The optimum income for happiness moves further away as salaries fall with rising recruitment
Nobel Laureates Professor Sir Angus Deaton and Daniel Kahneman have studied the link between earnings and happiness. They found that happiness increases as we earn more but found a point at which happiness rises so slowly that barely any improvement is perceptible. They concluded that a salary of $75,000 is what you need to be happy in the US. Earn more and happiness doesn’t increase significantly. Adjusting for inflation and exchange rates since the study was published, the Deaton-Kahneman happiness figure equates to about £66,000 in today’s prices.
Just 19% of architects earn £66,000 or more. That’s about one in every five architects. If you are older you are more likely to have reached this nirvana figure. For those aged over 50, the proportion rises to one in three. That figure of £66,000 is close to the average earnings of architects who work for private in-house departments, and just a little higher than the average for partners and directors in private practice. But salaried architects in private practice, sole principals and those in government have a little way to go before they reach financial happiness. And overall average salaries are falling.
But it is not just about money. We haven’t measured happiness in this survey, but for the first time this year we’ve looked at another factor which affects satisfaction and lifestyle; the ability to work from home and how long architects spend travelling to work. The proportion of architects who regularly work from home is 21% – a similar proportion, although not the same individuals, as those earning above that magic figure of £66,000.
These homeworkers are defined as those who regularly work from home as part of their normal working week. They include one in three local authority architects, one in four private in-house architects, but only one in eight salaried private practice staff. The largest numbers of architects ‘regularly’ working from home are partners and directors (36%) and sole principals (80%). While architecture is flexible enough to permit home working, most regular home workers also need to work in the office. Only 7% of all architects work full-time from home, rising to 13% of sole principals and 23% of partners and directors.
While we don’t collect any data that would allow us to correlate happiness and earnings for the profession, we can look at how average earnings have trended over time and, in particular, look at whether there are any pay gaps between different groups. First, let’s look at the gap between the top quarter of earners (upper quartile) and the bottom quarter (lower quartile). That’s a broad measure of income equality between the higher and lower earners. The gap has remained fairly constant over a long period. In 1995, the upper quartile earnings were 68% higher than the lower quartile; in 2019 they are 71% higher. This suggests that equality within the profession has barely changed over the period and that there has been no significant divergence or convergence in the earnings of different quartiles – broadly in line with what’s happened in the overall economy.
Next, there’s the generational pay gap. We measured the average pay for an architect aged between 30 and 34 and compared with an architect aged between 50 and 54. This shows more of a change – for these specific age groups, in 1995 the older architects earned 37% more than the younger ones. By 2019 the pay gap between the two age groups has increased to 48%.
And then there’s the gender pay gap. Despite it reducing a little last year it still persists, this year average male architects’ earnings exceed those of females by 13%. But back in 1995, the gender pay gap was 35%. At this rate, it will take another 14 years to eliminate the gender pay gap.
The bad news from this year’s survey is that it may take even longer; given that average earnings growth has gone into reverse. Last year, this survey recorded zero change in average earnings, and we commented then that it was remarkable earnings had not actually fallen, given the huge growth in the number of architects. Well, average earnings have fallen now, by 6%. We’ve seen another massive increase in the number of architects, another 1,200, taking it to 41,200. So over the last two years, the number of architects has increased by 2,900. That’s a rise of 8% over two years, and the elementary economic law of supply and demand has been felt this year.
Two groups have experienced falling salaries this year; salaried architects working in private practice, and sole principals. These are two quite different groups of architects. The fall in average earnings among private practice salaried architects is entirely logical as practices have continued to recruit young, less experienced architects. This is where the main growth in total numbers has been and is the most likely explanation for falling salaries. The fall in average earnings of sole principals is less easily explained. It might be due to there being less work, although under-employment among sole principals has only increased slightly this year, from 12 to 14%. One concern we often hear is that fees (and so incomes) continue to be pushed down by competition from other providers of architectural services. So this year’s fall may be due not so much to a lack of work as to smaller profits coming from each project.
Other groups of architects have seen earnings increase; by 9% for partners and directors and 14% for private in-house architects. Local authority architects’ average salaries are higher by 8%, although their central government colleagues record a slight fall of 2%.
Falling salaries make it harder to reach that optimal figure of £66,000. This year, around 5,500 architects earn at least this and, according to the Nobel Laureate economists, earn enough to maximise their potential for happiness.
The annual RIBA/The Fees Bureau Architects Employment and Earnings Survey is conducted The Fees Bureau among RIBA members and excludes members based overseas. A sample of members was invited by email to complete an online questionnaire in May to July 2019. Around 1,170 architects responded; we are very grateful for these members’ willingness to provide their information. The profile of the sample by age and region is broadly consistent with previous years.
Buy the report or read summary statistics (RIBA members) at feesbureau.co.uk/data