New Study Confirms SIIA Findings on Software's Economic Impact

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Two years ago, SIIA published a study on the economic effects of the software industry.  The study found:

  • All told, the software industry in 2012 contributed $526 billion to GDP
  • Software accounted for 12.1 percent of all U.S. labor productivity gains from 1995 to 2004 and 15.4 percent of those gains from 2004 to 2012
  • Direct employment in the software industry increased from 778,000 jobs in 1990 and 1,083,000 jobs in 1995 to 2,501,000 in 2014
  • About 12 percent of U.S. software production is exported, totaling some $50 billion to $57 billion in 2012

In their recent study, BSA makes similar points about the positive impact of the software industry:

  • In 2014, software contributed $1.07 trillion of US value-added GDP  
  • The software industry directly employs 2.5 million people, and indirectly benefits an additional 7.3 million workers
  • Software developers earn twice the average annual wage among all US occupations
  • More than 17% of domestic business research and development stems from the software industry, which amounts to roughly $52 billion

Additionally, BSA commented further on the economic benefits across various sectors of the economy. In agriculture, data from satellites, tractors and sensors has increased crop yields and boosted production. In smart cities, communities use Internet of Things (IoT) technologies to improve safety, efficiency and quality of life. For example, by creating 7,500 data points across the city, the NYC Fire Department has been able to harness predictive analytics and artificial intelligence to anticipate areas at high risk for fires.

The positive economic benefits from software also affect other sectors and regions. In their analysis of all 50 states, it is not surprising that California, Texas, and Virginia generate the majority of software jobs and spend the most on R&D. However, it is intriguing to see how many other smaller and agriculture-oriented states notably contribute directly and indirectly to software employment, GDP and R&D.

Recently, there has been a lot of buzz surrounding software innovation and declining levels of job growth. However, in his latest blog, the Senior Vice President of Public Policy at SIIA, Mark MacCarthy, notes that the notion that software innovation destroys jobs is completely unfounded. In fact, industries that invested most heavily in software over the past 15 years yielded relatively higher levels of job growth.

Both directly and indirectly, it is clearly evident in both studies that software facilitates economic growth and job creation.

Niko Nikola Marcich is an intern with the SIIA Policy team. He is currently an undergraduate student at the University of Virginia studying foreign affairs and international economics.