Software, the U.S. Economy and Small Business  

By at 28 November, 2016, 4:39 pm


by Raymond J. Keating-

In June, a study titled The Economic Impact of Software was published by the BSA/The Software Alliance. The report made clear the importance of the software industry to jobs, income and the U.S. economy. In turn, it’s critical to understand the role that small business plays in the industry.

Among the key findings in the study were:

Big Contributions to GDP. In terms of direct and induced impact, “software was responsible for a total $1.07 trillion of all US value-added GDP in 2014.”

Millions of Jobs. As reported, “While the software industry itself directly employed 2.5 million people in the US in 2014, research shows the software industry supports a total of 9.8 million jobs when including the indirect and induced jobs that software supports.”

Higher Wages. “Not only does software support millions of good jobs, but these are great-paying jobs, too. For example, software developers earned $108,760 on average in 2014 — more than twice what the average worker earns — $48,320 a year — for all US occupations.”

The study also highlighted how investments and innovation in software reach into practically all aspects of our lives and careers, and laid out the economic impact of the software industry by state.

Software Is About Small Business

But there’s still more to understand about the software industry. As explained in SBE Council’s book  “Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment,” small business overwhelmingly populates the software industry. The latest Census Bureau data, for example, tell us that among software publishers, employer firms with less than 20 workers account for 73 percent of those businesses, those with less than 100 employees registered 91 percent, and employer firms with less than 500 workers accounted for 96 percent.

Looking ahead, like most other industries, the software business will be aided by reducing costs and enhancing incentives for risk taking via tax and regulatory relief and reform. For good measure, entrepreneurs, small businesses and large firms in software would reap rewards from a reduction in barriers to international trade, and an enhancement of intellectual property protections at home and internationally.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.


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