U.S. App Economy Update

U.S. APP ECONOMY UPDATE

U.S. App

Economy Update

Dr. Michael Mandel

May 2017

U.S. APP ECONOMY UPDATE

About the author

Dr. Michael Mandel is chief economic strategist at the Progressive

Policy Institute (PPI) in Washington. Dr. Mandel is currently Senior

Fellow at the Mack Institute for Innovation Management at the

Wharton School at the University of Pennsylvania. Dr. Mandel

started two businesses: South Mountain Economics LLC, a

consulting rm focusing on emerging occupations and emerging

industries; and Visible Economy LLC, which produced news

and education videos for the college market. Dr. Mandel is the

author of four books, including The High Risk Society and Rational

Exuberance: Silencing the Enemies of Growth and Why the Future Is

Better Than You Think. His essentials-level economics textbook

from McGraw-Hill, Economics: The Basics, is into its third edition.

Dr. Mandel received a PhD in economics from Harvard University,

and taught at New York University’s Stern School of Business.

U.S. APP ECONOMY UPDATE

When Apple introduced the

iPhone in 2007, that initiated

a profound and transformative

new economic innovation.

While central bankers and national leaders

struggled with a deep nancial crisis and

stagnation, the fervent demand for smartphones

was a rare force for growth. Today, there are

four billion smartphone subscriptions, an

unprecedented rate of adoption for a new

technology.

Use of mobile data is rising at

55 percent per year, a stunning number that

shows its revolutionary impact.

More than just hardware, the smartphone also

inaugurated a new era for software developers

around the world. Apple’s opening up of the App

Store in 2008, followed by Android Market (now

Google Play) and other app stores, created a way

for iOS and Android developers to write mobile

applications that could run on smartphones

anywhere.

The iPhone and the App Store were the

beginnings of a global App Economy: an army

of app developers writing mobile applications

for billions of users. For the most part, these

developers are not hobbyists writing games in

their basements. Instead, as more and more

U.S. App Economy Update

MAY 2017

Dr. Michael Mandel

INTRODUCTION

U.S. APP ECONOMY UPDATE

people are linked to the Internet through their

smartphone and mobile data connections,

mobile apps have become an essential way

for businesses, nonprots, and governments

to interact with their customers, members, and

citizens. (Indeed, data shows that people spend

most of their internet time interacting with

apps).

Use of mobile data is rising at

55 percent per year, a stunning

number that shows its

revolutionary impact.

Moreover, the long-term growth prospects of

the App Economy are still strong. Yes, the great

surge of new game, media, and ecommerce

apps is probably close to its peak. However, the

rise of the Internet of Things means that more

and more objects and physical processes will

be connected to the Internet.

Increasingly, individuals will be using mobile

apps as their interface to their home, travel,

entertainment, car, schools, health providers,

and state and local governments. Employees

in many enterprises are using mobile apps to

monitor or control work processes. These apps

will be highly functional and sophisticated,

serving an essential role in interacting with our

environment.

THIS PAPER

Building on previous work, this paper examines

the number of jobs created by the App Economy

in the United States. Our rst estimate of App

Economy employment in the United States was

issued in February 2012, based on fall 2011

data.

This gure of 466,000 was widely reported

in the media at the time.

We then published

additional estimates in October 2012; July 2013,

which coincided with the fth anniversary of

the launch of the Apple App Store; and January

2016.

In this paper we update our most recent release,

and estimate that App Economy employment

in the U.S. totaled 1.729 million as of December

2016 (Table 1). In other words, by our estimate,

the number of App Economy jobs in the United

States has nearly quadrupled over the past

ve years, growing at a 30 percent annual rate

(Figure 1).

U.S. APP ECONOMY UPDATE

Total U.S. App Employment Average annual growth since fall 2011

1.729 million

Jobs

30%

per year

DECEMBER 2016

500

1,000

1,500

2,000

2,500

Oct 11 Oct 12 Oct 13 Oct 14 Oct 15 Oct 16

Trend line

FIGURE 1: U.S. App Economy Employment Over Time (thousands of jobs)

TABLE 1: The U.S. App Economy

Data: South Mountain Economics, Progressive Policy Institute, Indeed, The Conference Board

Data: Progressive Policy Institute, Indeed, public job postings

This stunning growth in App Economy

employment roughly parallels the growth in the

number of iOS and Android apps, which have

more than quadrupled over the same period.

Meanwhile, consumers spend vastly more time

on their smartphone apps today than they did

in 2011.

In addition, this paper estimates the breakdown

of App Economy employment by operating

system, comparing the number of jobs in the

iOS ecosystem with the number of jobs in

the Android ecosystem. Finally, we provide a

ranking of the top 25 App Economy states in the

country, starting with California, New York, and

Texas at the top, with states such as Missouri,

Tennessee, Wisconsin, Indiana, and Utah.

U.S. APP ECONOMY UPDATE

CONTEXT

In this paper we focus on App Economy

employment in the United States. However,

this paper is part of a larger research project

examining App Economy employment in

different countries and regions, including the

European Union, Japan, Australia, Mexico,

Argentina, Colombia, Vietnam, Indonesia,

and China.

There are several reasons we have focused on

App Economy jobs. First, the invention of the

smartphone was one of the two most important

technological innovations over the past decade,

from the perspective of economic impact, so

it’s natural to want to know how many jobs it is

creating.

These are not numbers that can be

found in government statistics, which typically

have trouble capturing the impact of new

technologies.

The App Economy, because it doesn’t t neatly

into the old economic paradigms, is particularly

hard for traditional government statistics to

measure. For example, statistical agencies

that count exports have no category in trade

statistics for the revenues generated by the

export of domestically-created apps to other

countries, even though these revenues may be

very signicant. Indeed, statisticians may not be

counting these exports at all.

The App Economy, because it

doesn’t t neatly into the old

economic paradigms, is particularly

hard for traditional government

statistics to measure.

The other reason we have focused on App

Economy employment has to do with the

broad ongoing debate about the link between

technological innovation and jobs. There’s a

pervasive worry, especially in the aftermath

of the nancial crisis, that new technologies

destroy jobs without creating very many

new ones.

So we see reputable business

publications like Fortune and the Wall Street

Journal run articles with titles like “Silicon

Valley Is Not a Job Creator” and “Wireless Jobs

Evaporate Even As Industry Expands.”

10,11

U.S. APP ECONOMY UPDATE

Unfortunately, government economic statistics

are much better at tracking the reduction of

existing jobs than identifying the growth of

new types of jobs. For reasons of both budget

limitations and inertia, it takes years for new

occupations to get their own categories in

the employment statistics, if it ever happens

at all. For example, the term “Web developer”

was only added to the Standard Occupational

Classication in 2010. However, the term was

in common use at least as early as 1995, when

visitors to the ofcial White House Web page

were invited to send emails “to the White House

Web developers and maintainers.“

This lack of data made it harder to measure

the employment impact of the Internet and the

New Economy. Equally important, without being

able to track new jobs, it’s impossible to gure

out if policies are succeeding or failing. Without

data—specically data about the contribution of

the App Economy to individual countries—policy

makers in Hanoi, or Berlin, or Washington can’t

make the right decisions.

MEASURING THE APP ECONOMY

The economic impact of the App Economy

can be characterized by various metrics. One

important metric is the total revenue flowing

through the various app stores, both globally

and nationally. One report pegs global app

revenues at $45 billion in 2016, with the Asia-

Pacic market accounting for 56 percent of

that.

A related metric is the revenue per app,

which measures the value to developers. By

some reports, “the average iOS download now

generates four times the revenue for developers

compared to Google Play.”

However, the revenue metric, while important, far

understates the full economic impact of the App

Economy. Many heavily-used apps from non-

game companies, nonprots, and governments

are free to download and have no in-app

purchases, meaning they generate no revenues

on an app store. For example, Facebook

Messenger has 1 billion users worldwide,

according to Facebook. But, as a free app, it

generates no revenue through the App Store or

Google Play. Similarly, visitors to Washington,

D.C., can download a variety of free apps that

help in navigating the local transit system.

These apps generally provide no revenue, but

do provide benets for their users.

Moreover, the revenue numbers for the app

stores tell you where apps are generating

revenue, but not where they are produced. Most

game developers have operations around the

world. For example, Gameloft—a company

that makes games for iOS, Android and other

platforms—is headquartered in Paris. However, it

has ofces in 18 countries and was advertising

in October 2016 for game designers in locations

U.S. APP ECONOMY UPDATE

such as Mexicali (Mexico), Lviv (Ukraine), and

Da Nang (Vietnam). The Da Nang location was

established in 2010 and now has almost 500

employees. It would be misleading to attribute all

of Gameloft’s app revenue to France.

Similarly,

a non-tech company like Walmart or BMW that

offers an app may develop it internally, or hire an

app developer anywhere around the world.

The Da Nang location was

established in 2010 and now

has almost 500 employees.

For these reasons, we have chosen to use

employment as our preferred metric for

measuring the economic impact of the App

Economy. Our methodology (described in the

Appendix) is based on analyzing databases of

online job postings. These job postings typically

contain information about the skills required

for the job and the location of the job. We are

then able to search for jobs that require App

Economy-related skills, such as knowledge of

iOS or Android. In this way we can develop an

estimate of App Economy jobs by country

and region.

This methodology uses what is known as

“organic data.” As opposed to economic data

collected by government statisticians using

special surveys, organic data is generated by

organizations in the course of doing normal

business. For example, economists have

successfully used the prices posted by retailers

on their websites to estimate the inflation rate

without the need to do the usual monthly survey

of businesses.

Our methodology for using online job postings

to estimate the size of the App Economy was

originally introduced in 2012, in a widely-quoted

paper that reported the rst estimate of U.S. App

Economy jobs.

In December 2015 we extended

and standardized the original methodology so it

could be applied to a wide variety of countries,

languages, and economic environments. Our

goal was to produce a set of globally-consistent

and credible estimates for App Economy

employment by individual countries, broad

geographical regions, and, where possible, by

the largest cities.

DEFINING THE APP ECONOMY

For this study, a worker is in the App Economy if

he or she is in:

• An IT-related job that uses App Economy

skills—the ability to develop, maintain, or

support mobile applications. We will call

this a “core” app economy job. Core app

economy jobs include app developers;

software engineers whose work requires

knowledge of mobile applications; security

engineers who help keep mobile apps safe

from being hacked; and help desk workers

who support use of mobile apps.

• A non-IT job (such as sales, marketing,

nance, human resources, or administrative

staff) that supports core app economy jobs

in the same enterprise. We will call this an

“indirect” app economy job.

U.S. APP ECONOMY UPDATE

• A job in the local economy that is supported

either by the goods and services purchased

by the enterprise, or by the income flowing

to core and indirect app economy workers.

These “spillover” jobs include local

professional services such as bank tellers,

law ofces, and building managers; telecom,

electric, and cable installers and maintainers;

education, recreation, lodging, and restaurant

jobs; and all the other necessary services.

We use a conservative estimate of the

indirect and spillover effects, as discussed

in the Appendix.

EXAMPLES OF APP ECONOMY JOBS

Core App Economy Jobs

App Economy workers are widely distributed

across the U.S. economy, both geographically

and in terms of industries. Of course, top

tech rms such as Apple, Google, Amazon

and Facebook hire hundreds of workers with

expertise in building and maintaining mobile

applications and the underlying infrastructure.

Mobile game companies, too, need developers

with a deep knowledge of iOS and Android.

But those jobs are just the very tip of the iceberg.

The App Economy has steadily expanded.

Retailers such as Target, Walmart and Best

Buy use apps as an essential channel for

reaching consumers. Media and entertainment

companies such as Disney and ESPN develop

apps to deliver content right to consumers.

Financial companies such as JPMorgan

Chase and Bank of America develop apps

as an essential part to their strategy to offer

new services and to wean consumers and

businesses away from expensive bank branches.

Moreover, these apps have to be continually

maintained and updated by app developers to

keep them secure.

Airlines and other transportation companies

cannot afford to be without apps these days.

Neither can automakers such as GM and Ford,

who are hiring app developers at a rapid pace

to help them gain a foothold in the market for

connected cars. Indeed, Michigan has almost

as many job openings for app developers these

days as for machinists.

And of course, the

military and intelligence agencies are big hirers

of App Economy talent.

Both startups and large companies are creating

App Economy jobs at a rapid pace. For example,

as of April 2017, Pager, a health tech startup

in New York City, was looking for a senior IOS

software engineer. Foursquare, founded in 2009,

was looking for an Android and an iOS engineer

in New York as well. In Ann Arbor, Interaction

Gaming, founded in 2016, was looking for an IOS

mobile developer to help with mobile apps for

the lottery industry.

At the other end of the size scale, Verizon

posted a position for a Senior iOS Developer in

Alpharetta, Georgia. Allstate, the giant insurance

company, was hiring for a senior iOS developer

in Northbrook, Illinois. Charter Communications

was looking for an Android Mobile Application

Developer in St. Louis, MO. JP Morgan Chase

was posting for a Mobile Application QA

Developer in Columbus, Ohio.

Media and retail companies need high-quality

mobile apps in order to survive. As of April

2017, Target was looking for a senior Android

engineer in Brooklyn Park, Minnesota, outside

of Minneapolis. Showtime was looking for an

iOS/tvOS Developer in New York City. In Austin,

Texas, Cox Automotive, which owns brands

such as Kelley Blue Book and Autotrader, was

looking for a senior mobile software engineer

to build iOS apps. Rue La La, a Boston-based

U.S. APP ECONOMY UPDATE

P10

ecommerce leader, was looking for a senior iOS

developer. Papa John’s, the national pizza chain,

was looking for an iOS developer in Louisville,

KY, who was willing to tackle new devices such

as connected vehicles and wearables. New

Balance was posting for a mobile architect

to join its ecommerce division in St. Louis,

Missouri.

The federal government, the Department of

Defense and intelligence agencies are also major

sources of demand for App Economy jobs.

For example, as of April 2017, Ball Aerospace

was looking for a “Software Developer-Mobile

Apps” in Dayton Ohio who was able to get a

Department of Defense security clearance. And

the NSA, of course, was advertising for a mobile

applications developer who would contribute

to both “Computer Network Defense” and

“Computer Network Exploitation.”

Probably the fastest growing sector of the

App Economy is the Internet of Things, which

is the application of information technology .

As of April 2017, John Deere was looking for a

mobile application developer in Urbandale, Iowa,

outside of Des Moines. DuPont Pioneer was

looking for a mobile architect in Johnston, Iowa.

Cricut, a maker of personal electronic cutting

machines, was posting for a Senior Android

Mobile Engineer in South Jordan, Utah. Emerson,

a Fortune 500 company, was looking for a senior

engineer experienced with iOS and Android to

join its operations in St. Louis, MO. ForeFlight ,

which produces apps for pilots and operators,

was looking for an iOS mapping developer

in Portland Maine. Of course, as the posting

suggested, “a pilot-coder, or individual looking to

pursue his or her private pilot license, is a plus.”

The App Economy is becoming a crucial part

of security and support. In April 2017, Ernst

& Young was searching for a senior security

consultant for mobile and infrastructure,

based out of Alpharetta, GA. Yudrio was

looking for a Mobile Device Security Analyst

U.S. APP ECONOMY UPDATE

P11

in Reston, Virginia. And Bluegrass Cellular,

in Elizabethtown, Kentucky, was looking for a

helpdesk support coordinator with “exceptional

knowledge” of Android and Apple email and

browsing systems.

Social and religious organizations are investing

in mobile apps as well. OkCupid, the dating

website, was looking to hire a Senior iOS

Engineer in New York City to help attract more

daters. Life.Church in Edmond, Oklahoma, was

looking for an iOS software engineer to help

build and maintain bible apps.

And then of course the auto industry has

embraced the connected car with a vengeance.

Ford Motor Company was looking for “innovative

and highly skilled iOS Mobile Development

Engineers” to join its Advanced Mobile/

Embedded Apps team in Dearborn, Michigan.

Meanwhile Systems Technology Group was

hiring for fty available positions for iOS or

Android developers for a “large Fortune 500

Automotive rm” in Michigan. This is the wave of

the future.

Indirect App Economy Jobs

App developers do not work in a vacuum.

Other workers at the same enterprise generally

support them. These positions include the sales

and marketing staff; human resources, nancial

and legal professionals; and the ofce and

administrative staff.

When we examine the distribution of

occupations in software-related industries,

we nd that employees in computer and

statistical occupations represent roughly

half the workforce.

In other ways, each tech

occupation job in an enterprise is associated

with roughly one other non-tech job. We use that

as our multiplier for indirect App Economy jobs

within an enterprise. In other words, the data is

consistent with an assumption that each App

Economy job created adds another job at the

same enterprise.

When we examine the distribution

of occupations in software-related

industries, we nd that employees

in computer and statistical

occupations represent roughly

half the workforce.

Spillover Jobs

How much impact does the creation of a core

App Economy job have on the broader economy?

This is a very important question, since we

want to know whether the benets of the

App Economy spread out to the parts of

the workforce that are not necessarily

technically trained.

Typically, economists who study economic

development distinguish between Type 1 and

Type 2 “multiplier effects.” Type 1 multiplier

effects refer to the additional jobs created by

increased purchases by the enterprise hiring

the App Economy worker. Type 2 multiplier

effects refer to the additional jobs created

because the newly hired App Economy worker

is spending more in the area. So, if a mobile

game development rm purchases additional

services and goods from local law rms and

ofce suppliers, that’s a Type 1 multiplier. If the

game company’s workers go home and make

appointments to have dental work at the local

dentist, that’s a Type 2 multiplier.

A review of the existing literature, including the

employment requirements tables put together

by the Bureau of Labor Statistics, suggests that

the Type 1 multiplier effect from an additional

job at a software company is likely to have a

broad impact across the whole service sector.

That means more jobs at local healthcare and

U.S. APP ECONOMY UPDATE

P12

education institutions, professional services

rms, building management, entertainment,

culture, nancial institutions, real estate,

retailers, hotels, and restaurants. So we would

expect a broad increase in service sector

employment as a spillover effect from the

expansion of the App Economy, including a

wide range of occupations. That might include

demand for additional commercial real estate

brokers, for example, as growing companies

need more space.

We want to be conservative about the size of

the spillover multiplier for the purposes of this

paper. Therefore, we assume that each core App

Economy job generates one indirect job in the

same enterprise and one spillover job in the rest

of the economy, with the benets accruing to a

wide range of occupations.

Our assumptions for the size of the spillover

effect are quite conservative. For example, the

Center for Automotive Research, in a study

done for Alliance of Automobile Manufacturer,

estimated that every new job in the automobile

industry generated 3.7 additional jobs in the rest

of the economy.

Another analyst estimated

that each job in the software publishing industry

generated 3.3 jobs in rest of the economy.

However, our use of a low multiplier increases

our condence in the nal result.

RESULTS

We estimate that total App Economy employment

in the United States was 1.729 million as

of December 2016. This includes core App

Economy jobs, indirect App Economy jobs,

and a conservative estimate of spillover jobs.

Because of the nature of the methodology,

the gure does not include hobbyists or the

smallest companies.

DATE OF ESTIMATE DATE OF PUBLICATION APP ECONOMY JOBS, THOUSANDS

FALL 2011 FEBRUARY 2012

466

APRIL 2012 OCTOBER 2012

519

JUNE 2013 JULY 2013

752

DECEMBER 2015 JANUARY 2016

1,660

DECEMBER 2016 MAY 2017

1,729

TABLE 2: Estimates of App Economy Jobs over Time

Data: South Mountain Economics, Progressive Policy Institute, The Conference Board, Indeed, BLS

U.S. APP ECONOMY UPDATE

P13

Note that, over the past ve years, App Economy

jobs have grown at an annual rate of roughly 30

percent. This growth rate in App Economy jobs is

roughly in the same ballpark as other measures

of app growth, such as the number of apps in

the various app stores and consumer usage

of apps. For example, from the fourth quarter

of 2012 to the fourth quarter of 2014, Nielsen

reports that time spent on apps increased at an

average annual rate of 28 percent.

Note that, over the past ve years,

App Economy jobs have grown

at an annual rate of roughly

30 percent.

To see just how far the App Economy has

outperformed the rest of the economy, just

take a look at Table 3. We see that the average

ve-year growth rate for all occupations is 1.6

percent. Employment in management and

professional occupations has risen at a 2.5

percent rate, with the number of people working

in computer and mathematical occupations

rising at a 4.9 percent rate.

Employment in management and

professional occupations has

risen at a 2.5 percent rate, with

the number of people working

in computer and mathematical

occupations rising at a 4.9

percent rate.

In other words, the App Economy is one of the

most dynamic parts of the economy in terms

of adding jobs, but conventional statistics don’t

pick up these gains.

U.S. APP ECONOMY UPDATE

P14

5-YEAR GROWTH RATE

ALL OCCUPATIONS

1.6%

MANAGEMENT AND PROFESSIONAL OCCUPATIONS

2.5%

COMPUTER AND MATHEMATICAL OCCUPATIONS

4.9%

APP ECONOMY JOBS

30.0%

TABLE 3: Five-year growth rate of employment, Fall 2011-Fall 2016

Data: BLS, Progressive Policy Institute

OPERATING SYSTEM

The two major smartphone operating systems

today are iOS and Android. Employers looking for

App developers often specify in which operating

system or systems they want their hires to

have expertise. This enables us to assign jobs

to either the iOS ecosystem or the Android

ecosystem, or both.

Table 4 shows the distribution of App Economy

jobs by mobile operating system.

DECEMBER 2016 (THOUSANDS)

ALL APP ECONOMY JOBS

1,729

iOS ECOSYSTEM

1,530

ANDROID ECOSYSTEM

1,353

TABLE 4: App Economy Jobs by Operating System

Data: Progressive Policy Institute

Note that the iOS and Android numbers add up to more than the total, because many App Economy jobs belong to both ecosystems.

U.S. APP ECONOMY UPDATE

P15

LOCATION

Generally, job postings have to contain the

location of the position. In particular, we can

identify the state where the position is located.

Table 5 below lists the top 25 App Economy

states, along with the number of App Economy

workers.

THOUSANDS OF JOBS

01 CALIFORNIA

419.1

02 NEW YORK

135.6

03 TEXAS

118.6

04 WASHINGTON

91.6

05 MASSACHUSETTS

73.6

06 ILLINOIS

72.3

07 VIRGINIA

67.0

08 FLORIDA

65.8

09 GEORGIA

51.0

10 NEW JERSEY

47.7

11 PENNSYLVANIA

46.1

12 OHIO

45.9

13 MICHIGAN

39.2

THOUSANDS OF JOBS

14 NORTH CAROLINA

37.9

15 MINNESOTA

37.7

16 MARYLAND

36.5

17 COLORADO

31.8

18 ARIZONA

24.7

19 DISTRICT OF COLUMBIA

24.2

20 OREGON

21.9

21 MISSOURI

18.5

22 TENNESSEE

18.0

23 WISCONSIN

17.6

24 INDIANA

17.1

25 UTAH

15.6

TABLE 5: The Top 25 App Economy States, December 2016

Data: Progressive Policy Institute

U.S. APP ECONOMY UPDATE

P16

CONCLUSION

There’s an ongoing debate about whether the

tech boom is generating enough jobs, and what

kind. This debate has been hindered, in part,

by a lack of good data. The categories used by

government statisticians to track tech industries

are too old to correctly pick up the growth in

tech-related activities.

In this paper we have focused on one important

slice of the tech boom: the jobs related to the

development, maintenance, and support of

mobile applications. We showed that starting

from nothing in 2007—before Apple released the

rst iPhone—there are now more than 1.7 million

jobs in the App Economy. Moreover, these jobs

We note that the order of this table is very

similar to the table we published in January

2016.

California, New York, and Texas are

still at the top of the list, although New York’s

number is somewhat lower because we made

a slight tweak to the methodology to eliminate

some spurious jobs. Washington has jumped

from #10 a year ago to #4, most likely on the

strength of Amazon’s hiring of App Economy

workers. Finally, note the large number of

Midwestern states in the top 25.

are distributed across the country and across

industries.

Apple released the rst iPhone in

2007—there are now more than 1.7

million jobs in the App Economy.

These results directly address the question

of job creation by the tech sector. Indeed,

we see that the investments tech and telecom

companies have made in the operating

systems for smartphones, in the hardware

for smartphones, and in the mobile networks

have paid off with job growth, not just in the

US, but around the world.

U.S. APP ECONOMY UPDATE

P17

Methodology Appendix

In practice, we compiled a short list of key words

and phrases that would generally be associated

with App Economy-related skills. These included

iOS, Android, Blackberry, Windows Phone,

Windows Mobile, and app. We applied these

search terms to the real-time database of job

postings developed by Indeed, which gave us

an unadjusted count of job postings for core

App Economy jobs.

However, that’s only the start. Job postings

for an occupation are only a fraction of the

number of people employed in that occupation,

since most positions are not empty.

develop an estimate for the ratio between

the number of job postings for tech jobs and

overall tech employment.

This ratio is applied

to the number of App Economy job postings

to generate a provisional estimate of core App

Economy employment. Crucially, we used a

validation procedure to ensure we are actually

counting job postings that correspond to core

App Economy jobs.

How do we tell which jobs require App Economy

skills? The key is to look at help wanted ads—

also called job postings—where enterprises

actually describe the skills and knowledge

they are looking for. The heart of the analysis

is the list of key words and phrases generally

associated with App Economy-related skills.

In previous studies we have built up extended

keyword lists. However, because we intend this

analysis to be repeatable across a wide range of

countries, we simplied the search terms.

Even today, most studies of job creation rely on

government-generated survey data. To estimate

the size of App Economy employment, however,

requires an innovative methodology based on

“organic data.” Organic data is generated by

organizations in the normal course of doing

business. In the past, organic data was not

easily accessible to analysts. However, much

more data is available on a consistent basis.

Our methodology for estimating the number of

App Economy jobs uses the continually updated

database of online job postings put together by

Indeed.com. Indeed bills itself as “the world’s

#1 job site, with over 200 million unique visitors

every month from over 60 different countries.”

Using Indeed, we can search for online job

postings containing specic key words and

phrases.

In this Appendix, we will describe how the

baseline December 2015 estimate (published

January 2016) was calculated. Then we will

describe how the December 2016 update was

constructed.

DECEMBER 2015 BASELINE ESTIMATE

To estimate the number of core App Economy

jobs in December 2015, we used a multi-step

procedure based on data from the universe of

online job postings. Our rst observation is that

online job postings typically describe the skills

and knowledge being sought by the employer.

For example, if a job posting requires that the job

candidate have experience developing apps for

iOS—the iPhone/iPad operating system—then

we can reasonably conclude the posting refers

to a core App Economy job.

U.S. APP ECONOMY UPDATE

P18

1. Identication of App Economy job postings

Using summary statistics generated by searches

on indeed.com, we identied job postings ads

for App Economy jobs containing one of the

following key words: iOS, Android, Blackberry,

Windows Phone, Windows Mobile and app.

2. Validation

Invariably, some job postings identied in Step

1 will not t the criteria of an App Economy

worker (e.g. a job posting for a truck driver using

an app). We therefore validated the sample

by manually examining a sample of the job

postings from Step 1 to eliminate those that do

not t our criteria of an App Economy worker.

This allows us to estimate a validation ratio that

we applied to the results of Step 1.

3. Identication of IT job postings in the

United States, and estimation of the ratio

of job postings to employment for overall IT

occupations

We constructed a keyword list to identify job

postings for IT occupations in the U.S. This

included a core list of English words and

phrases commonly found in job postings for

IT occupations (such as “java” and “database”

and “app”).

We then validated the outcome using the same

methodology as Step 2, manually examining

a sample of job postings to assess which

actually correspond to IT occupations. Then

the resulting number was used to estimate the

ratio of job postings to employment for overall IT

occupations.

4. Estimation of App Economy core jobs

for the United States

We multiplied the ratio generated in Step 3

and the validated number of App Economy job

postings generated in Step 2. The result gave us

the estimate of core App Economy jobs for the

United States in December 2015.

5. Estimation of total App Economy

employment for the United States

Using the same multipliers as in our previous

work, we estimated the total number of App

Economy jobs in the United States. We assumed

that each core App Economy job is supported

by one job-equivalent at the same company (e.g.

managers, human resources, accounting). Then

we assume that each company job generates

one job in the rest of the economy. This is a very

conservative assumption for spillovers.

6. Estimation of the total employment in the

iOS and Android ecosystems in the United

States

Out of the set of job postings containing the

terms “iOS” or “Android”, we identied the

share that contain terms belonging to the iOS

ecosystem (Apple, iPad, iPhone, iOS) and the

share belonging to the Android ecosystem

(Android, Google). Then those shares were

applied to all App Economy employment.

7. Estimation of App Economy employment

by states

The Indeed database enabled us to identify App

Economy job postings by state. We therefore

could rank states by App Economy employment.

THE METHODOLOGY CONSISTED OF SEVEN DISTINCT STEPS.

U.S. APP ECONOMY UPDATE

P19

DECEMBER 2016 UPDATE

Organic data, such as online job postings,

are produced by organizations in their

normal course of business. As such, these

organizations have an incentive to make sure

their data reflects the realities of the economy

as soon as possible. That means organic

data are continuously improving, making

them a wonderful tool for studying emerging

occupations. By contrast, it can take a decade

or more for government statisticians to update

the ofcial statistical categories to match the

realities of the economy.

But there’s a downside to this business-driven

urge for improvement: The organizations that

generate the data have no incentive to keep

it consistent over time. Quite the contrary,

if organizations see a way of changing or

rearranging their data to better improve its

usefulness for customers, they will do that, even

if it breaks the statistical continuity over time.

For example, a job site such as Indeed

collects its data from multiple job boards and

companies. If a new job board opens up, that

has the potential to increase the count of

reported job postings, even though nothing

fundamental has changed in the labor market.

As a result, tracing organic data over time

can be misleading unless appropriate care is

taken. In this case, we will use the “job trends”

data produced by Indeed, which, for any set of

keywords, gives a consistent estimate over time

of the share of job postings tting those criteria

compared to all job postings.

We then use the job trends data to estimate

the percentage increase in the total number of

core App Economy jobs over time, as well as

the percentage increase in the size of the iOS

and Android ecosystems. We then apply those

percentage increases to the December 2015

App Economy estimates in order to derive the

December 2016 estimates. In other words, we

estimate the rate of growth, and then use that

rate of growth to estimate the level a year later.

U.S. APP ECONOMY UPDATE

P20

Notes

1 “Ericsson Mobility Report: Interim Update,” February 2017, https://www.ericsson.com/res/docs/2016/mobility-report/emr-interim-

february-2017.pdf

2 Ibid

3 The term “App Economy” was being used as early as 2009, in a BusinessWeek cover story “Inside the App Economy,”

(October 22, 2009). http://www.bloomberg.com/news/articles/2009-10-22/inside-the-app-economy

4 Michael Mandel, “Where the Jobs Are: The App Economy,” (February 2012). http://www.technet.org/wp-content/uploads/2012/02/

TechNet-App-Economy-Jobs-Study.pdf

5 For example, “The ‘App Economy’ Estimated to Contribute Nearly Half a Million Jobs to the U.S.,” Time (2/8/12) http://business.time.

com/2012/02/08/the-app-economy-estimated-to-contribute-nearly-half-a-million-jobs-to-the-u-s/, and “Angry Birds Boom

Spurs U.S. Job Revival on Mobile Demand,” Bloomberg, (3/5/12). https://www.bloomberg.com/news/articles/2012-03-05/angry-birds-

boom-spurs-u-s-employment-revival-on-mobile-software-demand

6 Michael Mandel and Judith Scherer, “The Geography of the App Economy,” (October 2012). https://southmountaineconomics.les.

wordpress.com/2012/11/the_geography_of_the_app_economy-f.pdf

“752,000 App Economy jobs on the 5th anniversary of the App Store,” (July 2013). http://www.economicmodeling.com/2012/08/31/

job-multipliers-silicon-valley-vs-the-motor-city/

7 See “Economic Revival and the Unpredictability of Technological Innovation,” July 6, 2016,

http://www.progressivepolicy.org/issues/economy/local-economic-revival-unpredictability-technological-innovation/

8 See Michael Mandel, “Data, Trade, and Growth,” Progressive Policy Institute, April 2014.

http://www.progressivepolicy.org/slider/data-trade-and-growth/

9 See, for example, “The Onrushing Wave: Previous technological innovation has always delivered more long-run employment, not less.

But things can change,” The Economist, January 28, 2014. http://www.economist.com/news/brieng/21594264-previous-

technological-innovation-has-always-delivered-more-long-run-employment-not-less

10 “Silicon Valley Is Not a Job Creator,” Fortune, December 4, 2015. http://fortune.com/2015/12/04/silicon-valley-is-not-a-job-creator/

11 “Wireless Jobs Evaporate Even as Industry Expands,” Wall Street Journal, July 17, 2011. See my analysis at

https://innovationandgrowth.wordpress.com/2011/07/24/misinterpreting-data-how-the-wsj-got-the-wireless-jobs-story-wrong/

12 White House, (1995). “Send mail to the developers,”

https://clinton1.nara.gov/White_House/Mail/html/Mail_Developers.html, downloaded November 3, 2016.

13 “App revenue to hit $81B by 2020,” Mobile World Live, October 6, 2016.

http://www.mobileworldlive.com/apps/news-apps/app-revenues-to-hit-81b-by-2020/

14 “Apple’s iOS App Store now generating 4x revenues per app vs Android Google Play,” AppleInsider, July 19, 2016.

http://appleinsider.com/articles/16/07/19/apples-ios-app-store-now-generating-4x-revenues-per-app-vs-android-google-play

U.S. APP ECONOMY UPDATE

P21

15 Unfortunately, it is common for analysts to attribute all economic benets of app development to the home country of the app

developer. For example, a 2016 report, “Winners & Losers in the Global App Economy” (Caribou Digital) tried to identify flows of app-

related trade by looking at a large sample of top apps in each market, and then identifying the city and country location for the

developer. However, they explicitly assumed that, “for larger rms with multiple ofces, the headquarters location was selected“ as

the location of production (Page 15). This assumption is like treating all of GE’s $120 billion in global revenues as if it was produced in

Connecticut, simply because that is where the company is headquartered.

16 Rigobon, R. and Cavallo, A., (2016) “The Billion Prices Project: Using Online Prices for Inflation Measurement and Research,” Journal of

Economic Perspectives, Vol 30(2):151-78.

17 Michael Mandel, “The App Economy: Where the Jobs Are,” February 2012, South Mountain Economics LLC.

18 As of the end of April 2017, there were roughly 290 job postings in Michigan that contained the words “mobile”, “iOS”, or “Android”

in their title. At the same time, there were roughly 350 job postings with the word “machinist” in their title.

19 In particular, we looked at the distribution of occupations in NAICS codes 5415, 5112, and 519. See index here

https://www.bls.gov/oes/current/oessrci.htm#54

20 The employment requirements tables of the BLS show “the employment generated directly and indirectly across all industries by a

million dollars production of a given industry’s primary product.” https://www.bls.gov/emp/ep_data_emp_requirements.htm

21 Center for Automotive Research, 2015, “Contribution of the Automotive Industry to the Economies of All Fifty States and the United

States”

22 See, for example, EMSI, “Job Multipliers: Silicon Valley vs. The Motor City,“ August 31, 2012,

http://www.economicmodeling.com/2012/08/31/job-multipliers-silicon-valley-vs-the-motor-city/

23 “So Many Apps, So Much More Time For Entertainment,” Nielsen (June 11, 2015). http://www.nielsen.com/us/en/insights/news/2015/

so-many-apps-so-much-more-time-for-entertainment.html

24 Adding in the Blackberry and Windows Mobile operating systems does not change the result signicantly.

25 http://www.progressivepolicy.org/blog/app-economy-jobs-part-2/

26 https://www.indeed.com/about We thank Indeed for the use of the data it collects. Indeed bears no responsibility for the content in this

paper.

27 For example, the Indeed database, as of late December 2015, contained roughly 390,000 job postings for the search “’registered nurse’

or RN”. That’s compared to an estimated employment of 3 million registered nurses, for a ratio of one job posting for roughly every

eight jobs.

28 The ratio in the U.S. was roughly one tech job posting for every nine tech jobs in 2015. Our work shows that this ratio varies by country,

as one would expect. In addition, this ratio would vary by broad occupation, depending on the hiring practices in that occupation.

29 https://www.indeed.com/jobtrends

U.S. APP ECONOMY UPDATE

P22

The Progressive Policy Institute is a catalyst for policy innovation

and political reform based in Washington, D.C. Its mission is to create

radically pragmatic ideas for moving America beyond ideological and

partisan deadlock.

Founded in 1989, PPI started as the intellectual home of the New

Democrats and earned a reputation as President Bill Clinton’s “idea

mill.” Many of its mold-breaking ideas have been translated into public

policy and law and have influenced international efforts to modernize

progressive politics.

Today, PPI is developing fresh proposals for stimulating U.S. economic

innovation and growth; equipping all Americans with the skills and assets

that social mobility in the knowledge economy requires; modernizing an

overly bureaucratic and centralized public sector; and, defending liberal

democracy in a dangerous world.

Progressive Policy Institute

1200 New Hampshire Ave NW,

Suite 575

Washington, DC 20036

Tel 202.525.3926

Fax 202.525.3941

[email protected]

progressivepolicy.org