In today’s AEC market, retention isn’t just about culture – it’s about whether employees can afford to stay.
Recruitment and retention have been persistent challenges in the AEC industry, but the pressure is evolving. According to Zweig Group’s 2026 Principals, Partners + Owners Report, staffing remains the number one issue facing firm leaders today. What’s changing is why: It’s no longer just about competition for talent. It’s about affordability.
Employees – especially younger professionals – are feeling squeezed, and they’re responding accordingly.
The new reality: Talent is doing the math
For years, firms have competed on culture, project experience, and career opportunity. Those factors still matter, but they’re no longer enough on their own.
The data is clear. According to Deloitte’s 2025 Gen Z and Millennial Survey, cost of living is the top concern for both generations for the fourth consecutive year. Nearly half of Gen Z (48%) and millennials (46%) say they do not feel financially secure, and eight in 10 report that financial stress impacts their daily lives.
At the same time, these employees are highly mobile. About 31% of Gen Z and 17% of millennials say they plan to leave their employer within two years. When asked why, the answer consistently comes down to three things: money, meaning, and well-being.
In other words, employees are making rational decisions. If they can earn more elsewhere – and relieve some of that financial pressure – they will.
Raises aren’t keeping pace
The affordability gap isn’t just perception – it’s grounded in real economic pressure. According to the Bureau of Labor Statistics, inflation averaged 2.7% in 2025 and 2.9% in 2024. On the surface, that looks relatively stable. But that stability comes after a period of significant disruption. In the five years leading up to 2020, inflation averaged just 1.82%. In the five years after, it averaged closer to 4.5%, with peaks of 7% in 2021 and 6.5% in 2022.
That matters because compensation hasn’t kept pace over that full cycle. Even with steady year-over-year raises, many employees are still effectively behind where they were pre-pandemic in terms of purchasing power. The cumulative impact of those high-inflation years created a reset in expectations – one that modest increases today aren’t fully offsetting.
Zweig Group’s 2026 AEC compensation data reflects this tension. Average raises vary by region, with firms in the East reporting average increases around 5.8%, compared to 3.2% in the Central region and just 2% in the West. Outside the East, however, raise levels suggest many firms are still falling short of what would be needed to meaningfully rebuild lost purchasing power.
For employees – especially younger professionals already feeling financial strain – the math is straightforward. If their compensation isn’t meaningfully improving their financial position, they will look elsewhere for opportunities that do.
Job hopping isn’t a trend – it’s a response
It’s easy to frame job hopping as impatience or lack of loyalty. That’s a mistake.
Younger generations are behaving exactly as the market incentives encourage them to. They know that switching firms often results in significantly higher compensation than staying put. They also know their skills are in demand.
Layer on top of that the expectations highlighted in Deloitte’s research: access to learning and development, meaningful work, and strong mentorship. When those expectations aren’t met – financially or professionally – the decision to leave becomes straightforward.
This is where many firms are missing the mark.
Managers are often still focused on oversight and task management, while employees are looking for guidance, development, and advocacy. When that disconnect exists alongside financial pressure, retention becomes even more fragile.
The affordability gap is a leadership issue
The instinctive response to this challenge is to focus on compensation alone. But that’s only part of the equation – and often not the most sustainable lever. The real issue is alignment.
Employees are evaluating their employer based on a combination of:
- Financial progress (Can I afford my life?)
- Career growth (Am I advancing?)
- Support and leadership (Does someone care about my success?)
When one of those breaks down, the others have to work harder to compensate. When two or more break down, turnover becomes inevitable.
That’s why firms that treat affordability as purely a compensation issue will continue to struggle. The firms that succeed will be the ones that take a broader view of employee value.
What firms should be doing now
Addressing affordability doesn’t mean simply raising salaries across the board. It means being more intentional about how compensation, growth, and communication come together.
That starts with transparency. Employees want to understand how compensation decisions are made, what it takes to advance, and how they can increase their earning potential over time.
It also requires a renewed focus on development. Learning and development consistently ranks as a top driver of retention, just behind work-life balance and career progression. When employees see a clear path forward, they are more willing to stay and grow.
And perhaps most importantly, it requires better leadership at the manager level. Employees are looking for mentors, not just supervisors. They want guidance, advocacy, and someone who helps them navigate both their career and their workload.
The path forward
The talent challenge in AEC isn’t going away. But it is changing.
Affordability has become a central factor in how employees evaluate their careers, and firms that ignore it do so at their own risk. When raises don’t align with cost of living, when growth feels uncertain, and when leadership doesn’t provide support, employees will look elsewhere.
The firms that adapt – by aligning compensation, development, and leadership around the realities their employees face – will have a clear advantage. Because in today’s market, retention isn’t just about culture or opportunity. It’s about whether your people can afford to stay.
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Chad Coldiron is a principal and director of client relations and development at Zweig Group. Contact him at ccoldiron@zweiggroup.com. |
