Employment in Software Development
The first year the United States Bureau of Economic Analysis (BEA) published employment figures for those in software development field was 1977. That year, the BEA reported about 200,000 individuals were employed in software development in the USA; and, in 2006, there were about around 2 million.
The USA economy is a growing economy and the total number of all jobs in the USA doubled between 1977 and 2006. Software jobs in the USA during this same twenty year period went up about ten times. This means jobs in software development are growing five times as fast as the rest of the USA economy. As I pointed out early in the chapter, other industries have seen this same rapid growth followed by an equally rapid decline. I cannot overstress this rapid growth is not unique to software development.
Gross Output
The Bureau of Economics Analysis (BEA) uses gross output and gross domestic product to measure the contribution to the economy. Gross output represents the market value of an industry production, and it differs from Gross Domestic Product (GDP). Gross output is larger than GDP since it includes the value of intermediate goods and services that are netted out of GDP. GDP includes only final goods and services. Software developed for internal use would be considered an intermediate product, and software developed for external sale would be considered a final product. Software can be both a final product and an intermediate product; therefore, gross output is a better measure than gross domestic product software’s contribution to the overall economy.
The BEA tracks gross output for 65 different industries. If gross output is divided by the number employed in a specific industry, then gross output per employee is obtained. This would be a rough measure of how much a specific industry contributes to the economy. It also allows comparison of industry to industry. Gross output per software developer does not make the top 25 industries. In fact, software development ranks 39 out of the 65 industries tracked by BEA. This means software development is in the bottom half of those contributing to the US gross output. The good news is software development is moving up. In 1987 it was ranked 46; so in 16 years, the software development has moved up 7 places.
A farmer contributes more to gross output than the typical software developer. Gross output per those employed in farming is nearly twice that of a software developer. A farmer contributes $325,032 to gross output while a software developer contributes only $182,407. Just like software today, the agricultural sector was once a very labor-intensive industry. The productivity of the individual farmer has soared over the past century because of the use of tools and better farming techniques. It is amazing to compare the top of the line farm tractor manufactured in the 1950s with a top of the line farm tractor manufactured today. The tools used in farming have helped the farmer increase productivity.
As the following table demonstrates, gross output per software developer lags behind nearly all manufacturing industries. Software developers do a bit better than those in the wood working industry and those fabricating metals. Software developers are far behind those in the motor vehicles, paper, and chemical industries. One of the reasons for these low numbers is software development is still very labor-intensive. The tools and techniques of the other industries are far superior to the software industry. This is starting to change, but software is still put together by hand.
| Industry Sector | Gross Output Per Worker |
|---|---|
| Textile Product Mills | $176,350 |
| Metal Fabrications | $177,639 |
| Wood Products | $181,347 |
| Software Development | $182,407 |
| All Manufacturing | $314,196 |
| Paper Products | $320,661 |
| Motor Vehicles | $439,000 |
| Chemical Products | $615,639 |
As the manufacturing sector matured, by using a combination of automation and foreign labor, it increased per employee productivity. This was accomplished by the introduction of better tools, methods, and outsourcing of work to foreign lands especially, Asia.
The software industry is headed down the same path as manufacturing and agriculture industries. There is desire to increase productivity by using better techniques, tools, and by outsourcing. The software trend rhymes with other industries.