Firms see many reasons for declining licensure rates
among younger staff
By Kermit Baker, Hon. AIA
AIA Chief Economist
As of July, U.S. architecture firms have produced three
straight months of accelerating gains in design billings. With a reading of
55.8 for the month (where any score above 50 signifies growth), the July
reading reflects stronger gains in billings than any period since mid-2007.
With solid monthly scores for new design contracts (at 54.9 this month) and new
project inquiries (66.0), all signs indicate strong momentum building in design
activity, which is expected to produce solids gains in construction later this
year and into 2015.
Regional billings activity is also showing more
consistent growth. Billings at firms in each of the major regions of the
country were strong, with firms in the Northeast, Midwest, and West showing a
reversal from declining billings as recently as two to three months ago. Firms
in the South continue to report healthy business conditions, as they have every
month for two straight years.
Another equally favorable sign is that all of the major
building sectors are now reporting healthy gains in design activity. In
particular, institutional firms reported healthy increases for July, with
growth accelerating over June levels. Commercial/industrial firms have reported
growth each month this year, while residential firms now have an almost
three-year uninterrupted string of gains.
Economy coming
around
After a slow start to the year, the economy is finally
beginning to perk up. The preliminary estimate for economic growth in the
second quarter was just under 4 percent, more than offsetting the revised
estimate of a 2.1 percent decline during the first quarter. One key reason for
this reversal was increased business investment—including investment in new
structures—which was estimated to have grown at a 5.5 percent pace in the
second quarter, up from 1.6 percent in the first quarter.
Feeling more comfortable with the economic outlook, U.S.
businesses also continue to increase their payroll headcounts. Payrolls
increased nationally by 209,000 in July, the sixth straight month that employment
has increased by at least 200,000 positions. Construction is also benefitting
from the general increase in employment, with payrolls at construction firms
increasing every month this year.
The housing market continues its recovery, though the
momentum has slowed from the fourth quarter of last year. Still, national
housing starts totaled almost a million during the second quarter, up from
925,000 in the first quarter. One reason that the housing recovery is expected
to continue at a healthy pace is that home prices are rebounding strongly,
suggesting that demand is growing. For each of the past four quarters, house
prices nationally have been increasing at a double-digit pace compared to year-ago
figures, according to the S&P/Case-Shiller Home Price Index. A
strengthening housing market has helped to boost consumer confidence levels,
and also has encouraged more spending, as evidenced by the recent strong
increases in national retail sales figures.
Why aren’t younger
architects getting licensed?
Firm leaders are increasingly concerned that a growing
share of their younger architectural staff is not pursuing licensure. While
there is consensus that this is a growing problem, there is much less agreement
as to the key reasons behind this trend. When questioned on this issue, a
plurality of respondents identified “few perceived benefits/few incentives” to
licensure as the most important reason for declining rates. However, almost as
many indicated a different but closely related reason: Many younger architects
don’t feel the need to pursue licensure, suggesting that it is not yet, at
least, a goal on their career path. Other closely related reasons are that many
younger architects are not fully committed to a career in architecture
(selected by 13.3 percent of respondents), and that many have no plans to
become principals or firm owners (5.6 percent), where licensure would be more
essential.
Other respondents suggested that leaders in the profession
share responsibility for declining licensure rates. The sense that the
profession hasn’t adequately demonstrated the benefits of licensure was
mentioned by almost 15 percent of respondents as the most important reason,
while an additional 3 percent indicated that firm leaders haven’t sufficiently
encouraged younger staff to pursue licensure. Still others point to the
licensure process itself as a key reason for declining rates. Other reasons
include: preparation for the ARE is too time-consuming (8.2 percent); the
internship process is too difficult/ complicated (5.8 percent); the ARE and
licensure are too costly (4.0 percent); many feel unprepared to take the ARE
(3.0 percent).
This month,
Work-on-the-Boards participants are saying:
Stalled projects
are being released and existing clients are adding new work. Competition for
talented staff is fierce, and pay rates are increasing as a result.
—14-person firm
in the West, commercial/industrial specialization
• [The]
election cycle has incumbents spreading new found “surpluses” to building
projects. This will be a short lived bump.
—17-person firm
in the Northeast, institutional specialization
• Residential
additions and renovations overheating; new homes still dead.
—One-person firm
in the South, residential specialization
• This year has
been very strong for our firm metrics. Many clients that have been holding on
to work in past years are now releasing projects.
—45-person firm
in the Midwest, commercial/industrial specialization
Source: AIA
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