08 February 2012

Jobs in the App Economy

Michael Mandel has done a rough estimate of the jobs created  in the "app economy" since 2007 and published his results in a paper for TechNet (here in PDF). He concludes:
How can the U.S. dig itself out of the current job drought? Government policy can temporarily boost employment. The ultimate answer, though, is innovation:  The creation of new goods and services that spur the growth of new industries capable of employing tens or hundreds of thousands of workers.1

Nothing illustrates the job-creating power of innovation better than the App Economy. The incredibly rapid rise of smartphones, tablets, and social media, and the applications—“apps”—that run on them, is perhaps the biggest economic and technological phenomenon today. Almost a million apps have been created for the iPhone, iPad and Android alone, greatly augmenting the usefulness of mobile devices. Want to play games, track your workouts, write music? There are a plethora of apps to choose from, many of them free.

On an economic level, each app represents jobs— for programmers, for user interface designers, for marketers, for managers, for support staff. But how many? . . .

The App Economy now is responsible for roughly 466,000 jobs in the United States, up from zero in 2007 when the iPhone was introduced. This total includes jobs at ‘pure’ app firms such as Zynga, a San Francisco-based maker of Facebook game apps that went public in December 2011. App Economy employment also includes app-related jobs at large companies such as Electronic Arts, Amazon, and AT&T, as well as app ‘infrastructure’ jobs at core firms such as Google, Apple, and Facebook. In additional, the App Economy total includes employment spillovers to the rest of the economy.
The methodology is rough -- one could easily justify a number half as big or twice as large. In either case, the job numbers are big. The numbers are rough estimates because government economic data is not yet caught up with this fast-changing aspect of the national economy.

The analysis thus raises a larger question: How do we think intelligently about innovation and its consequences when the relevant data doesn't even measure what is going on in the current economy. Are we trying to drive by looking in the rear-view mirror?