting
Overall, the value of fringe benefits offered by architecture firms to their employees in 2018 remained generally consistent with where it has been over the last several years, at about 17% of base pay for full-time professional, technical, nontechnical, and administrative employees, according to the 2019 AIA Compensation Report. However, the value of benefits for part-time staff continued its recent decline, falling to an average of just 9% of base pay in 2018, from a peak of 18% in 2012.
With the demand at architecture firms for qualified architectural staff rising in recent years, benefits, perks, and professional development support now play an increasingly important role in employment packages offered by firms. In addition, with firms paying greater attention to issues related to equity, diversity, and inclusion, firm culture has taken on a more prominent role to support employees along their career paths. And many of these benefits can also help firms to reduce their carbon footprint and meet sustainability goals, such as through offering employees remote work options, and through increased support for alternative forms of commuting, like subsidies for qualified transportation programs (e.g., public transit reimbursement or a bike sharing program).
Providing employees with the option to work remotely is an employee benefit that has become so commonplace that 87% of architecture firms offered it to their full-time employees in some capacity in 2018. This is largely regardless of firm size, with 78% of small firms reporting that they offered remote work in 2018, and 97% of large firms reporting the same. The largest share of firms, more than two-thirds overall, offered remote work on an ad hoc basis. In contrast, just 13% of firms offer full-time, or nearly full-time, remote work, with more than one-quarter of large firms offering this type of remote work, versus just 4% of small firms that offer the same.
Many firms also report that in 2018 they made a specific effort to encourage diversity in hiring and actively engaged in steps to enrich firm culture and retain employees throughout different life stages. Eighty-eight percent of firms reported that they employed a formalized annual employee review process in 2018, while 36% conducted a salary equity assessment by gender and/or race, 27% had transparent promotion and compensation practices, and 20% had a formal employee retention plan. In addition, 80% of firms indicated that they have specifically hired, promoted, and/or mentored employees with diverse backgrounds, 43% have proactively sought to develop diverse employees for leadership roles, and 25% have developed a firmwide value of diversity statement. To provide additional support, 16% of firms have also provided training and/or resources around the topic of intercultural competence.
