Software industry responsible for estimated $1.14 trillion in economic benefits

(Courtesy of JaxBizJournals.com)

The software industry, which is responsible for the codes that bring electronics to life and puts the “smart” in smartphones, is emerging as a trillion-dollar force in the U.S. economy.

A newly released report, unveiled this morning by Software.org: the BSA Foundation, found that the software industry added $564.4 billion in direct value added to the U.S. gross domestic product in 2016, marking an 18.7 percent increase from 2014. Additionally, because so many industries rely on software, the report said the industry is responsible for $1.14 trillion in indirect and induced benefits to the U.S. economy last year.

It also highlights Idaho and North Carolina as two states where the industry has made sizable gains as part of their local economies in recent years.

The increased gains from the software industry come at a time when many local markets are seeing tepid economic improvements in particular areas.

The report notes that software entails far more than the programs on a worker’s desktop computer. It includes apps, data, cloud computing, and the many other digital products that businesses and governments use every day.

software

Software companies are putting more money into future technologies, as well. The report found that the software industry invested more than $63 billion in research and development in 2013, the most recent year for which data was available. That sum is up 21 percent over the prior year.

Software industry employment has seen significant growth in recent years. The industry accounted for 2.9 million jobs in 2016, a 14.6 percent increase over 2014. Put another way, the industry has added more than 350,000 jobs since 2014. On average, software developers earn $104,360 each year, the report said.

As for state-level gains, California’s software industry was calculated to have alone directly contributed $124.7 billion to the GDP in 2016. New York came in at No. 2 with $49.1 billion, followed by Texas with $37.2 billion.

The report found that 35 states saw their direct value-added GDP from the software industry grow by more than 20 percent between 2014 and 2016. Two states, Idaho and North Carolina, saw an increase of 40 percent between 2014 and 2016. The software industry contributes $900 million and $13.2 billion to the GDP in Idaho and North Carolina, respectively.

Software.org: the BSA Foundation commissioned The Economist Intelligence Unit, the research and analysis division of The Economist Group, to conduct the study earlier this year. The EIU relied on data collected by IMPLAN, the National Science Foundation, the U.S. Bureau of Economic Analysis, the U.S. Bureau of Labor Statistics and the U.S. Census Bureau.

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