Everyone wants to know how valuable their job or industry is to the economy. That may be even more true for people working in the software industry, which continues to affect nearly every business and industry. So, how much is software worth to the US economy?
That's right—trillion, with a "T." According to a new report from trade organization The Software Alliance (BSA), software added $1 trillion of total value to the US GDP contribution, as well as millions of jobs and economic impact in all 50 states.
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Let's break down the numbers. In terms of direct contribution, the software industry technically added only $475 billion to the US economy in 2014. However, when you factor in the indirect effects as well, the BSA claimed that it totaled $1 trillion in that same year. To put that into perspective, the total estimated US GDP for 2014 was $17.4 trillion.The BSA's report said that software supports almost 10 million jobs nationwide. Of that 10 million, only 2.5 million were jobs in the software industry, itself, but the remainder came from software impacts in other industries.
Another big impact software made was in research and development (R&D). According to the report, the software industry makes up 17% of all R&D in the US, with more than $52 billion invested in R&D in 2012.
As noted above, software is impacting the economy of every US state, but not evenly. Here are the top 10 states in terms of direct GDP contribution:
- California - $90.5 billion
- New York - $37.1 billion
- Texas - $30 billion
- Washington - $27.6 billion
- Virginia - $25.8 billion
- Massachusetts - $22.6 billion
- New Jersey - $16.4 billion
- Illinois - $16.1 billion
- Florida - $15.8 billion
- Pennsylvania - $13.3 billion
Additional data from The Economist Intelligence Unit (EIU) showed that software has grown at double the annual growth rate for the US economy as a whole from 2004-2014. The direct GDP contribution from the software industry grew 78% in that same time period. And, in terms of the total GDP contribution, it grew 54%.
Over that same period of 10 years, employment in the software industry jumped from 1.8 million in 2004 to 2.5 million people in 2014. And, the wages for those jobs are nothing to balk at either. In 2015, the average annual wage for a software developer in the US was $108,760. That's more than twice the amount of the average annual wage for all US occupations, which was $48,320.
SEE: Tech industry employment soars past 6.7 Million, led by IT services (TechRepublic)
While these numbers are extraordinary, it is worth noting that the BSA is an advocate for the software industry, and this report is about software. In an effort to mitigate this conflict of interest, the report was apparently validated by third-parties, Vijay Gurbaxani and Vidyanand Choudhary of the University of California Irvine Paul Merage School of Business.
BSA president and CEO Victoria A. Espinel said that, when most people think about software, they're likely just thinking about what programs they use on their desktop at work.
"Software is so much more—the apps we use every day are software," Espinel said. "Data analytics is driven by software. Cloud computing is enabled by software. Software powers industry solutions in everything from our global financial infrastructure to aerodynamics systems to more efficient transportation."
The 3 big takeaways for TechRepublic readers
- A new report claims that the software industry, directly and indirectly, added a total of $1.07 trillion to the US economy in 2014, up from $649 billion in 2004, a 54% increase.
- According to the report, the US software industry accounts for 17% of the total R&D in the US, around $52 billion.
- Software accounts for the employment of almost 10 million jobs, due to its direct and indirect impact on certain industries, and the average software developer made $108,760 in 2015.
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Conner Forrest has nothing to disclose. He doesn't hold investments in the technology companies he covers.
Conner Forrest is a Senior Editor for TechRepublic. He covers enterprise technology and is interested in the convergence of tech and culture.