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Software booms while US economy chugs along, report says

The software industry contributed more than $1 trillion to the US' GDP last year, and supports over 10 million jobs.


Google, headquartered in Mountain View, California, is among the tech giants that hold annual software developer conferences. California's software industry contributed the most to the GDP last year. 

James Martin/CNET

Software is virtually everywhere. It powers our devices and helps predict the weather. It transforms the way products are manufactured and helps us reduce energy.

So it's no surprise that it also provides a sizable boost to the US economy each year, according to a report out Tuesday from independent research organization the BSA Foundation. How much? The report says the software industry either directly or indirectly contributed more than $1.14 trillion to the total value-added US gross domestic product last year, an increase of 6.4 percent from 2014.


The software industry is growing all across the US, from California to North Carolina.

Software is also a powerful force in the job market. It directly employs 2.9 million people in the US and supports a total of 10.5 million US jobs, including those indirectly affected by the industry and its workers, such as accounting and real estate, the report says. Those numbers are up 14.6 percent and 6.5 percent from 2014, respectively. Overall US employment, by comparison, increased 3.9 percent from 2014 to 2016.

The numbers underscore the importance of software on society. From the games we load on our phones in our free time to the programs that manage our power grid, there are few aspects of our lives that aren't touched by software. The GDP contribution further illustrates its growing influence.

The software industry "has an impact across so many different industry sectors," said Victoria Espinel, president and CEO of BSA | The Software Alliance. They include manufacturing, health care, transportation and agriculture. "Every economic sector across the US is either being enabled by software or is part of the software industry."

The software industry's growth is reflected in all 50 states, according to the report, with rapid increases in places you might least expect, such as Idaho and North Carolina, where direct value-added GDP from software was up more than 40 percent. Other states, including Utah, Kansas and Nevada, experienced 30 percent growth. Espinel said this is because the industry is making investments all across the country -- not just in California.

But California's software industry, thanks to Silicon Valley, did contribute the most to the GDP, at $124.7 billion. New York contributed $49.1 billion, and Texas, where Dell is headquartered and companies including IBM and Microsoft have significant investments, contributed $37.2 billion.

Software workers further power the economy as they spend their generous salaries. The average wage for software developers is $104,360, according to the report. That's more than two times the average annual wage for all US occupations, which in 2016 was $49,630.

The growth in software-related jobs extends beyond having more app developers and web designers. It's led to the creation of jobs in fields like agriculture, where "precision agriculture" -- or the use of data to improve farming -- requires there be people deploying the sensors and drones that are out collecting data, as well as workers crunching the numbers. And in the auto industry, software is becoming increasingly important as cars get smarter and as more self-driving cars get ready to hit the road.  

The software industry has also increased its investments in research and development. In 2013, the most recent year for which data is available, software companies invested $63.1 billion, an increase of 21 percent from 2012. By comparison, the National Science Foundation invested $6.2 billion, NASA invested $12.2 billion and the National Institutes of Health invested $30 billion in research and development.

"This is an industry that is transforming itself and going through a period of tremendous change, but also tremendous positive growth," Espinel said. She noted that emerging technologies such as augmented reality, artificial intelligence and 3D printing are all either part of or enabled by the software industry. "There is a huge amount of investment that is going on in terms of the products that they develop today, but also in terms of creating the future."

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