the architecture of constructing a practice

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    one chart, one heart, one....

    Gregory Walker
    Jul 9, '12 1:23 PM EST


    it's pretty rare that a single chart can show so much about the current state of the industry, but this one, from Macro Monitor, does a great job. 


    the upshot? 2.27M construction payroll jobs lost between '06 and '11. only 60k net new jobs since feb. 2011. 


    only 60k. out of 2.2M.


    the only reason the unemployment rate for architects (and the construction industry in general) is falling, as grieg o'brien and others have noted, is that so many people have simply left the industry for good or have simply given up hope of finding work. it's not that the jobs have come back. 


    of course, none of these numbers talk - at all - about how many people who are self-employed (and can't be laid off in pure unemployment terms) simply don't have enough work to keep their income sustained at previously levels. or how many graduates simply are unable to find work (or documented, payroll level jobs). 


    i don't know how many times we'll have to keep saying this: fix the construction industry and you've fixed the economy. it's really that simple...


    happy monday!


    • Rusty!

      These numbers are Hitleresque.

      Perhaps we have built all that needs to be built. We need some old fasioned demolition to kickstart the things.

      Sarah Palin for VP!

      Jul 9, 12 2:48 pm  · 

      A depressing chart, indeed.  But at least it tells the real story of what is happening in the economy.  It is a candid assessment that is seldom glimpsed in the mainstream news outlets.  It should also be obvious that there is a lack of strong leadership on the part of both the private and public sectors of the economy to do something about reviving the construction and design industries.  Unfortunately, for experienced architects, there are not a lot of options once they become unemployed.  It's not like one can walk into the nearest factory and get a manufacturing job, perhaps not requiring too much retraining.  Those don't exist in droves either.    Supremely challenging and unprecedented situation that the social institutions have neither a clue how to, nor the requisite wherewithal to cope with.

      Jul 9, 12 3:54 pm  · 

      walter - i don't think it's a question of having a clue. they do. there's simply no political will to match. 


      i'm a subscriber to the idea, though, that we're seeing a much more fundamental shift in how middle class jobs work in america. here's another piece (from thomas edsell of the nytimes) that does a brief overview. in general, i'm not sure it's accelerating as fast, nor inherently has the kinds of doomsday connotations that are implied, but the reality is, yeah, certain kinds of labor aren't coming back. and it's incredibly tough to retrench and refocus to something more productive, without taking huge steps back (salary and timing wise)  :


      The issue of the disappearing middle is not new, but credible economists have added a more threatening twist to the argument: the possibility that a well-functioning, efficient modern market economy, driven by exponential growth in the rate of technological innovation, can simultaneously produce economic growth and eliminate millions of middle-class jobs.

      Michael Spence, a professor at N.Y.U.’s Stern School of Business, and David Autor, an economist at M.I.T., have argued that this “hollowing out” process is a result of twin upheavals: globalization and the hyper-acceleration of technological progress.

      Just two weeks ago at the Aspen Ideas Festival, Alan Krueger, Chairman of the Council of Economic Advisers, stressed this theme:

      If you look at the decade before the recession, the U.S. economy was not creating enough jobs, particularly not enough middle class jobs, and we were losing manufacturing jobs at an alarming rate even before the recession. And I would also put together, combined with those two problems, the polarization of the U.S. job market, the fact that we are getting more and more people at the very top and the very bottom and the middle has been shrinking.
      In recent months, Erik Brynjolfsson, a professor at the M.I.T. Sloan School of Management, and Andrew McAfee, a research scientist at M.I.T.’s Center for Digital Business, have raised the stakes in this discussion with the publication of “Race Against the Machine” and a collection of accompanying essays and papers by the authors.

      McAfee has graphically illustrated the key findings that worry him and Brynjolfsson. The red line in the figure below, the employment to population ratio, tracks the ratio of the number of people working to the total number of working-age men and women in the United States.


      On his blog, McAfee explains the graphic:

      Since the Great Recession officially ended in June of 2009 G.D.P., equipment investment, and total corporate profits have rebounded, and are now at their all-time highs. The employment ratio, meanwhile, has only shrunk and is now at its lowest level since the early 1980s when women had not yet entered the workforce in significant numbers. So current labor force woes are not because the economy isn’t growing, and they’re not because companies aren’t making money or spending money on equipment. They’re because these trends have become increasingly decoupled from hiring — from needing more human workers. As computers race ahead, acquiring more and more skills in pattern matching, communication, perception, and so on, I expect that this decoupling will continue, and maybe even accelerate.
      This view is controversial — especially McAfee’s argument that the decoupling of jobs from other positive economic developments “will continue, and maybe even accelerate.” In other words, the downward employment and jobs spiral will keep going, driven by structural forces. Policies to ameliorate the process – a shorter work week, a massive investment in education (for example, at the community college level), the disaggregation of complex tasks into simple functions that could be executed by mid-skill workers — may only slow the decline, not stop it. This is a deeply pessimistic vision.

      “In my dystopian vision of the future, that red line (in the chart) keeps falling down – or suddenly drops off a cliff,” McAfee told The Times, adding: “All of the trends that I see and can identify are contributing to the hollowing out of the economy.”

      In a videotaped interview on Bloomberg News, Brynjolfsson was somewhat more cautious:

      I have to be brutally honest, I don’t think Andy and I are sure whether it’s different this time around. If you look at the data, this time it seems to be a lot more difficult. So it’s possible we are facing a regime change, a fundamental change in the way technology and employment interact with each other.
      The Brynjolfsson-McAfee message has been generally well received in the high-tech community. On July 5, McAfee held the attention of an audience of young researchers and prospective entrepreneurs here at Singularity University. For over an hour after his lecture, students met with McAfee to explore the consequences of his argument.

      The students’ questions:

      How much can wealth accumulate for a small slice of the population at the top, while large numbers of people are forced to work for ever lower pay or to drop out of the workforce altogether? For such a future society to function, would wealth need to be (coercively) redistributed from the top to those below, in order for the mass of the jobless population to survive? Who would have power and how would tax and spending policies be determined in such a radically bifurcated, automated, workless society?

      Many reviews of “Race Against The Machine” have been favorable, including those in publications supportive of free markets, including the Economist and the Financial Times.

      McAfee noted in our interview that some critics have accused him and Brynjolfsson of accepting the “lump of labor fallacy” (the idea that there is a fixed amount of work available) in defiance of economic history. In the aftermath of major periods of technological advance, including the transition from agriculture to industry, employment has grown enormously.

      James Hamilton, an economist at the University of California, San Diego, challenged the “Race Against The Machine” thesis in an e-mail to The Times:

      I am very skeptical of the claim that technology itself is the problem. In 2005, the average U.S. worker could produce what would have required 2 people to do in 1970, what would have required 4 people in 1940, and would have required 6 people in 1910. The result of this technological progress was not higher unemployment, but instead rising real wages. The evidence from the last two centuries is unambiguous — productivity gains lead to more wealth, not poverty. The unemployment since 2007 was not caused by gains in productivity or increased automation, but instead by loss of demand for the product that the workers had been producing, for example, a plunge in the demand for new home construction.
      Amar Bhidé, author of the book “The Venturesome Economy,” and senior fellow at the Center for Emerging Market Enterprises at Tufts, did not mince words responding to a request for comment from The Times:

      As you might guess I find the storyline rather unconvincing and Luddite. What’s new about automation? I’ve been banging away for years about the phenomenon of non-destructive creation as a vital complement to creative destruction. The two don’t move in lock step but I have no reason to believe that non-destructive creation has ceased. Until someone persuades me it has, I will limit my anxieties to global warming, financial misregulation, a screwed up health care system, etc.
      McAfee countered in an e-mail that “this time really is different,”  arguing:

      All previous waves of automation affected only a small subset of human skills and abilities. To oversimplify a bit, the industrial revolution was about building machines that had (much) more brute strength than we did. For all mental work, the industrial revolution was meaningless — you still needed people.

      Until recently, the digital revolution also didn’t affect that many human skills and abilities. Computers became better at math, and at some clerical abilities, but we people were still miles ahead in other areas. So employers needed to hire humans if they wanted to listen to people speak and respond to them, write a report, pattern-match across a large and diverse body of information, and do all the other things that modern knowledge workers do.

      Employers also needed people if they wanted lots of physical tasks done, including driving a truck or vacuuming a floor. The same with most tasks involving sensory perception, such as determining if a soccer ball has crossed a goal line.

      All of the above abilities have now been demonstrated by digital technologies, and not just in the lab, but in the real world. So employers are going to switch from human labor to digital labor to execute tasks like those above. In fact, they’re already doing so. I expect this process of switching to accelerate in the future, perhaps rapidly, because computers get cheaper all the time, are very accurate and reliable once they’re programmed properly, and don’t demand overtime, benefits, or health care.
      Brynjolfsson, who is more optimistic, said in an interview with The Times, “we are hopeful that that (job growth) will happen, but there is no guarantee of it. There is no economic law that says everyone benefits from technological improvement.” He also pointed out that the surge in inequality driven by rising incomes at the very top of the distribution suggests strongly that the benefits of digitization have not been widely spread.

      “The problem is not tech stagnation,” as some have argued, “but the opposite,” Brynjolfsson contends. “Technology is rushing ahead faster than humans can adapt.” The difficulty of human adaptation is, in turn, likely to get worse, he added, because technological innovation — as in Moore’s Law (predicting a doubling of computer capacity roughly every two years) — grows exponentially in scope. The total number of non-farm jobs in the country is now 5 million less than in January, 2008. The 3.7 million jobs added to the economy have not been enough to make up for the 8.7 million jobs lost in 2008-9.

      Brynjolfsson and McAfee have a list of 19 proposals that they support — which range from massive investment in education, infrastructure and basic research, to lowering barriers to business creation, eliminating the mortgage interest deduction and changing copyright and patent law to encourage new (as opposed to protecting old) innovations.

      Any effort to ameliorate the damaging consequences to the employment marketplace stemming from technological innovation, according to Brynjolfsson, requires substantial government action at a time when “the political system is the most dysfunctional part of our society.”

      McAfee and Brynjolfsson argue that in a race against machines, humans will lose. In their view, “the key to winning the race is not to compete against machines but to compete with machines.” The question, then, will be whether humans can adapt at anywhere near the pace needed to keep up.

      Jul 9, 12 5:53 pm  · 

      I have a feeling that there will eventually either be regression or wholesale rejection of some forms of technological advancement - where certain analog skills and old-school knowledge will be seen as more valuable - but the question is in what areas will this happen, and when?  There seems to be a threshold of sophistication of technology where people don't like that they've lost the ability to understand what's going on under the hood - once the novelty has worn off.


      Brynjolfsson and McAfee have a list of 19 proposals that they support — which range from massive investment in education, infrastructure and basic research, to lowering barriers to business creation, eliminating the mortgage interest deduction and changing copyright and patent law to encourage new (as opposed to protecting old) innovations.


      so they sound the alarm over the negative effects of technological advancement and innovation yet their answer is accelerating it even further?

      Jul 10, 12 10:45 am  · 
      vado retro

      these charts would make great Architecture school T Shirt designs!

      Jul 15, 12 3:57 pm  · 

      maybe, vado - maybe....

      Jul 16, 12 2:56 pm  · 

      It's pretty rare that a single chart can show so much about the current state of the industry, but this one, from Macro Monitor, does a great job.


      Jul 18, 12 3:02 am  · 


      Great graph, but i think the notion that if we "fix the construction industry, we fix the economy" doesn't make much sense to me.  

      Knowing what we know now about the economic growth we saw from the 80's through the mid 2000's, how could we hope for its return?  The construction boom based on personal debt and suburban sprawl might have been great while it lasted, and it made SOME people rich, but how many ways can we possibly show that it was unsustainable, and in many ways a net negative?

      We can whimsically recall the glory days, but what exactly are you pining for?  We pretended to be rich for 20 years and ended up with a glut of buildings it will take a decade to absorb, a reduction in the overall wealth of the vast majority of our population and a huge increase in wealth and income disparities, a decaying infrastructure, a possible tidal wave of defaulting cities and towns, etc etc... 

      Jul 18, 12 12:53 pm  · 

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About this Blog

Central to the blog is a long running interest in how we construct practices that enable and promote the kind of work we are all most interested in. From how firms are run, structured, and constructed, the main focus will be on exploring, expanding and demystifying how firms operate. I’ll be interviewing different practices – from startups to nationally recognized firms, bringing to print at least one a month. Our focus will be connecting Archinect readers with the business of practice.

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