I've become privy to a few conversations within my firm about new hires. We've had a total of 4 in the last two or three months. The salaries being offered to them could maybe have been considered competitive pre-inflation. Are firm owners just sticking their heads in the sand? Not raising hourly rates/fees? Not offering higher pay or raising salaries?
I'm baffled that at staffing/management meetings the managers in our office will discuss offering salaries similar to those they were offering in 2020 with a completely straight face. Further, the topic of inflation has not been brought up even once at office-wide meetings. The firm seems to have not adjusted their pay scale for inflation. Worse still, they seem to still be able to bring on new hires, which says a lot to me about the state of the profession (nothing that wasn't painfully obvious anyway) and how easily architectural workers will allow themselves to be exploited.
I light of this I've got two round-two interviews coming up. I've already told both firms what I'm seeking in terms of a salary, and both seem willing to offer it, pending second round interviews. It is substantially higher than what I'm being paid currently, well over $10k.But actually a fairly reasonable raise given the experience I've accrued and recent inflation.
My first question is this: don't firm owners care about keeping their staff? Every place I've ever worked has the same story: losing staff costs a firm money in lost training, in-house experience, costs associated with spending time finding replacement staff, etc. But then during times like this, managers are the last people to be proactive about retaining staff; even when concerns about salary are voiced, getting a pay raise, even with competitive offers in-hand, feels like pulling teeth. What gives?
Second question is a bit of a negotiation advice question; I don't want to take one of these new jobs, which I am genuinely excited about on a career and salary level, only for inflation to wipe out my raise again. Is anyone bringing up inflation at interviews? Trying to secure some way of protecting their remuneration against it?
flatroof
Jul 18, 22 2:53 pm
Firms are still stuck/drunk on post-2008 hiring practices when you could easily find experienced people to work for next to nothing up until this inflation started. A decade plus of stagnant salaries and the fees built around them make it hard to raise. Luckily for firms another downturn is around the corner, so if they stick to their guns a little longer they will prob find the 20+ year architect willing to work for an interns salary again.
ham17
Jul 18, 22 6:55 pm
I'm in the same boat, I just started working at a big firm at an entry-level position and feel like the salary range I gave and ended up receiving upon graduating college will be seriously outdated by the end of the year. Our office is also relocating to a space half the size since our previously 100-person space is often at 25% capacity due to hybrid/remote work options. Should I risk asking for a sizable raise on the basis of this + inflation in addition to performance? I enjoy the work so far and see myself staying here long-term but I know the best way to see a salary increase is by moving to other firms. My boss knows I am going to grad school in the next few years and am willing to work part-time, but I'm not sure if that makes me a more or less valuable asset to the firm. I know a 10%-15% raise is steep to ask for, but for context a summer intern I'm working with in structural is getting paid more than me. Curious what people are thinking at other firms in big cities!
citizen
Jul 18, 22 11:21 pm
Wondering if clients are being charged / paying higher fees in order to help this process along....
baboo.fei
Jul 19, 22 9:47 pm
Non-residential construction starts down 24% M/M, residential construction starts down 2.0% M/M.
A lot of development deals simply cannot pencil right now (sky-high hard costs due to inflation, cost of leverage exploding due to SOFR up 150bps Y/Y, reluctant lenders due to expectation of more hikes later this year, etc.)
Don't think architects are driving the fee conversations with developers right now lol.
AJgold
Jul 19, 22 1:41 am
few firms acted early 15%~20% raise for everyone. They will take all talents
Chad Miller
Jul 19, 22 12:37 pm
Which firms?
baboo.fei
Jul 19, 22 10:28 pm
The “revolving door of talent” is why something like the Cravath scale exists and the best talents compete to work for those firms. But go off about “lack of allegiance” ig lmao. Not sure why anyone should have any allegiance to anything in a field that pays like $200k after 10 years of experiences and 5-7 years of specialized schooling.
will galloway
Jul 19, 22 8:33 am
Nobody is paying us 15-20% more in fees so far. But we are a small office without the leverage of the firms you are talking about...
Even so, can't help but believe the answer to these questions is that it is, like everything else in business, complicated. Some of our projects are based on construction percentage, some on hourly rate. It depends on the client and the country we are working in. Managing that difference is not trivial for us at least.
I'll be honest right now I am more worried that projects will continue at all as we struggle to keep to budgets that were set before the economy went for a stroll into the 1970's. We have already shifted several projects in fundamental ways due to shortages and spikes in costs, and seems like that is a problem that is not going to go away soon either.
Big offices have far more buffer than we do, but even they will need to hedge their bets in case this ends up going wronger than it is already. So far it seems like there is enough work that you can get higher wages elsewhere, in which case go for it. But it sure feels like we have entered a serious period of uncertainty and its just hard to plan for everything. Wages will adjust soon enough. It may not be to any of our liking.
Non Sequitur
Jul 19, 22 9:25 am
our office was proactive, slightly, and gave everyone a 5% raise a few months ago (salary negotiations and raises are always in October). The current fear is staff leaving for cushy and dead end gov jobs which being the national capital, is always a big threat we can’t compete with.
Besides that, we certainly did increase our fees, by at least 35% from what I can tell. I just submitted a proposal for a 4 year project and our fees were over 6x what we got for the same project back in 2015-16. Seasoned clients know that costs are up.
Wood Guy
Jul 19, 22 9:37 am
I'm self-employed and currently work alone but this year I increased my billing rate by 35%, mostly to account for inflation.
Bench
Jul 19, 22 9:55 am
Well done! Really good to hear WG. Can I ask generally, how are clients reacting to it?
Wood Guy
Jul 19, 22 10:04 am
Thanks! I haven't signed any new clients at that rate because I'm still working through projects I contracted over the last 2-5 years, and I'm so far behind that I'm not even talking with potential clients at this point. I expect that I'll lose some projects, and I will probably change to fixed-fee for many projects, so the rate will be buried. But at my current rate, clients sign up a bit too quickly, and I'm finding that I can design a high performance house for around 4-5% of construction costs, so I'm leaving money on the table.
A wise architect friend of mine said that she charges at least as much as her structural engineer, and their rates have shot up in recent years, so I'm just catching up.
RJ87
Jul 19, 22 10:35 am
I'm sure it's an industry sector difference, but we're charging roughly 6x what our structural engineer's rate is. Crazy to me to think that we'd pay them anything close to what our fee is. Same goes for MEP or FP.
Wood Guy
Jul 19, 22 10:39 am
I do residential design only and my main structural engineer principal's rate is $185/hr. I'm charging less than that but I'd love to do 6X!
RJ87
Jul 19, 22 10:47 am
Ah, you meant on an hourly basis. I was thinking total fee, nevermind. I was really confused there for a moment!
x-jla
Jul 19, 22 1:58 pm
I had to raise my prices significantly to account for the huge price increase in materials, subs, and equipment. Some materials that I was paying 4$ per sqft last year are now 12$ per sqft. The costs get passed to the clients
, but it ultimately trims down the scope of their jobs to stay on budget, so essentially I’m making less.
x-jla
Jul 19, 22 2:04 pm
*because high cost of finish materials eat up the more profitable aspects of construction…which get sacrificed to keep within the target budget…
Wood Guy
Jul 19, 22 2:50 pm
RJ, haha, that makes more sense! For most of my projects I'd say a 6X multiplier for the PE fee is about right. Though I have one now with a PE fee that exceeds my fee, but that's an unusual situation. On another project the PE fee is about 5% of mine but I'm doing the bulk of the work and they are just reviewing what I design.
I've become privy to a few conversations within my firm about new hires. We've had a total of 4 in the last two or three months. The salaries being offered to them could maybe have been considered competitive pre-inflation. Are firm owners just sticking their heads in the sand? Not raising hourly rates/fees? Not offering higher pay or raising salaries?
I'm baffled that at staffing/management meetings the managers in our office will discuss offering salaries similar to those they were offering in 2020 with a completely straight face. Further, the topic of inflation has not been brought up even once at office-wide meetings. The firm seems to have not adjusted their pay scale for inflation. Worse still, they seem to still be able to bring on new hires, which says a lot to me about the state of the profession (nothing that wasn't painfully obvious anyway) and how easily architectural workers will allow themselves to be exploited.
I light of this I've got two round-two interviews coming up. I've already told both firms what I'm seeking in terms of a salary, and both seem willing to offer it, pending second round interviews. It is substantially higher than what I'm being paid currently, well over $10k.But actually a fairly reasonable raise given the experience I've accrued and recent inflation.
My first question is this: don't firm owners care about keeping their staff? Every place I've ever worked has the same story: losing staff costs a firm money in lost training, in-house experience, costs associated with spending time finding replacement staff, etc. But then during times like this, managers are the last people to be proactive about retaining staff; even when concerns about salary are voiced, getting a pay raise, even with competitive offers in-hand, feels like pulling teeth. What gives?
Second question is a bit of a negotiation advice question; I don't want to take one of these new jobs, which I am genuinely excited about on a career and salary level, only for inflation to wipe out my raise again. Is anyone bringing up inflation at interviews? Trying to secure some way of protecting their remuneration against it?
Firms are still stuck/drunk on post-2008 hiring practices when you could easily find experienced people to work for next to nothing up until this inflation started. A decade plus of stagnant salaries and the fees built around them make it hard to raise. Luckily for firms another downturn is around the corner, so if they stick to their guns a little longer they will prob find the 20+ year architect willing to work for an interns salary again.
I'm in the same boat, I just started working at a big firm at an entry-level position and feel like the salary range I gave and ended up receiving upon graduating college will be seriously outdated by the end of the year. Our office is also relocating to a space half the size since our previously 100-person space is often at 25% capacity due to hybrid/remote work options. Should I risk asking for a sizable raise on the basis of this + inflation in addition to performance? I enjoy the work so far and see myself staying here long-term but I know the best way to see a salary increase is by moving to other firms. My boss knows I am going to grad school in the next few years and am willing to work part-time, but I'm not sure if that makes me a more or less valuable asset to the firm. I know a 10%-15% raise is steep to ask for, but for context a summer intern I'm working with in structural is getting paid more than me. Curious what people are thinking at other firms in big cities!
Wondering if clients are being charged / paying higher fees in order to help this process along....
Non-residential construction starts down 24% M/M, residential construction starts down 2.0% M/M. A lot of development deals simply cannot pencil right now (sky-high hard costs due to inflation, cost of leverage exploding due to SOFR up 150bps Y/Y, reluctant lenders due to expectation of more hikes later this year, etc.) Don't think architects are driving the fee conversations with developers right now lol.
few firms acted early 15%~20% raise for everyone. They will take all talents
Which firms?
The “revolving door of talent” is why something like the Cravath scale exists and the best talents compete to work for those firms. But go off about “lack of allegiance” ig lmao. Not sure why anyone should have any allegiance to anything in a field that pays like $200k after 10 years of experiences and 5-7 years of specialized schooling.
Nobody is paying us 15-20% more in fees so far. But we are a small office without the leverage of the firms you are talking about...
Even so, can't help but believe the answer to these questions is that it is, like everything else in business, complicated. Some of our projects are based on construction percentage, some on hourly rate. It depends on the client and the country we are working in. Managing that difference is not trivial for us at least.
I'll be honest right now I am more worried that projects will continue at all as we struggle to keep to budgets that were set before the economy went for a stroll into the 1970's. We have already shifted several projects in fundamental ways due to shortages and spikes in costs, and seems like that is a problem that is not going to go away soon either.
Big offices have far more buffer than we do, but even they will need to hedge their bets in case this ends up going wronger than it is already. So far it seems like there is enough work that you can get higher wages elsewhere, in which case go for it. But it sure feels like we have entered a serious period of uncertainty and its just hard to plan for everything. Wages will adjust soon enough. It may not be to any of our liking.
our office was proactive, slightly, and gave everyone a 5% raise a few months ago (salary negotiations and raises are always in October). The current fear is staff leaving for cushy and dead end gov jobs which being the national capital, is always a big threat we can’t compete with.
Besides that, we certainly did increase our fees, by at least 35% from what I can tell. I just submitted a proposal for a 4 year project and our fees were over 6x what we got for the same project back in 2015-16. Seasoned clients know that costs are up.
I'm self-employed and currently work alone but this year I increased my billing rate by 35%, mostly to account for inflation.
Well done! Really good to hear WG. Can I ask generally, how are clients reacting to it?
Thanks! I haven't signed any new clients at that rate because I'm still working through projects I contracted over the last 2-5 years, and I'm so far behind that I'm not even talking with potential clients at this point. I expect that I'll lose some projects, and I will probably change to fixed-fee for many projects, so the rate will be buried. But at my current rate, clients sign up a bit too quickly, and I'm finding that I can design a high performance house for around 4-5% of construction costs, so I'm leaving money on the table.
A wise architect friend of mine said that she charges at least as much as her structural engineer, and their rates have shot up in recent years, so I'm just catching up.
I'm sure it's an industry sector difference, but we're charging roughly 6x what our structural engineer's rate is. Crazy to me to think that we'd pay them anything close to what our fee is. Same goes for MEP or FP.
I do residential design only and my main structural engineer principal's rate is $185/hr. I'm charging less than that but I'd love to do 6X!
Ah, you meant on an hourly basis. I was thinking total fee, nevermind. I was really confused there for a moment!
I had to raise my prices significantly to account for the huge price increase in materials, subs, and equipment. Some materials that I was paying 4$ per sqft last year are now 12$ per sqft. The costs get passed to the clients
, but it ultimately trims down the scope of their jobs to stay on budget, so essentially I’m making less.
*because high cost of finish materials eat up the more profitable aspects of construction…which get sacrificed to keep within the target budget…
RJ, haha, that makes more sense! For most of my projects I'd say a 6X multiplier for the PE fee is about right. Though I have one now with a PE fee that exceeds my fee, but that's an unusual situation. On another project the PE fee is about 5% of mine but I'm doing the bulk of the work and they are just reviewing what I design.
We raised billable hourly rates by abound 5%.