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Celebrating job growth's healthy ripple effects

Celebrating job growth's
healthy ripple effects

by CLARK DAVIS, FAIA, LEED AP | Feb 24, 2015

Many design firms are busier now than at any time since 2006, finally enjoying growth after the deepest and longest economic downturn in memory. We know that the economy is improving, in the U.S. at least, but what’s actually driving recovery in building design and construction?

The AEC industry should be very encouraged by the steady U.S. job growth reported in recent months. Twenty years ago, I found that our firm’s earnings almost exactly mirrored trends in new job postings then reported in the Federal Reserve’s “Beige Book.” It’s still true for the industry as a whole.

When more people are put to work in offices, research labs, factories, healthcare facilities, and retail businesses, their employers invest in more, larger, and better workplaces with new amenities and technology. When talent becomes scarce, the quality of workplaces again becomes a major competitive factor in attracting and retaining the best people.

This chart shows the correlation between the rate of U.S. non-farm job openings and the AIA’s Architecture Billings Index between 2000 and 2014:

Sources: AIA Architecture Billing Index, illustrated at www.calculatedriskblog.com; Job data from U.S. Bureau of Labor Statistics, Job Openings & Labor Turnover Survey (JOLTS).

Sources: AIA Architecture Billing Index, illustrated at www.calculatedriskblog.com; Job data from U.S. Bureau of Labor Statistics, Job Openings & Labor Turnover Survey (JOLTS).

The graph also illustrates how swings in the A/E business exaggerate general economic trends, including GDP growth, on the upside and the downside. This is a painfully familiar pattern to those of us who’ve run design or construction firms.

Rising employment also supports the consumer demand that’s driving much of today’s economic resurgence. Consumer products, durable goods, dining, entertainment, travel, and hospitality businesses all benefit even if average wages aren’t increasing dramatically.

Thank you, private sector

Our current recovery is selective and in some ways fragile. Public sector employment isn’t growing. Companies most affected by declining oil prices or the strong dollar are not expanding as rapidly as others. Political, security, and economic risks make many owners very cautious about major capital project commitments. Projects start, stop, and change direction more frequently than we’ve experienced in more stable times.

Still, we can thank U.S. employers for the new growth that designers and builders are seeing right now. It seems likely to continue, as shown by the rising blue line at the right side of the graph. Let’s enjoy these times but take the opportunity to make our firms more relevant and resilient for the years ahead.

Based in St. Louis, the author is a principal consultant with Cameron Macallister Group. Prior to 2014, he had served 12 years as Vice Chairman of HOK and was managing principal of its St. Louis headquarters. He is a Fellow in the American Institute of Architects and a Senior Fellow with the Design Futures Council.

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