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Groundbreaking Study of U.S. Software Industry Shows Wide-Ranging Impact on GDP, Productivity, Exports and Jobs
[September 18, 2014]

Groundbreaking Study of U.S. Software Industry Shows Wide-Ranging Impact on GDP, Productivity, Exports and Jobs


(Targeted News Service Via Acquire Media NewsEdge) WASHINGTON, Sept. 17 -- The Software & Information Industry Association issued the following news release: The Software & Information Industry Association (SIIA) the principal association for the software and digital content industries, today released the results of a comprehensive study of the economic impact of the U.S. software industry. The groundbreaking report examines the various ways in which the software industry affects economic growth, trade, jobs, and more. While confirming the central role of software in increasing business productivity and investment, the study finds that software and the technology it enables are playing an increasingly vital role in creating American jobs and expanding exports.



To produce The U.S. Software Industry: An Engine for Economic Growth and Employment, SIIA worked with independent economic analysis firm Sonecon and its chairman and co-founder Robert Shapiro, former undersecretary of commerce for economic affairs under President Bill Clinton. The study represents a rigorous empirical analysis of the economic effects arising from the diffusion of software across U.S. businesses and households. The study was announced today during an event on Capitol Hill, and its findings and implications were discussed by Shapiro, Deputy Commerce Secretary Bruce Andrews and executives from Oracle, Intuit and GM.

The full version of the study, along with a detailed executive summary, is available here. (http://bit.ly/SIIAstudy) The study makes it clear a tremendous shift that has taken place during the last 20 years - software has become a vital enabling technology used in virtually every economic sector and industry. As a result, the study shows, the software industry contributes an increasing amount to GDP. From 1997 to 2012, U.S. software industry production increased from $149 billion to $425 billion, increasing its direct share of U.S. GDP from 1.7 to 2.6 percent. During that same period, the industry experienced an annual average growth rate of 7.2 percent - fully two-thirds faster than the overall economy.


The study examines how software is increasingly driving overall economic productivity and finds that it accounted for 12.1 percent of all U.S. labor productivity gains from 1995 to 2004, and 15.4 percent from 2004 to 2012. From this, the study determines that software accounted for 9.5 percent of all gains in U.S. output between 1995 and 2004, and 15 percent of all gains from 2004 to 2012.

In 2012, software and the productivity increase it provides accounted for $101 billion in production by other industries, bringing its total direct and indirect contribution to U.S. output to $526 billion, or 3.2 percent of GDP. Additionally, exports of software and related services have grown between 9 and 10 percent each year since 2006 - outpacing all U.S. exports by nearly 50 percent.

"The central role of software in business operations is clear, but the role it plays in driving the American economy has not been well understood until now," said SIIA Vice President of Public Policy, Mark MacCarthy. "Using solid data, we've been able to capture the real economic impact of software and software-driven automation. Software has become an enormous driving force, creating significant economic output and jobs as an industry and serving as an economic catalyst across almost the entire U.S. economy. In fact, our study finds that every 10 software jobs support five jobs in other industries." While software's increasingly integral role in nearly every industry is often recognized for improving business productivity, some have suggested that software-enabled automation has harmed job growth in the U.S. The SIIA report takes this question head-on, and finds no evidence supporting this claim. In fact, the study shows a correlation between software and job gains - identifying three critical ways in which the software industry supports U.S. jobs.

MacCarthy continued, "There's an unfounded myth that software-driven automation is going replace skilled workers. But with this comprehensive and independent economic analysis, we see a clear connection between software and job growth. As a quickly growing industry, software is creating many jobs on its own, but it's also creating jobs through purchasing from other industries and by enabling business expansion that leads to job growth." More specifically, the first jobs contribution of the software industry is direct employment, which has grown from 0.9 percent of American workers in 1990 to 2.2 percent today, and currently directly employs 2.5 million American workers, up from 778,000 in 1990. This is a growth rate that is consistently ahead of overall job growth in this country.

The second way in which the U.S. software industry contributes to employment is through the purchasing of products and services needed to run software businesses. In 2012 alone, U.S. software companies supported an additional 1.1 million jobs by consuming $212 billion in goods and services produced by other industries. Every 10 software jobs supports five more jobs in other industries - this 1.5 multiplier is well ahead of other industries, such as education (1.12), retail (1.14), health care (1.18), and arts, entertainment and recreation (1.19).

The third, and arguably most important, contribution is creating jobs in industries that purchase and use software. SIIA's economic analysis finds that industries which invested most heavily in software over the 15 years from 1997 to 2012 - including financial services, scientific and technical services, and education - had strong rates of job growth. While the correlation between investment in software and job growth is modest, it is nonetheless clear and significant - and directly contradicts the often repeated argument that automation is a job-killer.

TNS 24HariCha-140918-30FurigayJane-4864627 30FurigayJane (c) 2014 Targeted News Service

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