Okay, we’ve really gone over the student loans a lot on this site. We all know that a $50,000 loan will cost you $500 plus/minus per month for 10 years. It’s a lot. It’s a big burden.
On to bigger and better things.
Let’s talk about salaries. Hypothetical here of course.
Let’s say this one fella was 25 years old when he graduated in 1998.
Got a job and made some money for 10 years. Earned some raises and ……let’s say $2,500 per year
In 2008 was now 35 years old making $52,000
The recession hits.
In 2009 he keeps his job but still makes $52,000.
In 2010 he keeps his job but still makes $52,000.
How much did he lose?
Some of you will say he lost $5,000 but you’d be really wrong.
He is now 37 years old and has 30 years left to retirement.
His base pay would have increased by $5,000 per year. For the next 30 years.
30 years times $5000 = $150,000 lose. Because basically wages will increase based on what you make now. If you didn’t get the increase, you really never will. If you were making $52,000 and went after a new job you would have based your next salary on what you were making. $52,000 in 2008, 2009 or 2010. or what you want to make. These increases are lost. Forever really.
But it gets worse.
30 years later, if you had saved that money $5000 per year times 3% (inflation) = $238,000
Ok.
Not so fast. If it were me and I was saving it, it would be for my retirement instead, right?
30 years later if you saved $5000/year times 6% = $400,000
Ok.
Hold on people. If it really were me and I was saving for my retirement I’d be looking at 8%.
30 years later if you saved $5000/year times 8% = $566,000
Ok.
Honestly I look at 9% returns on my money so it actually is around $650,000.
The raises you miss and interest earned is exponential, not linear.
Miss your raises and see how far back retirement gets pushed back.
Is that depressing or what?
Next we should talk about paying taxes on interest earned.
I've actually looked at the same thing...
The value of a dollar saved now (30 years to retirement) to the value of a dollar saved 5 years from (25 years to retirement).
At an assumed standard of 8% return- The value of $1.00 now is $17.14 in 30 years, but if i wait 5 years and invest that same dollar, it will only be worth $10.34 at retirement. (the cents might be a bit off as i am doing this from memory)
I'm going back for an MBA to hopefulling make 70,000 to 100,000 /year in 2 years time.
I dare you to do the math, for the amount of Moolah that is being missed by being an architect... escpially after it is extrapoalted out to retirement. It's rather depressing.
w4000... Considering that the average income for a man in the US is about $44,000 a year and that the average salary for architects is $62,000 (AIA 2005), an architect makes $630,000 more than the average American.
And before someone pipes in with the whole Master's debate, about 48% of all architects hold only a B.Arch. So, the education slant here is less than important.
That figure doesn't even include the additional 7-11% bonus that many architects report receiving. That bumps the overall figure up to $781,900 (over 35 years assuming 7% incentives).
You're really not losing money. I think what architects have a hard time grasping is the fact that they'll never be able to afford the worlds they build for their clients. Architecture is off limits to architects!
If you're paying $500 per month to pay off $50,000 in loans, then you're screwing yourself over. Pay the least possible for your loans so that you're essentially just paying the interest on the loans...extend it as far off as possible so that you can start saving enough money to make some investments (new home, mutual funds, etc). Your loan payments will probably get cut in half. In 30 years, that $50,000 will be easy to pay off as a result of inflation and the investments you make will make it easier to pay it off 30 years from now. I realize this is only 1 part of the solution.
Don't know where you live, but 52K after 12 years is dismal. I'm in NYC and some interns here make that much. You should either ask for a raise, or get a new job that pays more. Not saying that's easy in this economy, but you should definitely try. Your projections are worthwhile only if they compel you to aggressively pursue better paying jobs and prove the projections wrong. At least you're thinking about these things.
Schiat happens. I only provided a scenario. Insert other factors as you guys want to. But lets face it. We aren't going to have MORE money cuze we didn't get our raises and bonuses, right?
And 7-11% bonuses? Where the blipen heck is that at that it averages this amount? about 7 out of 10 years I got bonuses. They averaged about 3.5% when you factor in the years I didn't recieve the bonus. Having talked with friends, some tell me they received hams and certificates to grocery stores.
Hey... that was pulled from the 2005 AIA Salary Report.
I was just answering that whole "salary being missed by being an architect." These arguments are pretty selfish and petty when you account for the fact that about 30-40% of this country makes less than $30,000 a head. And per capita income is a pretty grizzly figure ($18,000).
Just be glad you all aren't installing satellite dishes or "co-managing" a Burger King... err, I mean "Extraterrestrial Entertainment Architect" or "Senior Project Sandwich Design Architect."
With all due respect, the AIA salary reports should be burned. If you're basing your financial success on whether or not you are on par with the average AIA salary numbers (or for that matter, the average American), then you're not a good business person and you're only exacerbating the endemic salary problems architects have faced for so many years.
montagneux, you clear dont understand compounding interests...
as far as getting a master's goes... the industry has changed over the last few years... It used to be B.arch was good enough for architecture but with Ncarb / idp and everything , younger architects are almost considering it as a requirement due to the ever changing license hurdles.
No... you said "I dare you to do the math, for the amount of Moolah that is being missed by being an architect... "
Implying about earning money outside of being an architect... in which case the average architect is with the 85% percentile of the income bracket. Only 11% of society makes more than $75k a year.
Based on average, an architect makes ~180% of what an average person makes.
You can't necessarily do a compound interest calculation across a broad sector of society with having specifics first.
HUR DUR. I was not doing anything involving compounded interest.
In the best of all worlds, raises should track two components -- a) increases in the individual's productivity and b) increases (or decreases) in the cost of living. Discussing raises in the abstract -- without factoring in those components -- is a somewhat meaningless exercise, IMO.
In my experience, younger employees - who frequently are capable of greater annual increases in productivity - generally experience raises at a rate faster than more experienced employees. In many cases, increases in productivity will tend to slow as one ages in this profession, meaning older employees often will experience declining percentage raises as they age.
I would normally not really care what some random person on the internet posts. But you are just so far off the mark that I realized you are are the type of person that hurts the profession as a whole by under valueing yourself and lowering the general profit margin.
I wouldn't dare compare anyone with a college degree from any semi-decent school with the "average american".... let alone an architect. I can comfortable say anyone who pursues architecture does not consider themselves average.
You are seriously the first person I have ever even heard of making a point that architect is well paid in any reference. Fine we make more than the average joe, but the average joe isn't stamping drawings.
You are either a person who comes from a rediculous amount of wealth or someone who's aspirations are so small that you underestimate yourself and ultimately the profession. Either way you truely don't understand the meaning of a dollar, and how much compension normally comes with responsibity.
Sorry... I couldn't hear you over the sound of lawyers forming corporations and insurance representatives drafting liability policies!
If you want to be a member of a court, the court has to exist. And since we're a post-aristocratic society, I don't see that happening anytime soon.
P.s. The "masterbuilder" is a myth. Not just in theology and literature, Robert Moses makes a pretty convincing argument that it's primarily a relic of the past that presumably never existed.
Sure, you can make a lot of money as an architect being a one person firm. But unless you are amazing at all facets of modern business, your business can only growth with the help of others.
"His base pay would have increased by $5,000 per year. For the next 30 years."
"Honestly I look at 9% returns on my money so it actually is around... "
Going back to some of the original premises, I don't agree. I've had the same exact situation myself; Pay cut that has lasted 2 years. BUT, my employer recognized how unfair this has been and made up for it with a ridiculous bonus, a plotter, and a promise that my salary will be adjusted accordingly when the time comes (June this year). I realize this isn't common, but the OP has made some very strong assumptions. The numbers really aren't that rigid. And that there will be a 9% return?
Stepping back at the big picture, first of all, many employers had salary freezes, pay cuts, hiring freezes, layoffs, including companies not in architecture. And its all relative, so you're comparing the numbers to... some idealized version of yourself, where the recession didn't happen?
Wow a spreadsheet of a budget. I'm actually impressed.
Since you still don't understand my point original point that people other fields and industries make much more than architects and that over the course of a career it really adds up to an astonishing amount, I applaud the fact that you could fill in a spreadsheet.
I was address that under a current fee structure, it is hard for a principal of a very small firm to make very much money under the structure of a "liability-free" incorporation.
Here's the problem with "architecture."
Under the U.S. Tax Code regarding the write off of depreciation, a building owner can only write off the depreciated amount totaling the cost of the building under a practical value assessment of a building minus the costs of land, capital improvements and professional services.
If I were to build what would cost me a $300 million dollar building... one would have to estimate the value of the actual building. I would assume minus all contractor fees, architectural fees, permits et cetera... the at cost value of that building would be between ~$220-235 million dollars.
However, if the building appraiser lowballs me and values the building at $180 million dollars, I have lost a substantial amount "value" in that building that who prohibit me from further improving or reinvesting in it over a period of time.
Given it is an office building, my standard depreciation deduction would amount to around ~$5.7 million dollars a year given a 39-year life valued at ~$220 million-- conversely, a $180 million dollar evaluation would yield only ~$4.6 million in depreciation. This is simply ignoring the fact that depreciation deductions are maxed at $250,000 dollars.
The limit on building depreciation tax deduction is a primary driver as to why developers tend to stick around a $10 million dollar cost for commercial buildings and $6.25 million for residential buildings.
The reason for this argument is that architectural services are a soft good. While the plans written by architects do, in fact, produce real objects with tangible real capital value... the plans themselves and the aesthetics are not tangible goods.
And given depreciation and building lifecycles, it is hard to prove architectural performance (outside of energy and upkeep) in any person's given lifetime unless they are torn down or fall over.
Other individuals who get paid more than architects have variable reasoning as to why they receive more compensation-- like their products are easier to ascertain the value of or the lifecycles on the products is small enough to determine performance and value.
It is hard to finance or depend on the value of an object that has not only subjective value but has a serious time constraint.
You can argue since most of the objects architects design are ultimately for the wealthy and those individuals have more than enough money to compensate you accurately. But, refer to previous point about value and business constraints to those purchases.
And given that most property appraisers do not appraise the value of the aesthetics, value added is not an argument. Rather, appraisers would only increase the value of a given building provided the buildings aesthetics were in vogue and that those aesthetics would create market buzz. If people do not want any given style of aesthetic, then there is no demand for it. Given the basic concept of supply and demand, something that is not demanded is therefore oversupplied and valueless.
So, until architects start magically making pills, refining iridium, saving lives actively (passive action through sound engineering is not a "critical" service) or take on the immediate responsibility of the well-being of individuals around them in a time period that isn't measure in decades or centuries... it is hard to say what you do is anything other than something of imperative value.
You should appreciate the fact that even being "underpaid" puts you within the top 15% of society.
Basically, spending $50 million dollars on a building only worth $30 million dollars that I won't make money on for 7-16 years and that I can only write off a limited amount of the building's depreciation doesn't sell it to me very well.
And unless the building makes me absolutely cream my pants with visual ecstasy, I'm probably not going to be dolling out a ton of money to an architect.
And I'm not sure I would want to make a building too fancy if aesthetics were included into the valuation of the building... then I'd have to pay taxes on beauty and there's something very bittersweet about that.
no raises here since fiscal 2007, really.. I've started to build in 3% escalators for fiscal '10 (which hasn't started for us yet), and nobody's objected, so maybe we'll actually get raises this year. But we're actually pretty radically overpaid here relative to industry, so I suspect that everybody is just thankful. Promised promotions are two years overdue too, though...
It's worthwhile pointing out that comparing architects' salaries to the national median income is meaningless. Architects seem to disproportionately live in large and expensive metropole cities (like NYC, LA, San Fran, Chicago, Boston), and these cities can have costs of living that can be at 50% greater than (or more!) compared with the cities in which the "median income" American lives.
Mar 19, 10 7:00 pm ·
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Let's talk raises, or lack therof
Okay, we’ve really gone over the student loans a lot on this site. We all know that a $50,000 loan will cost you $500 plus/minus per month for 10 years. It’s a lot. It’s a big burden.
On to bigger and better things.
Let’s talk about salaries. Hypothetical here of course.
Let’s say this one fella was 25 years old when he graduated in 1998.
Got a job and made some money for 10 years. Earned some raises and ……let’s say $2,500 per year
In 2008 was now 35 years old making $52,000
The recession hits.
In 2009 he keeps his job but still makes $52,000.
In 2010 he keeps his job but still makes $52,000.
How much did he lose?
Some of you will say he lost $5,000 but you’d be really wrong.
He is now 37 years old and has 30 years left to retirement.
His base pay would have increased by $5,000 per year. For the next 30 years.
30 years times $5000 = $150,000 lose. Because basically wages will increase based on what you make now. If you didn’t get the increase, you really never will. If you were making $52,000 and went after a new job you would have based your next salary on what you were making. $52,000 in 2008, 2009 or 2010. or what you want to make. These increases are lost. Forever really.
But it gets worse.
30 years later, if you had saved that money $5000 per year times 3% (inflation) = $238,000
Ok.
Not so fast. If it were me and I was saving it, it would be for my retirement instead, right?
30 years later if you saved $5000/year times 6% = $400,000
Ok.
Hold on people. If it really were me and I was saving for my retirement I’d be looking at 8%.
30 years later if you saved $5000/year times 8% = $566,000
Ok.
Honestly I look at 9% returns on my money so it actually is around $650,000.
The raises you miss and interest earned is exponential, not linear.
Miss your raises and see how far back retirement gets pushed back.
Is that depressing or what?
Next we should talk about paying taxes on interest earned.
you project futures/speculations as if they're facts and everything will always go up,up,up according to plan.
sounds like you have a future at aig.
either that, or that you need to go get your money out of someone currently at aig (preferably one who's gotten some bonus $$ recently).
not sure which.
I've actually looked at the same thing...
The value of a dollar saved now (30 years to retirement) to the value of a dollar saved 5 years from (25 years to retirement).
At an assumed standard of 8% return- The value of $1.00 now is $17.14 in 30 years, but if i wait 5 years and invest that same dollar, it will only be worth $10.34 at retirement. (the cents might be a bit off as i am doing this from memory)
I'm going back for an MBA to hopefulling make 70,000 to 100,000 /year in 2 years time.
I dare you to do the math, for the amount of Moolah that is being missed by being an architect... escpially after it is extrapoalted out to retirement. It's rather depressing.
of course, missed raises are a lot more palatable than no job... but who seriously wants to retire?
10%*** for post above
w4000... Considering that the average income for a man in the US is about $44,000 a year and that the average salary for architects is $62,000 (AIA 2005), an architect makes $630,000 more than the average American.
And before someone pipes in with the whole Master's debate, about 48% of all architects hold only a B.Arch. So, the education slant here is less than important.
That figure doesn't even include the additional 7-11% bonus that many architects report receiving. That bumps the overall figure up to $781,900 (over 35 years assuming 7% incentives).
You're really not losing money. I think what architects have a hard time grasping is the fact that they'll never be able to afford the worlds they build for their clients. Architecture is off limits to architects!
If you're paying $500 per month to pay off $50,000 in loans, then you're screwing yourself over. Pay the least possible for your loans so that you're essentially just paying the interest on the loans...extend it as far off as possible so that you can start saving enough money to make some investments (new home, mutual funds, etc). Your loan payments will probably get cut in half. In 30 years, that $50,000 will be easy to pay off as a result of inflation and the investments you make will make it easier to pay it off 30 years from now. I realize this is only 1 part of the solution.
Don't know where you live, but 52K after 12 years is dismal. I'm in NYC and some interns here make that much. You should either ask for a raise, or get a new job that pays more. Not saying that's easy in this economy, but you should definitely try. Your projections are worthwhile only if they compel you to aggressively pursue better paying jobs and prove the projections wrong. At least you're thinking about these things.
Don't listen to Montagneux. S/he has no clue what the hell s/he talking about. I mean that respectfully, of course.
Schiat happens. I only provided a scenario. Insert other factors as you guys want to. But lets face it. We aren't going to have MORE money cuze we didn't get our raises and bonuses, right?
And 7-11% bonuses? Where the blipen heck is that at that it averages this amount? about 7 out of 10 years I got bonuses. They averaged about 3.5% when you factor in the years I didn't recieve the bonus. Having talked with friends, some tell me they received hams and certificates to grocery stores.
7-11% ok. <Sarcasm inserted here>
Hey... that was pulled from the 2005 AIA Salary Report.
I was just answering that whole "salary being missed by being an architect." These arguments are pretty selfish and petty when you account for the fact that about 30-40% of this country makes less than $30,000 a head. And per capita income is a pretty grizzly figure ($18,000).
Just be glad you all aren't installing satellite dishes or "co-managing" a Burger King... err, I mean "Extraterrestrial Entertainment Architect" or "Senior Project Sandwich Design Architect."
With all due respect, the AIA salary reports should be burned. If you're basing your financial success on whether or not you are on par with the average AIA salary numbers (or for that matter, the average American), then you're not a good business person and you're only exacerbating the endemic salary problems architects have faced for so many years.
montagneux, you clear dont understand compounding interests...
as far as getting a master's goes... the industry has changed over the last few years... It used to be B.arch was good enough for architecture but with Ncarb / idp and everything , younger architects are almost considering it as a requirement due to the ever changing license hurdles.
No... you said "I dare you to do the math, for the amount of Moolah that is being missed by being an architect... "
Implying about earning money outside of being an architect... in which case the average architect is with the 85% percentile of the income bracket. Only 11% of society makes more than $75k a year.
Based on average, an architect makes ~180% of what an average person makes.
You can't necessarily do a compound interest calculation across a broad sector of society with having specifics first.
HUR DUR. I was not doing anything involving compounded interest.
Also, 5% raises are ridiculous.
1.4% max and that's barely sustainable. I don't feel sorry for any firm who laid off a bunch of employees handing out yearly 5% raises.
In the best of all worlds, raises should track two components -- a) increases in the individual's productivity and b) increases (or decreases) in the cost of living. Discussing raises in the abstract -- without factoring in those components -- is a somewhat meaningless exercise, IMO.
In my experience, younger employees - who frequently are capable of greater annual increases in productivity - generally experience raises at a rate faster than more experienced employees. In many cases, increases in productivity will tend to slow as one ages in this profession, meaning older employees often will experience declining percentage raises as they age.
montagneux,
I would normally not really care what some random person on the internet posts. But you are just so far off the mark that I realized you are are the type of person that hurts the profession as a whole by under valueing yourself and lowering the general profit margin.
I wouldn't dare compare anyone with a college degree from any semi-decent school with the "average american".... let alone an architect. I can comfortable say anyone who pursues architecture does not consider themselves average.
You are seriously the first person I have ever even heard of making a point that architect is well paid in any reference. Fine we make more than the average joe, but the average joe isn't stamping drawings.
You are either a person who comes from a rediculous amount of wealth or someone who's aspirations are so small that you underestimate yourself and ultimately the profession. Either way you truely don't understand the meaning of a dollar, and how much compension normally comes with responsibity.
Sorry... I couldn't hear you over the sound of lawyers forming corporations and insurance representatives drafting liability policies!
If you want to be a member of a court, the court has to exist. And since we're a post-aristocratic society, I don't see that happening anytime soon.
P.s. The "masterbuilder" is a myth. Not just in theology and literature, Robert Moses makes a pretty convincing argument that it's primarily a relic of the past that presumably never existed.
Sure, you can make a lot of money as an architect being a one person firm. But unless you are amazing at all facets of modern business, your business can only growth with the help of others.
And other people means "profit sharing."
"His base pay would have increased by $5,000 per year. For the next 30 years."
"Honestly I look at 9% returns on my money so it actually is around... "
Going back to some of the original premises, I don't agree. I've had the same exact situation myself; Pay cut that has lasted 2 years. BUT, my employer recognized how unfair this has been and made up for it with a ridiculous bonus, a plotter, and a promise that my salary will be adjusted accordingly when the time comes (June this year). I realize this isn't common, but the OP has made some very strong assumptions. The numbers really aren't that rigid. And that there will be a 9% return?
Stepping back at the big picture, first of all, many employers had salary freezes, pay cuts, hiring freezes, layoffs, including companies not in architecture. And its all relative, so you're comparing the numbers to... some idealized version of yourself, where the recession didn't happen?
Yes, 12 years of experience at 52k is pretty bad.
30 YEARS EXPERIANCE AND ( - $22,000 ) IS EVEN WORSE SO STOP YOUR WHINING; THE PERSON PAYING YOU HAS PROBABLY TAKEN A LOSS
Yes that is yelling in caps lock
montag,
You are wrong and clearly can't comprehend why. You obviously don't have a mind for business and fiance.
No, I am pretty sure I can comprehend why.
Wow a spreadsheet of a budget. I'm actually impressed.
Since you still don't understand my point original point that people other fields and industries make much more than architects and that over the course of a career it really adds up to an astonishing amount, I applaud the fact that you could fill in a spreadsheet.
I was address that under a current fee structure, it is hard for a principal of a very small firm to make very much money under the structure of a "liability-free" incorporation.
Here's the problem with "architecture."
Under the U.S. Tax Code regarding the write off of depreciation, a building owner can only write off the depreciated amount totaling the cost of the building under a practical value assessment of a building minus the costs of land, capital improvements and professional services.
If I were to build what would cost me a $300 million dollar building... one would have to estimate the value of the actual building. I would assume minus all contractor fees, architectural fees, permits et cetera... the at cost value of that building would be between ~$220-235 million dollars.
However, if the building appraiser lowballs me and values the building at $180 million dollars, I have lost a substantial amount "value" in that building that who prohibit me from further improving or reinvesting in it over a period of time.
Given it is an office building, my standard depreciation deduction would amount to around ~$5.7 million dollars a year given a 39-year life valued at ~$220 million-- conversely, a $180 million dollar evaluation would yield only ~$4.6 million in depreciation. This is simply ignoring the fact that depreciation deductions are maxed at $250,000 dollars.
The limit on building depreciation tax deduction is a primary driver as to why developers tend to stick around a $10 million dollar cost for commercial buildings and $6.25 million for residential buildings.
The reason for this argument is that architectural services are a soft good. While the plans written by architects do, in fact, produce real objects with tangible real capital value... the plans themselves and the aesthetics are not tangible goods.
And given depreciation and building lifecycles, it is hard to prove architectural performance (outside of energy and upkeep) in any person's given lifetime unless they are torn down or fall over.
Other individuals who get paid more than architects have variable reasoning as to why they receive more compensation-- like their products are easier to ascertain the value of or the lifecycles on the products is small enough to determine performance and value.
It is hard to finance or depend on the value of an object that has not only subjective value but has a serious time constraint.
You can argue since most of the objects architects design are ultimately for the wealthy and those individuals have more than enough money to compensate you accurately. But, refer to previous point about value and business constraints to those purchases.
And given that most property appraisers do not appraise the value of the aesthetics, value added is not an argument. Rather, appraisers would only increase the value of a given building provided the buildings aesthetics were in vogue and that those aesthetics would create market buzz. If people do not want any given style of aesthetic, then there is no demand for it. Given the basic concept of supply and demand, something that is not demanded is therefore oversupplied and valueless.
So, until architects start magically making pills, refining iridium, saving lives actively (passive action through sound engineering is not a "critical" service) or take on the immediate responsibility of the well-being of individuals around them in a time period that isn't measure in decades or centuries... it is hard to say what you do is anything other than something of imperative value.
You should appreciate the fact that even being "underpaid" puts you within the top 15% of society.
Basically, spending $50 million dollars on a building only worth $30 million dollars that I won't make money on for 7-16 years and that I can only write off a limited amount of the building's depreciation doesn't sell it to me very well.
And unless the building makes me absolutely cream my pants with visual ecstasy, I'm probably not going to be dolling out a ton of money to an architect.
And I'm not sure I would want to make a building too fancy if aesthetics were included into the valuation of the building... then I'd have to pay taxes on beauty and there's something very bittersweet about that.
TGIF
no raises here since fiscal 2007, really.. I've started to build in 3% escalators for fiscal '10 (which hasn't started for us yet), and nobody's objected, so maybe we'll actually get raises this year. But we're actually pretty radically overpaid here relative to industry, so I suspect that everybody is just thankful. Promised promotions are two years overdue too, though...
It's worthwhile pointing out that comparing architects' salaries to the national median income is meaningless. Architects seem to disproportionately live in large and expensive metropole cities (like NYC, LA, San Fran, Chicago, Boston), and these cities can have costs of living that can be at 50% greater than (or more!) compared with the cities in which the "median income" American lives.
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