Are you going to simply bow your head and go with the status quo? Or are you going to rise up and write a new narrative for yourself within the existing narrative of the industry? This is the Business of Architecture. Hello, architect nation. The topic of today's podcast episode is, why do architects earn less than doctors? Why do architects earn less than doctors? So if you've been in architecture for any amount of time, you've probably heard a lot of complaints about low wages in the industry. And it's very common for us as architects to compare ourselves with other professionals in the industry like accountants, lawyers, and doctors, who go through extensive training and, and experience requirements to be able to practice their profession. Now, the difference between a professional and non professional as a professional is typically registered or licensed by some authority, in this case, the government to be able to practice their profession along with that comes certain responsibilities, certain responsibilities to protect the general health and welfare of the public certain responsibilities to follow certain practices, as in as in law or in accounting. But we're here to talk about architecture, and specifically Docker. So the first question is, do architects actually earn less than doctors? Well, certainly it can vary debate based upon the person and certainly there might be instances where you have a doctor who's earning less than an architect when you compare them directly. However, a quick Google search as of today reveals the following. According to mint.com, based upon data from income tax returns in California, the average income, the average yearly compensation for a doctor is $227,000, plus or minus. Now, the average income for an architect is $82,000. So we have 227,000 versus 82,000. So indeed, it does seem that doctors are paid significantly more than architects are. So this leads us to the following question. Why is that? Why the income discrepancy? Well, our mind might instantly go to several reasons why architects are paid less than doctors. So we're going to look at education training requirements are doctors paid more, because they go through more extensive education and training. Our doctors paid more because of demand and supply or supply and demand are our doctors paid more, because there's more demand for doctors, and there's less demand for architects in the marketplace? Do architects learn less earn less because of the nature of the work and the responsibility, in other words, is the stress and the overall job prospects satisfaction, and ultimately risk of the of the position as a doctor isn't that much higher, that justify the additional compensation. And the last but not least, we're going to look at thing number four, which would be perceived value, what is the perceived value, and perhaps this is the driver of why architects earn less than doctors. So with that, let's get into it. Let's first of all, look at education and training requirements. Now, to become an architect, architects generally need to go through here in California, you're gonna go through nine years, let's say nine years of overall education and experience. So this would be four plus two, let's say you do an undergraduate degree, that's four years, and then you go to a master's program, master's programs can run anywhere from from two to three years, let's say you go with a two year program, so conservatively, for you to get out of school with a training as an architect to prepare you to be an architect, that would be six years total of education. Now on the flip side, for doctors, typically they're going to go to undergraduate and then they're gonna have a four year graduate program. So that's two, that's eight years. So already we can see the doctors indeed, have additional educational requirements beyond what architects require. Now, let's move over to the training portion of it. Now in training, they're similar. Architects are required here in California to have a minimum of what amounts to about three years of of experience before they can sit for the the CSC California supplemental exam. The doctor, on the other hand, for residency generally is going to spend three years if they're not a specialist, so that comes out to three. So when we look here, we see a difference of that two years of education of education. So it comes down to architects nine years of training and education Doctor 11 years so we can see that indeed, doctors do have a higher education and training requirement. However, is this the reason why doctors are paid almost three times as much as architects are, well, if we assume that it is let's just say it is the education and training. Let's say that it is because doctors are there's a much more education and training required for doctors. Well, if that's the case, Why are some other careers like library science and other advanced PhD programs, graduates coming out of this, these programs that require eight plus years are earning very, very low salaries. As a matter of fact, a quick Google search that I did came up with quite a number of articles, complaining about how many PhD students who go through four years of undergraduate maybe six years of postgraduate, so that's a total of 10 years of, of training and experience in terms of their education alone, end up earning $50,000 To start, very, very low wages. So we begin to look at this and then our theory begins to fall apart, we can see, well, just because someone has invested a lot of time and education in something a lot of training, it doesn't necessarily mean that they're going to be compensated very highly. This is making sense, you probably know as well as I do. A lot of people who are the eternal students who spend a lot of time in school, they spend a lot of time training and learning some skill or profession, and ultimately doesn't end up providing them with a lot of financial compensation. So while it does seem on the face of it, that we can blame low architect salaries compared to doctors for the fact that the training requirements for doctors are much higher, this begins to fall apart. When we look at other examples of careers and professions that require a lot of training, and yet have relatively low salaries. On the flip side, we can also see other careers and professions that have very low thresholds for experience and training, such as law enforcement. No, no slight to my friends who are in the law enforcement industry. However, law enforcement, typically you can, you don't necessarily need to have a bachelor's degree, you can get into law enforcement, and around here, a police officer where I live can earn easily over six figures. All right. So this would definitely be more than many of the architectural professionals that I know that invest a lot of time and experience. So again, we see this begins to break down. So what we can determine is, maybe it's not the education and training requirements, that is to blame for the fact that architects earn a lot less than doctors. Okay, well, let's move on, what could it be? Let's look at supply and demand. So certainly, you know, when we went to economics classes back in high school,
we learned about the idea of supply and demand, we learned that as supply shrinks demand and demand goes up, there's there's this correlation, right? When the supply shrinks and the demand goes up? Well, we expect that there's going to be more demand, which means that prices are going to rise for that, when there's a lot of supply and there's little demand, we're going to expect that the prices of things are going to come down. Now, again, doing a quick search of different articles, I came across an article from the American Medical Association that indeed confirms that there is a shortage of doctors currently and projected into the future. Now the numbers of the shortage of doctors is all over the map. We have any estimates anywhere in this particular article, there's estimates between 17, about 18,040 8000 primary care physicians that there's going to be short of in the next 10 years, well, that's quite a that's quite a spread, that's about 18,000 40,000. That's a that's over double in terms of their margin of error. So either way you look at it, that's a very large number. So we can say that, indeed, it appears the United States is experiencing a large shortage of medical professionals, particularly doctors. Now let's look at architects is architects also experiencing, is there an abundance of architectural professionals? Or is there a shortage? What we discover again, and there's less data on this, unfortunately. But according to my and this is going to be my own anecdotal experience, working with hundreds of architecture firm owners, particularly small, firm owners, and what I'm hearing from different professionals in the industry, that indeed, there is a shortage of architectural professionals, particularly mid career professionals. So people who were in the age group of their late 30s, to their mid to upper 40s, these people are like the sweet spot, they were in there, they were starting out their career, or maybe just had gotten started in their career back in the big Great Recession of 2009, when we lost so many architectural professionals. So most architecture firm owners that I talked to, will tell me at this time that they could probably use an extra person. So let's look at this number a different way. Let's say that right now, according to estimates, and again, these are all over the map. There's anywhere from 65,000 on the high end to 22,000 architectural practices in the United States. 65,000 sounds a bit high to me. 22,000 sounds more reasonable, but also a bit low. Now let's just assume that a quarter of these practices could actually bring on an extra person right now let's say there's enough work in the industry, where one quarter of these practices could bring on one additional person, which would be a shortage. So let's see how many people that would be. If we take 65,000 And we take a fourth of that. That's a shortage of 16,250 Architects. That sounds like a number that's too high. Now we look at the 22,000 number, we get a shortage of about 5500. So the question is, could the architectural market here in the United States could absorb 5000 professionals mid career professionals in architecture? My guess is that probably it could at this time, right? There's enough work happening right now, in the industry, when you look at most small firm owners, the fact that they're working probably more than 40 hours a week, which means that the firms are have more work that they can handle deadlines, and there's there's waiting lists for architects to take on projects, it definitely shows that there's some sort of shortage in the architecture industry. Now, it may not be as large as the shortage of medical professionals. So certainly, the demand and supply or lack thereof for architects in the industry, this could be one of the reasons why architects earn less than doctors, however, does it really does it really account for the great disparity because when we see we can see the both industries have a shortage. And yet architects are basically earning about a third what doctors are earning. So this causes us let's dig a little deeper here. The next thing we can look at is the nature of the work and the responsibility involved in the position. So certainly, jobs and careers generally speaking, that require a high level of precision, a high level of responsibility, a high level of risk are generally going to come with greater reward. For instance, if you're a nuclear engineer working in a nuclear power plant, your pay is generally going to be very high because it's highly specialized. And there's a great deal of responsibility upon you. As you know, if you've seen the Simpsons and seen Homer definitely requires a very high level of attention to detail and a high level of integrity. All right, now let's get back to architects and doctors. Doctors do they have a stressful work environment. Indeed, doctors oftentimes depending on whether they're an ER doc or primary care physician, they can be working let's let's look at the ER Doc's these doctors are, of course, the parent of some of the most hardworking doctors in the medical field in the United States, they can work shifts of 12 hours at a time, four days a week. So they're on their feet a lot. They're running around high stress environments. And let's face it, a lot of these doctors are dealing with life or death situations. They're dealing with trauma. They're dealing with people, they're having hysterical meltdowns. I was just thinking about last last month, my kids were in a major accident. Fortunately, all of them are okay. But we did spend three or four hours in the emergency room. And it was mayhem in there people rushing back and forth. People hollering in the hallway, you know, nurses running around distraught parents, not to mention people that were in critical condition who basically were hanging on for dear life. So this is a highly stressful environment. So we can say that, as in terms of overall stress, perhaps someone who was working in an ER emergency room is going to experience more stress than your average architectural job. However, when we look at jobs like radiologists, or people like perhaps primary care physicians, a lot of times these are much less pressing, these are jobs that have a much less level of stress. And oftentimes, they can get by working four and a half, four and a half days per week. So they may even take the afternoons on Friday off much less demanding. So I would say that in this case, based upon this, we look at architecture, what's the risk associated with architectural indeed? And how stressful is it? Having worked in an architectural practice? I know that architecture indeed can be stressful around deadlines, it can be stressful trying to meet client demands, it can be stressful when you're having to work on a project that you know, is losing money. And what's the risk that architects take? What is the actual the risk that architects take upon themselves in the in the in the um, in their profession? Well, I would say that it's it's, it's not a it's not a small risk, right. architects do shoulder an important responsibility safeguarding the health and wellness of the public, as a professional architects know that they will be held, they can be held personally liable for mistakes. This is why we have errors and omissions insurance, just like doctors have malpractice insurance. So we can see that in terms of the nature of work. When we look at stress alone, we might say that, er, doctors take the cake on that one. When we look at other stressful positions within the medical field as well as architecture we can say that perhaps architecture might be as stressful or even more stressful than a primary care physician or a doctor that might have a less taxing and less stressful position. How about the ultimate responsibility they take on? Well, one thing about doctors that oftentimes doctors are working with life or death situations. So I would say that the teeter totter the scale is going to tip over to the doctors on this one on having a higher immediate sort of responsibility. However, if we look at the long term responsibility of architecture, this gets a bit obscured meaning that architects and their designs on the way that design buildings in coordination with engineers can have a very large impact that may only be revealed over time, maybe not immediately, right? If my son goes in with some sort of traumatic injury, we're gonna get the outcome of that very, very quickly. However, with an architectural project, the results of the designs that you put in or the design mistakes you make, or maybe design choices that you make aren't going to be seen for many years down the line. And so again, this can muddy the water, about the nature and responsibility of the work. But when we look at it overall, I'm going to say that the doctors take the high stress and the immediate responsibility on this one, although I would say that architects are close behind, because let's face it, being able to construct a building safely, being able to make sure that all the fire codes are met, being able to make sure that a building has the proper circulation, being able to make sure that the mechanical systems in the building are adequate and appropriate. Everything that goes into a building, how can we downplay that? Like, is this not a great value to society? Is is not hugely important? And could this not impact the lives of hundreds of people, if not 1000s, we look at terrible disasters, like the condo in Florida that collapsed. Obviously, there are structural failures that happen there. We hear about sometimes clubs being overloaded and collapsing, we hear about hundreds of people dying at a time. And then we have things like the World Trade Center now who could have foreseen that that actually would have happened. But we can see that there was a great loss of life with that. So we can see that architects are not far behind in terms of the importance of what they do to safeguard the life, health, safety of the public. So as we look at these, we've looked at education and training so far, which the doctors take just by a hair, we look at demand and supply, which may be a wash, although I think doctors may take it on this one as well. And then we look at the nature of the work certainly in terms of the more immediate concerns, doctors went out on this one as well. However, does this really account for the great disparity that we see in architects salaries versus versus doctors? Well, perhaps it doesn't. But when we look at the next category, which is perceived value, perhaps things start to make more sense. So one thing to consider about the medical industry is that there's a lot of forces and a lot of variables that have resulted in the salaries that doctors earn.
The medical system United States is very, very complex. You have a lot of people with interests, we have pharmaceutical companies. We have the medical establishment nurses, doctors and other support professionals. We have hospitals and groups and clinic owners. We have medical associations, we have insurance companies. So there's a wide cast of characters involved in the medical profession, we can say it's very complex. Now, going back to architecture, we can say that it is very complex, but it perhaps is not as complex indeed, we have. We have insurance companies. We have, we have contractors, we have developers, we have finance ears, we have real estate professionals, we have architects, we have Associated Consultants, MEP engineers, we have other consultants like low voltage consultants. Security Consultants, right. So again, a very complex field. Now architects, depending on what size of projects they're working on, they can work with multimillion dollar projects, or they can be doing a simple house renovation. So there's a big difference in the kind of work that architecture is doing an architect is doing, and the amount of responsibility that this architect is taking on with regards to their work. However, let's look at a study that was done by Richard Thaler who was in economist. And when he introduced the idea of transaction utility. Because we're going to talk now about the perceived value. What I will tell you anecdotally is when I went into the ER room when my children had an accident, it felt to me as a human being just as a person, as a participant, as a client, as a patient, or the father of several patients in the emergency room that day. To me, it felt like the the value of a nurse, and the value of a doctor was very, very, very high. As a matter of fact, I would have paid anything to ensure the health and the safety of my children. So this is another thing to keep in mind that when people see an immediate loss that they're facing, a lot of times this will cause them to value that experience that service that product or that thing, at a much higher level. When something is seen as a nice to have then it is going to be more of a luxury, good. Meaning demand for that particular experience. Widget product or service is going to go down. All right. So what does this have to do with Richard Thaler and what he said about in his paper on transaction utility? All right. So let's look at a hypothetical story he said. And then he gave he gave this as a study when he was researching and he put out some some some questionnaires who are administered to the participants at an executive development program. Okay, now here was the hypothetical scenario that they received. You're lying on the beach on a hot day, all you have to drink as ice water for the last hour, you've been thinking about how much you would enjoy a nice cold bottle of your favorite brand of beer, a companion gets up to go to go make a phone call, and offers to bring back a beer from the only nearby place where beer is sold. Now there's two options in this questionnaire first option, option a he said it was a fancy resort hotel, option B, he said it was a small rundown grocery store. He says that the beer might be expensive, and so asked how much you're willing to pay for the beer. He said that he will buy the beer if it cost as much or less than the price you state. But if it costs more than the price, you state, he will not buy it. You trust your friend, and there is no possibility of bargaining with the bartender or the store store owner. So what price do you tell him? This was the question that people got in this hypothetical thought experiment. Now, the results of this study are the following. Not surprisingly, when the two versions of this questionnaire were administered to participants, those receiving the fancy resort hotel version gave significantly higher responses than those receiving the small, rundown grocery version, it seems to make sense logically, imagine it in your mind, as you're listening to or watching this. If you're going to offer a certain amount of money for a drink from a fancy resort hotel, it's natural, you would think it's natural to offer and expect that it's going to be more expensive than a small rundown grocery store. Now, even if these two beers are exactly the same brand. So what the the point that failor made with this study was that the presentation, in other words, the perception, the perceived value of your service, or in this case, a product, the presentation, and packaging, and positioning of that particular beer is more important than the beer itself. Now consider this as it relates to your firm architectural services, and what architects are able to charge for their services. perceived value. So what we can see is that there is definitely a gap between what architects would like to be paid, and what architects oftentimes believe their value is, and what how architects are actually compensated all day long. Every single week, I talk to firm owners, and they're facing the following. Clients who don't value their architectural services, the way that they value them, clients, were asking them to discount their invoices, clients, were asking for extras and then feeling like you're twisting their arm when you ask them to pay for these extras and these additional services that you want that they asked for. All right. So as we look at this fourth category of perceived value, what's the perceived value of a doctor? Well, just anecdotally, I'd say the perceived value of a doctor is very, very high, especially if my life is on the line, especially if someone else's life is on the line. So this is turning out to look like it's going to be one of the things that is more relevant in terms of this conversation of why architects earn less than doctors. Now, what's the perceived value of an architect? This is where it gets interesting. Does the does the client and do people generally understand all the liability and all the important things that an architect does? Have we as architects commoditized our services by being in a race to the bottom for fees? Have we as architects been hesitant to charge what we really need to get the profit the project done to pay our staff adequately to offer correct bonuses and to be able to have a healthy profit margin? These are questions that go back to this idea of answering the question of why doctors are paid more. So when we look at it, we're like we're faced with the reality here. Architects indeed do generally earn less than doctors. So the question is, what are we as architectural professionals going to do about it? Well, we have a number of fixed variables, we know that the things outside of ourself we can't control. So we have to ask ourselves the question, What can we control and consider that one of the things that we control as a business owner, is how we represent our value. Now, as a business owner, this would be the our area of marketing and sales. And when we think about marketing, sales, we're looking at things like positioning, we're looking at things like packaging. When we talk about positioning, we're looking at what is the position of your architectural practice in the marketplace compared to all the other options that people have available to them? Is it perceived as a luxury? Is it perceived as middle of the road are you perceived as a cheap architectural practice to people refer you because they know they can get it done quick and cheap. Or do people refer you because they know it's a very high end experience. And they want their referrals to have the best. This is positioning. When we look at packaging, packaging, response to the branding, the website, the image, even the clothes that you wear, even the cars that you drive the persona, that you have the persona, the ethos of your practice in your firm.
Now, that's the marketing. Now we look on the other side, what's past the marketing. So when we look at the marketing, primarily the packaging and positioning and the promotion, we can say, Okay, let's move past that. What's the next step in the process? Well, the next step in the process is the sales process. So the question I have for our architectural community is, how much time have you spent learning how to sell aka how much time have you actually spent learning how to communicate the value a very, very high value of your designs, and be able to close high value contracts, no matter who your clients are? Because if you just take a set number of clients, let's just do a thought experiment. Let's just say you have, you're working with middle class Americans, and you're doing home renovations, okay, within that group of people, if you put one person in front of me, that person is going to have a range of money that they're willing to spend on their project, they're going to have a top figure that they're willing to spend, and the below they're going to be willing to spend anything below that. Now, in my experience, when architects are presenting their their proposals and their architectural work, they're looking to minimize their fees. In other words, the mindset they're going into is, what's the what's the lowest amount that I can give and still get the job done and still win the project. In other words, most small architectural practices, and probably even many large practices compete on fee. So the question I have for you today, is the firm while you're working, or the firm that you own, are you competing on fee and price? Or are you competing on value, because these two things are very different. They're very two different roads. And if you want to be able to close that gap, because we know we're not you are not going to be able to individually change the macro economic forces that cause architects to earn less than doctors. This is a sad reality of where the architectural industry is right now. But what you can do is in with your microcosm, you can be one of the architects who earn substantially more than all the others, you can be one of the firm's that is highly profitable, highly, much more profitable than other firms. While all the other firms are. While many of the other firms are racing to the bottom, you can be one of the firm's who chooses not to race to the bottom. Now, this is going to be upon you, and it's going to deal directly back to your ability to persuade. And to create a perceived value going back to the scalar study, what we can see is that it wasn't so much the beer aka your architectural services that determined the value the perceived value, but it was everything around it was the presentation of it the fancy hotel versus the rundown grocery store. So the question I have for you, as we wrap up, today's episode is simply this. Are you going to remain a victim blaming the economy, blaming clients, blaming everything except for yourself, that you're not earning more and bringing more into your practice as an architectural professional, while we continue to play the victim role in the industry, blaming all the big, the big forces outside of us, instead of taking responsibility and saying, Hey, look, I can see this is a fact of reality that architects are earning far less, I can see the negative consequences of this, I can see that professionals leave the industry because there's other industries that pay more, I can see that firm owners who run practices are stressed out. They're sacrificing their long term savings. They're dealing with the ups and downs of the economy. They're having difficulty hiring people. We're having people again, leave the economy leave leave the profession, because of low wages. Well, we can do that we can sit back we can play the victim card and say you know what, this is just it I'm just a victim of circumstances or are you? Are you going to do what you can in your power in terms of your positioning, in terms of your packaging, in the terms of the way that you present your practice, to be able to learn how to close high value contracts, so that you can then be a profitable and a fluent architect who can then hire people, you can give bonuses to your team members. And while everyone else is falling apart, everyone else is running for cover. You can be a bastion of hope and a beacon of light in a world of people who are desperate and who are cutting their own fees to the bottom. You can be one holding the standard high and saying no, we will not go lower. I know my value. And we are here to take a stand for profitable architects and for the influence of these designs. Line professionals. That's the question I have for you today. If you resonate with this, and you know that you're one of the people who is willing to take personal responsibility for your own personal abundance, well, smart practice and business of architecture may be a fit for you. To find out more, go to smart practice method.com. And I would love to hear your comments and your thoughts about this episode. Now, as a reminder, everything I shared here today is my opinion, I make no claims that this was a heavily researched video. This is based upon information that I was able to gather based on the internet, which, as you can see from the video that I just shared, there's some margin of error in the numbers. But what we do know is that the architecture industry is rife with architects who are scraping the bottom of the barrel. With firms who underpay and overwork their employees with firms are hesitant to and don't know how to capture the value for their services, with firms who become the bad boys and the bad women have the developers and the other financial interests who are just looking for the cheapest design. So again, the question I asked you today, are you going to simply bow your head and go with the status quo? Or are you going to rise up and write a new narrative for yourself within the existing narrative of the industry? As always, this is Enoch reminding you carpet Diem. And goodbye for now. And that's a wrap. Oh, yeah, one more thing. If you haven't already, head on over to iTunes and leave a review, we'd love to read your name out here on the show. This episode is sponsored by Smart practice, the world's leading step by step business training program that's helped more than 103 architecture firm owners structure their existing practice. So the complexity of business doesn't get in the way of their architecture, because you see, it's not your architecture design skills that's holding you back. It's the complexity of running a business, managing projects and people dealing with clients, contractors and money. So if you're ready to simplify the running of your practice, go to business of architecture.com forward slash smart to discover the proven simple and easy to implement smart practice method for running a practice that doesn't get in the way of doing exceptional architecture. The views expressed on the show by my guests do not represent those of the hosts and I make no representation, promise guarantee, pledge, warranty, contract, bond or commitment, except to help you conquer the world. QRP DM
