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Follow the sweat equity…
by Dan Roche
The following story appears in our February print issue, #26. We deemed its pressing subject matter merited being published online and in full, both below and on our website. To support our work and receive the issue, please consider a subscription.
On February 3, staffers at SHoP Architects organizing under the name Architectural Workers United (AWU) chose to withdraw their unionization bid. The decision was announced less than 24 hours before a vote was set to take place that would potentially have granted the staffers a union certificate from the National Labor Relations Board (NLRB), signaling the start of a collective bargaining process. But the AWU unit had lost majority support from the firm’s 135 employees less than two months after the group made its actions public in The New York Times on December 21. AWU says management mounted a “powerful anti-union campaign” to break up the movement from within.
Shortly after the Times published its article, SHoP retained the services of Proskauer Rose LLP, a top-tier New York law firm with deep union-busting experience. (Last year, the firm represented MoMA after employees went on strike to protest the institution’s financial ties to Jeffrey Epstein, as it did Columbia University during a graduate student strike.) The move was confirmed by a spokesperson from Risa Heller Communications, which SHoP also hired; Ivanka Trump and Jared Kushner’s real estate firm is among its past clients.
SHoP, via Risa Heller, says it sought out Proskauer Rose “for limited purpose as required to comply with the NLRB petition process.” It also denied the allegations that management acted nefariously to stymie the union drive and emphasized that this “employee-led movement” led to “an employee-led outcome.”
David DiMaria, a representative of the International Association of Machinists and Aerospace Workers with whom organizers consulted, rejected SHoP’s claims, accusing the firm of “gaslighting.”
Other New York offices are in more nascent stages of unionizing, says Andrew Daley, another Machinists rep, who previously worked as an architect at SHoP. “We still have good momentum. Our long-term goal is to create a union local for architects connected to an international union. My focus is on larger, industrywide expansion.”
To be sure, the failed drive at SHoP is a major setback for the seedling labor movement within architecture. Nevertheless, since AWU went public, architects have openly debated the merits of unionizing the profession more than at any time in recent memory. Those sympathetic to the prospect might use this moment as an opportunity to take a step back, reflect, and learn from the current outcomes to plot the road ahead.
Architectural workers fighting for their rights today know that the odds are historically stacked against them. Architects in the U.S. haven’t had a professional labor union in nearly 80 years, since the Federation of Architects, Engineers, Chemists and Technicians (FAECT) folded in 1947. FAECT, which at its height represented 6,500 members across 15 chapters, superseded the International Federation of Technical Engineers, Architects and Draftsmen’s Union and the United Committee of Architects, Engineers and Chemists. Members voted to consolidate after the American Institute of Architects (AIA) published a suggested minimum wage under the 1933 National Industrial Recovery Act, dramatically decreasing wages.
Dubbed the “Vanguard of Technical Professions,” FAECT grew into a major left-led force after it joined the Congress of Industrial Organizations (CIO), which allowed members to forge coalitions with factory workers and others in the industrial sector. In 1936, FAECT organized a sit-down strike led by architects employed by the New York City Department of Parks against alleged antiunion activities by chairman Robert Moses. After a massive organized effort, the union achieved significant wage increases for approximately 7,000 architects employed by the Works Progress Administration. FAECT was disbanded shortly after World War II, when a second Red Scare began to sweep the country. (Many of its members were, in fact, Communists.) There wouldn’t be another push toward unionization in the U.S. until the 1970s, when workers at SOM’s San Francisco office tried to form a union but lost the election. Organizers also provided support to workers at Hertza & Knowles, whose own union drive foundered not long after.
Architecture isn’t unique in resisting organized labor, whose influence began to decline in the 1980s. Today, union density is at its nadir and traditional, working-class bases of support are vanishing. Organizing service and creative work—the U.S.’s most economically productive sector—has been painfully slow. Even so, among younger workers, particularly those employed in “white-collar” professions, union favorability is at its highest in decades. Reporters, video game developers, and tech workers have all mounted savvy, high-profile union campaigns that couch workplace grievances within broader social justice issues.
Architectural Workers United can be understood within this broader context, forming in the wake of the George Floyd protests in summer 2020. Like many progressive-leaning firms, SHoP responded to these events with a public statement indicating its commitment to antiracism and offering small-scale solutions to address grievances within its New York office. Several workers created a private Slack channel where they proposed bolder measures, such as instituting salary transparency and diverse hiring practices. They later raised these proposals in a town hall, which led to a series of company diversity, equity, and inclusion workshops. But according to those within AWU, management failed to address their more central concerns. For instance, it did not recall furloughed staffers whose workloads had simply been dumped on those remaining on the payroll. In 2020, SHoP was approved for two PPP loans, adding up to $5.6 million; in October of that year, it laid off almost 20 workers.
Job precarity wrought by the pandemic, long hours, low pay, and for many, the anxieties that come with crushing student loan debt, pushed workers to the brink. Several of them elected to organize, citing research showing how unions counteract inequality. They entered into conversations with the local chapter of the Machinists Union, which continues to advise AWU as organizing efforts build at other firms besides SHoP. The group says it wants to raise industry standards through collective bargaining rights, sector wide union density, and political action.
When pressed on the aims of unionization, SHoP pointed to its employee benefits policy, which it claims is far more generous than what most architecture offices offer, including an “industry-leading” family leave program, paid internships, full insurance coverage, 30 days of paid vacation, and company shares as part of a newly rolled-out employee stock ownership plan (ESOP).
Following the lead of firms including Zaha Hadid Architects and IA Interior Architects, SHoP transitioned to an employee ownership last March, but it only began distributing shares in December. DiMaria argues that while the move sounds great on paper, “it doesn’t actually yield much of a material difference for workers.” He explains that the ESOP that SHoP now offers “is really just a retirement structure that falls under ERISA, the Employee Retirement Income Security Act. Under an ESOP, you do own shares of the company, but you don’t have any collective bargaining power or job protection. You can be fired at will. Management sets wages unilaterally.”
A report in Curbed implied that SHoP may have presented the ESOP to its staff as an alternative to unionization. However, according to Scura Partners, the financial adviser that oversaw SHoP’s ownership transition, the goal of the ESOP was to “ensure the continued success of SHoP through attracting and retaining the most talented architects and provide liquidity for the founding principals of the firm.” Indeed, many business owners turn to ESOPs because of the unique advantages for tax deferment they offer. The pandemic has only accentuated these advantages.
For employees, meanwhile, the benefits of share allocation and voting power are determined by the financial terms of the ESOP. In recent years, according to the National Center for Employee Ownership, “two-thirds of newly created ESOPs have been leveraged,” meaning that the ESOP takes out a loan to buy the shares from the original owners and places the shares in an independent trust, which controls the votes. Scura Partners confirmed that SHoP’s ESOP is leveraged, following “a process to find the least cost, most flexible capital provider to fund the recapitalization transaction.”
If SHoP’s goal is to empower employees through ownership, the chosen method of a loan-backed ESOP raises questions about what it means to own the firm. SHoP partners have touted disruptive revenue models as the source of the office’s growth. In its early key projects, such as Porter House, a 20,000-square-foot, four-story addition to a 1905 brick warehouse in New York’s meatpacking district, SHoP began taking part of its design fee in sweat equity in order to share in the developer’s profits. Since then, partners have continued to advocate this model and alluded to similar approaches in other projects.
But where is this sweat equity held? Today, there are over twenty LLCs registered to SHoP’s office at 233 Broadway, 11th Floor, with names such as Shop Africa LLC, Doublegadvisor LLC, Shppf LLC, Third Investors LLC, and Timing Chain LLC. There is very little information about the purpose or value of these companies; however, according to property records, at least one, 30LITTLERAMISLAND LLC, was used to purchase a $4.9 million home in New York around the time that the ESOP was announced. Other LLC names refer to streets where SHoP has designed projects for other developers. When asked about these LLCs, a spokesperson for SHoP stated that they are not included in the ESOP. As a private company, SHoP is under no obligation to disclose the details of its holdings. According to the evidence, however, it is at least possible that some assets and equity, built up by the sweat labor of staff over two decades, will not transfer to employee ownership. On the other hand, the statements from ShoP’s financial adviser confirm that employees will assume responsibility for the ESOP loan repayment. Will the ESOP help them gain greater control over the firm and assets they helped grow, in part, through unpaid overtime hours? Or are they merely assuming responsibility for a company stripped of the sweat equity that, as SHoP partners have argued, sets the firm apart?
In the U.S., which places barely any restrictions on sweat equity practices, this behavior is hailed as innovative business thinking. By contrast, the Netherlands and other countries with more regulated economies combat sweat equity in order to keep architects’ fees high across the board and prevent competing firms from undercutting each other.
Sweat equity can help explain SHoP’s meteoric rise from a relatively unknown firm to an office on par with industry leaders practically overnight. But at the end of the day, it is the architectural workers at SHoP who foot the bill, providing 60-, 70-, and in one instance, 110-hour work weeks without paid overtime to make projects happen. This seems particularly problematic given that some of the founding principals have bought and sold properties in their own firm’s projects (such as a condo in the Porter House, which two partners bought for $1.3 million in 2006 and sold for $3.2 million in 2017).
In an interview with Mansion Global, another founding partner, Gregg Pasquarelli, said he has lived in SHoP-designed buildings for the past 20 years. The formation of a union within the firm may have disrupted the “disruptive” fee structure that resulted in such imbalances.
Throughout its campaign, the AWU unit at SHoP maintained that the problems it encountered are present in design offices everywhere. Cultures of overwork, exploitation, and abuse are deeply embedded within architecture, beginning at the college level.
“Professional practice instruction when I was a student consistently reinforced classism,” says Susanō Surface, the strategic investment lead at the Seattle Office of Arts and Culture and professional practice instructor at Cornish College of Arts. After attempting to unionize graduate students at Yale in 2009, Surface recalls, they were met with pushback by a tenured professor who today is considered a major voice for organized labor, revealing antagonisms within architecture’s labor movement itself that need working through.
Critical supporters of the movement like Cruz García, an associate professor at Iowa State University and co-director of the design office WAI Think Tank, are already looking beyond SHoP to the systemic issues facing the profession. “How can we discuss solidarity in a discipline known for cutthroat competition and complicity with capitalism?” he says. “Are architects unionizing so we can continue building skyscrapers for billionaires and continue gentrifying Harlem and the Bronx, or are we unionizing so we can demand more equitable forms of architectural practice? We cannot lose focus of a bigger picture that includes not only the workers, but the impact of their work and presence on society at large.”
Antagonism, García suggests, is unavoidable in a profession whose products often have a negative impact on the social and ecological well-being of people and places. Regardless of the outcome, perhaps the SHoP drive will awaken more architectural workers to the everyday struggles that their work touches, impinges upon, or cuts across. It’s too soon to tell, but maybe AWU’s efforts will help bring about a reordering of the discipline’s priorities at large. For now, workers may take comfort in knowing that the mere threat of unionization is keeping their bosses up at night. ⬤
DAN ROCHE is an adjunct professor, curator, and writer in New York. He researches socialist art and architecture, labor history, and internet culture.
Drawing by Angela Sun.
This piece is from Issue #26 of New York Review of Architecture, to support the work and receive the issue, subscribe here.