the architecture of constructing a practice

  • anchor

    skills vs need vs fees

    Gregory Walker
    Nov 25, '12 11:34 PM EST

    for anyone "looking for a job", the following equation will almost certainly drive the decision about how much pay will be offered:

    (fees/expenses) + ((skill-sets+need)/availability) = rate x (duration of project)

    or some variation thereof. in shorthand: the rate's driven by a combination of the fees and expenses (direct costs) of a project, combined with what skills are needed and the availability of people who possess those skills. in classical economics, if the skill-sets are rarer and in higher demand (say, someone who can design a BL-4 lab in their sleep, combined with a sudden rise in the number of BL-4 labs needed to combat the coming zombie apocalypse), the pay that worker can obtain will be higher than someone who possesses more common, average or less quantifiable skills.

    at least, that's the longstanding theory.

    over the past 10 years (but acutely over the past 3 or so), manufacturing sectors have lamented the so called 'skills gap' between what they've looked for in a worker and what's available. adam davidson, of planet money, laid waste to that myth in a recent editorial:

    "Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.” Isbister, after all, doesn’t abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald’s can earn around $14 an hour. (emphasis mine)


    The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages."

    this kind of shift isn't limited to traditionally 'blue collar' jobs, at least within the advanced industrial economies. in short, a confluence of vastly improved technology infrastructures have opened up a truly global market for skilled workers, especially in white collar jobs (outsourcing for the professional set). i've lived this with my software project - we've hired programmers from vietnam, india and the phillipines, all online, all remote, all without ever having met them. and, all for about 1/10th the cost of hiring someone here. 

    now, there's no absolutes here: highly skilled workers are hired all the time and paid handsomely for it. and manufacturing isn't the same as a service industry. but if this is the canary in the coal mine, it begs a few questions:

    does this kind of extreme push (more specialized skills for less pay) translate between industries/professions?

    is there any long term correlation between fees/income and the operating costs (salaries predominantly) in terms of rising/falling amounts?

    most importantly: what skillsets are truly driving value in the service economy? ie, what's truly creating rising income in terms of fees? 

    have we truly replaced lower skilled labor (draftsmen) with entry level professionals? (i'm contending it's been this way for the last 20 years at least but still asking the question) if so, is this because we've sold ourselves that way? ie - we're selling ourselves as the raw production instead of something with a higher value? 

    how do we avoid the race to the bottom?



    • I recently finished up a project for the a prestigious government client. The project had a very limited budget and we went through several bidding rounds to VE and push the contractors to hammer their subs. The contract was awarded to a young firm that was seeking to establish their name with such a prestigious client. They significant under bid all the other contractors, leaving almost no profit for their firm. After a fast and magnificent build out the contractor is now left in the black on the project. The next closest bid was 100k higher on a project with a winning bid of 350k. While the project benefited immensely the contractor is still feeling heavy repercussions for not knowing their value. If the AEC industry continues to hold their ground and take stands on reasonable worth (for both employees and employers signing contracts) we will all be better off. 

      Quality costs more.

      Nov 26, 12 4:03 pm  · 
      vado retro

      if you need to be skilled to earn ten bucks an hour, i'd rather live in the basement and watch jerry springer, which almost pays as much.

      Nov 26, 12 4:23 pm  · 
      vado retro

      the real skill is service. regardless, of the industry one is in. service, which is really the keystone of relationship building is the x factor. Those, who provide it build customer/client satisfaction and loyalty and receive referrals and repeat business in return.

      Nov 26, 12 4:30 pm  · 

      service is important and all, but surely competence still plays a role?  i don't know, maybe i'm still too young and naive.

      it seems to me architects are pushing more responsibility onto consultants and passing the costs to the client.  we aren't only passing work to acoustic consultants and lighting consultants, but even fenestration or building skin consultants and roofing consultants.  what's left for the architect?  a specialty in rhino script form generating?

      the article is about 'skilled' labor, which i think is different than just somebody going to college for a long time.  if an architect's role is to coordinate other people who know how buildings go together, then they're skill would be worth less than an architect who is coordinating other trades *and* knows how a building goes together.  if our job is mostly contract negotiation, contract management, risk management, ada and code compliance, and reduction of liability, then we as a profession are doing a very poor job compared to the lawyers our clients are hiring.  if the architect's role is to waffle on their opinion of what might look good without really listening to the client, then that architect can probably be replaced by an 8 year old.  having an opinion is not  a 'skill.'

      of course, as the OP's article mentions, being 'skilled' only gets you $10 an hour, so i guess in the new economy not knowing stuff is better than knowing stuff?

      Nov 27, 12 9:51 am  · 

      I have always felt that the greatest value an architect can provide is not only how to build, but what to build on a given site or where to build a given project.  Research, mapping, site analysis, diagraming, programing......are all skills that are not being fully utilized.  Developers and planners are usually not very creative, and this early stage of conception is where creativity can add the greatest value and the greatest impact on cities.  We need to tap into that big bicture "imagineering"  mentality and figure out how to incorporate it into the business and create value for clients. 

      Nov 27, 12 10:33 am  · 

      How do you avoid the race to the bottom? Declare a moratorium on immigration, impose tariffs on international labor arbitrage by employers, and quit subsidizing financialization of the economy through credit. Do that and problem solved.

      Nov 27, 12 12:42 pm  · 

      How do you avoid the race to the bottom?

      prevent spoiled rich kids that never learned how to take care of themselves from entering decision making positions.  reward and promote the people who are most competent and capable rather those who meet "class membership" requirements gwharton is promoting in another thread.  i suspect architects would do better if our companies were run by people who added real value to their client's business model and who charged rates somewhat equivalent to lawyers for their services.

      let's not blame the failure of private industry or market forces, or specifically an architect's decision to undercut competition and work for free, on immigrants.  immigrants don't decide how to run an architect's office.  international trade laws don't either, and Obama certainly doesn't.  it's the partners or principals or owners who make those decisions.

      also, the construction industry needs credit.  there isn't a building operating at a profit until said building gets built, so there is a significant cost that occurs ahead of the profit required to pay the cost.  credit lets the client pay for a building before it's leased, and it lets contractors purchase materials before they submit pay apps to the architect/owner.

      jla-x, corporate architects commonly do feasibility studies to see if their clients can realistically move into a space.  sounds like that's the skillset you're talking about.  that is an architecture role that hasn't been passed onto consultants (to the best of my knowledge, so far) and adds value for the client.  maybe that's the future of the profession.  we go in, do some preliminary space planning, then just hand it off to the contractor to figure out.

      Nov 27, 12 2:46 pm  · 

      Feasibility studies are in that realm, but I'm talking more about "inventing" new architypes.  Open ideas competitions are usually as far as that goes...

      Nov 27, 12 4:01 pm  · 

      i would say necessity is the mother of invention.  new architypes will be born from programs that requires new architypes as they develop naturally.  such things will evolve organically from whatever economic, social, environmental, or whatever source needs said new architype.  it can be fun to think about what is going to bring in the new era (zombiepocalypse - we're not 100%, but we're pretty sure) and what sort of architecturally-related things will be developed to address that era (daylighting?  barricades? gated communities?).  however, i think if it's forced because we think we're smart we end up with failed good intentions like pruitt-igoe.

      inventing new architypes for the sake of new architypes is, at least in my current perspective, self-destructive.

      Nov 27, 12 5:06 pm  · 

      Block this user

      Are you sure you want to block this user and hide all related comments throughout the site?

    • Back to Entry List...
  • ×Search in:

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.

Authored by:

Recent Entries