Response: Jay Wickersham’s “From Disinterested Expert to Marketplace Competitor”

Phil Bernstein, Peggy Deamer

Jay Wickersham’s important and well-crafted article, “From Disinterested Expert to Marketplace Competitor: How Anti-Monopoly Law Transformed the Ethics and Economics of American Architecture in the 1970’s,” draws attention to an era in American architecture when the Department of Justice (DOJ) and the Federal Trade Commission (FTC) focused their attention on not only the profession of architecture, but on professions in general. The article suggests that after the trade regulators made illegal any doctrines which guided or fixed fees for service–and thereby forced professional firms to compete as businesses–the effect on architecture was an expansion of services, the ongoing success of large firms, and the general enhancement of fees. We feel that while none of the claims are wrong, the picture painted is incomplete and potentially draws incorrect inferences. There are three areas that warrant reexamination: his description of the political left-right attack on fee schedules that motivated the government regulators to act; his suggestion that the elimination of  standard fee structures is the cause of new multivalent practices; and his conclusion suggesting that architects in these expanded business models have in general garnered higher fees.

The political left-right attack on fee schedules:  Wickersham gives a detailed and informative description of the efforts of left-leaning activists like Ralph Nader who criticized professionalization as an elitist, anti-consumerist measure keeping fees in the hands of the professionals who prevent equal access to such services; and economists on the right, like Milton Freidman, who criticized professionalization as a means of avoiding free-market entrepreneurialism and competition. This portrayal, accurate as it is, makes it appear that these two forces themselves, coincidentally or perhaps ironically, forced professional firms to act like businesses in response. But he fails to link both of these movements to the larger phenomenon that motivated both Freidman and Nader (and also the government regulators) namely, the rise of national and global neo-liberalism that swept all of them along. The 70’s was the era of Margaret Thatcher and her anti-welfare state policies; Ronald Reagan and his union-busting, trickle-down economics; and the demise of Keynsianism and rise, beyond Milton Freidman, of supply-side economics. The importance of this contextualization is three-fold: it displaces the cause-effect model Wickersham describes (left/right advocacy=cause; government action/professional business interest=effect) to one that identifies capitalism’s changing dynamic as the cause of all of these; it focuses our attention on a dynamic larger than mere political happenstance to challenge our sense of professional autonomy; and it makes clear that what was at work in this era was not merely a call to have architecture operate as a business but one that was anti-labor at its core. (More on this later.)

The elimination of standard fee structures is the cause of new multivalent practices: Anti-trust provisions eliminated the last vestiges of fee schedules as points of reference for architects, but hardly created new-found freedom in services and pricing. Wickersham implies that the variety of compensation models and related scopes of services that today’s architects deploy originated in the open space created by the elimination of such guidelines, but we suspect (and propose to research) that this is a correlated but not causal relationship. The exuberance of global capitalism and the resulting explosion of building it catalyzed, along with increasing complex technical demands of building itself, required architects to provide more complex services with more varied consultants; consider, by way of example, requirements for sustainability and enhanced life safety codes as but two indicators of the more complex enterprise of architecture design. More complicated projects delivered in more complex systems of contracts and obligations means a richer set of services required by providers.

Architects in this expanded, multivalent realm of business models have garnered higher fees: Wickersham is careful to point out that it is the larger firms that have been able to increase fees by 15% while smaller firms have witnessed decreases, at least as specified by Gutman in the period directly after the consent decrees. But his narrative implies that these larger firms define the success of the profession, given that they dominate the global market and have increasingly swallowed up midsize offices. At the same time, he points out that deregulation has unleashed more efficient computer technology which in turn proves the legitimacy of laissez-faire economics. What is missed in this account is not only the quickly passed-over decrease in revenue for the small firms (which constitute 50% of the profession, but the fact that both small and larger firms compete against each other for a decreased proportion of AEC revenue as larger more complex buildings, designed by larger firms, take a bigger portion of the fee pie..  Compensation, however, has grown at only a 3.6% rate from 1993 to 2015 according to AIA data.The easiest way to offer a client more while charging less is to take advantage of an unlimited supply of labor that works unregulated hours and uncompensated overtime. (This labor-unfriendly environment is, of course, the legacy of ongoing neo-liberalism.) In other words, the conclusions that Wickersham draws misrepresents a more complex assessment of actual architectural value/compensation for production effort. Understanding this trend will require further research correlating fee volume relative to construction volume and compensation, which we propose to do in the future.

Further, design fees, even when “fixed” by industry standards before anti-trust busting, have always been a function of the commoditized nature of construction business models, and even today, with varied flavors of compensation strategies available (lump sums, hourly rates, percentage of construction, etc.), the vast majority of these techniques are means to lump sum, further commoditized fees. Recent AIA data (from the 2013 Firm Survey) indicates that 80% of compensation approaches employed by US architects are variation on lump-sum, commoditized fees. Anti-trust may have created opportunities for different ways of getting paid, and at the same time different services were being provided. But there is little evidence that architects made lots more money nor did salaries and profitability rise as a result. In fact, most compensation is based on the same techniques that pre-dated the consent decrees, simply generated in different ways and without the guidelines that precipitated the Justice Department actions in the first place.

This critique is not meant to neutralize Wickersham’s effort to explicate  the effects of antitrust laws on the profession. Rather, it aims to broaden the discussions and the agency that might come of such discussions. If he wonders, at the end, about how the profession, in a world of shattered ethics that once supported fee schedules, might address the need for the profession to be accessible to the underprivileged, we think that a complete assessment of changed architectural value is necessary.