Rises but no shine

The plot twists behind architects’ pay packets are increasingly entwined in the broader narrative of inflation. Earnings have risen over the past two years, but so too has the rate of consumer inflation.

On balance taking soundings from two pay surveys for both 2016 and 2017, the average earnings of architects have risen above the tide of rising consumer prices. So, on average, in real terms on average architects are better off.

According to the latest RIBA Employment & Earnings Survey the average annual income for architects in the year to April 2017 was £45,000, the same as 2016, but up from £42,000 in 2015. The latest Office for National Statistics survey of Annual Survey of Hours and Earnings (ASHE) put the averages (mean) at £44,871 in 2014, £45,223 in 2016 and £46,737 in the year to April 2017.

Differences between surveys are not unexpected, as the quality of the samples and how they are weighted will affect the final score. For reference the ONS survey sample is limited to employees, using HMRC data, and far smaller than the survey carried out by The Fees Bureau for the RIBA, so we might expect the latter to be more reflective.

However, while both agree that architects are better off than two years ago, there is a long way to go for average earnings to make up lost ground.

As we see in Chart 1, there is a difference between the surveys in the pattern of average incomes during the recovery, but both point to the conclusion that average income rose very little in nominal terms between 2009 and 2017. If we adjust for consumer inflation the average is well down, somewhere between 12% and 16%. But it’s also clear that there has been a slight real-term rise in average earnings of late.

The picture we see in the data, however, is never quite that simple. Paradoxically, a rise or fall in the earnings of individual architects need not necessarily lead to rising or falling averages. Averages disguise all manner of things going on below the surface.

There is a fair chance that the fall we see in the RIBA members survey of average earnings through what was a period of recovery in workloads may be less to do with personal earnings shrinking and more to do with the influx of less experienced (and lower earning) architects as work picked up.

Leavers tend to be the more expensive senior people and newcomers tend to be lower earning. This always happens. But if after a period of low recruitment there is a relative flood of new blood, this changes the mix of earnings in the sample.

The mix matters when it comes to rises, as any contestant on Bake Off will tell you. Most individuals already in jobs may well have seen their incomes rise quite nicely as the industry recovered, but the impact on the per-head wage bill will have been leavened by the recruitment of lower income starters.

In the absence of improvements in productivity, the big underlying force pushing up earnings is real-term rises in the fees practices secure for their architectural services. Chart 2 shows the ONS data for the nominal growth and price rises adjusted for consumer inflation.

What we see is the period of real-term growth in average salaries corresponding broadly with the rise, in real terms, in the price of architectural services.

This is not surprising. As a talent business, the biggest cost to a practice is staff earnings. So, the relationship between what is charged in fees and what is paid in salaries is very intimate. And, yes, worryingly, the chart hints at lean times ahead once more, as low nominal growth in fees is turned negative in real terms by rising inflation.

The statistical quirk that can lead to the average architect individually earning more while the average earnings of architects fall only goes so far as an interpretation of what’s occurring. The harsh reality is that the force of the recession pushed down heavily on earnings. The reasonable expectations of many architects will have been thwarted. Chart 3, using the ASHE data adjusted for consumer inflation, shows how average hourly earnings (mean and median) were suppressed dramatically from the peak. In real terms they are only just above 2000 levels.

And while real earnings elsewhere have also been supressed in recent years (coinciding with the UK’s much discussed poor productivity performance), architects seem to have fared even worse since the recession, as they appear to do during the 1990s recession. As Chart 4 shows, the differential (green line) between the average earnings of a full-time male among architects and across the whole economy has fallen from just above 40% in 2008 to nearer 30% today.

The choice of full-time male for the comparison, rather than all full-time employees, is important here if we want the comparison to be closer to like for like. The figures get more complicated if we take all employees because of the effects of the gender gap in pay. If the gender mix changes, the averages are likely to do so too.

And there’s no hiding the gender gap in architecture. Chart 5, taking simple average hourly pay rates from the ASHE survey for men and women across the UK, shows a 28% gap. For salaries the gap is slightly higher at 30%. These findings match those of the survey of RIBA members, which found a 28% gap in annual earnings.

For reference the ASHE survey recorded a gap among civil engineers between male and female average (mean) annual earnings of 10%. The gap in median annual earnings was just 2%, compared with 12% among architects.

Looked at purely in terms of how well women are doing in various professions, according to the ASHE data, women architects have seen a 12% rise in average annual earnings from 2005 to 2017, midwives a rise of 21%, teachers 20% and civil engineers 18%. On the face of it, this doesn’t look so good for attracting talented women into the profession.

But averages, as we know, can disguise what lies beneath, and the path to success isn’t necessarily a straight line so we need to be cautious how we read the trends in the numbers. Cultural and behavioural issues aside, it is argued that gender parity among architects, or lack of it, has three main aspects: not enough pay for women, not enough women and not enough women in senior positions.

Part of the answer, then, is recruiting more women, and in this there appears to be a hint of some success. ARB data show 74% male and 26% female on the register in December 2016 compared with 81% male and 19% female in 2010. And 44% of new admissions were women; 39% of admissions via the UK route were women and women accounted for 49% of admissions via the EU route.

Statistically, the initial impact of this will be to suppress overall average earnings for women – given the relatively low numbers of women already in post, it means a big skew in the distribution of female earnings towards starters who inevitably will be lower paid.

One way to judge the success of moves towards pay parity will be the degree to which that increased flow of women into architecture finds its way into senior and higher-paid positions and, at a more granular level, the degree to which there is parity in the pay of men and women doing the same work.

That will take time and any honest analysis will need to be fine-grained, looking beyond headline figures.

It seems inevitable that the big earners tend to be in London and the South East. The sample in the ASHE survey starts to get too small to provide great reliability at the regional level, but the survey does show London salaries ahead. The wider survey of RIBA members found London salaries 11% higher than the national average.

But there’s another perplexing statistical quirk in the figures from ASHE when we track average hourly pay in London with the UK average. The earnings show a perhaps surprising coming together of rates paid in London and those paid nationally, as we see in Chart 6. A London differential of between 10% and 15% seen before the recession has all but disappeared.

Part of this will again be down to the mix from which the averages are derived. It is possible, likely even given the trend of bright young things moving to London to spark their careers, that the proportion of younger architects has risen faster in London than elsewhere and the distribution is more skewed to youth. This would be helped by London driving growth in the sector and offering more opportunities.

Given that salaries rise with age in the earlier years of a career, this would suppress the average earnings and might explain some of the convergence.

But here’s another interesting finding from the ASHE survey: on average architects in London appear to do at least another paid hour of work a week than the average across the UK. This would add 3% or so to the annual salary.

It does seem the changing mix of architects is influencing the pattern of average salaries. so it may be some while before we get a clearer view of where earnings are really heading. Here the survey of RIBA members does provide interesting texture, showing the squeeze endured by architects working in the public sector, the degree to which pay levels follows age with (this year) a peak among those aged 45 to 49.

Taking the longer view, though, it will be a very tough journey to rebuild the relative salary levels enjoyed by architects when those now retiring or looking to retire were budding young professionals.

Trawling the archives, the 1977 New Earnings Survey put median weekly earnings of full-time male architects at £108.3, against £72.3 for all males in full-time employment – a 50% differential. Today those figures stand at £764.9 and £591.5 – a 30% differential. Relative to inflation the median male full-time weekly earnings have increased by almost a quarter since 1977. For architects the real-term rise is less than 7%.

Inflation has not been particularly kind to architects. They seem less successful than most in pushing up what they earn when the tide of consumer prices rises.