This article originally appeared on Forbes.
It’s a well-known fact that software engineers are among the highest paid, in-demand professionals right now. But what’s not emphasized as often is the enormous ripple effect that programmers have on job creation worldwide.
Developing software that shifts a product’s cost, capabilities or convenience results in a demand for a sea of jobs long-term, both directly and indirectly. Disruptive change from innovation is affecting more and more industries compared to 10 years ago. Just think, in 2005, YouTube just launched, Facebook was still exclusively for college kids and it would still be 2 years until Apple’s iPhone is tucked away in a million people’s pockets. Today all three platforms have ignited new industries and opportunities for a variety of professionals from entertainers to app developers.
As software increasingly touches nearly every industry, there’s a broader and deeper impact on job creation overtime. YouTube, Uber, Instacart and thousands of other similar platforms, create not only income opportunities for communities but also demand for supporting products and services as well as economic growth. If you think about it long-term, it triggers a job explosion.
Ron Conway, founder of SV Angel, is a staunch believer in software as a job engine. When asked if automation and tech will eventually replace menial jobs, Conway says:
“I think it’s essential that we realize, for every engineer that a tech company hires, that company ends up needing 4 entry-level support workers for the infrastructure around each engineer. So, the tech industry is, in fact, creating more [net] entry-level jobs than displacing. These are well-known statistics done by economists.”
A 2012 research paper by economist Ian Hathaway supports Conway’s assertion. The study finds that each new high-tech professional hired indirectly creates about 4 jobs over several years. Another 2012 book by economist Enrico Moretti points to similar results, which finds that for every high-tech professional a city attracts, there are about 5 new jobs created.
The Ripple Effect
There are a couple different ways in which software creates a demand for jobs. First, the mobile app revolution has most recently spawned a boom in the “sharing economy,” in which anyone can leverage apps to loan out goods or services to earn money.
Uber is a piston in creating revenue opportunities for drivers around the world at an exponential rate. In May 2014, Uber claimed to put 20,000 drivers to work per month. Four months later, that number spiked to 50,000 drivers per month. It’s projecting up to 1,000,000 drivers by the year’s end.
Airbnb is another perfect example of an app as a job generator. By allowing people to rent out spare bedrooms, it has changed the accommodation game. In 2013, Airbnb had 500,000 spaces listed, and, in late 2014, that number went up to 800,000. Postmates is a newer, similar startup that employs over 6,000 freelance couriers to make on-demand deliveries. There are hundreds upon hundreds of similar services that are creating flexible income opportunities at an astounding rate for anyone with a smartphone.
Each software engineer hired is key to creating hundreds of thousands of jobs because fast, scalable software is foundational to successful growth.
Plus, as high-growth software companies continue to advance and expand globally, they require many more supportive roles to oversee operations, community, sales, business development, maintenance, design, marketing and more.
Secondly, referring back to Hathaway and Moretti’s research, software engineers are also indirectly creating a net balance of more jobs through the multiplier effect. He says the products that software engineers create are generally, by definition, easy to distribute globally. Creating a product that’s globally competitive, innovative and productive fuels global economic growth, which is essential to long-term job growth.
The direct economic contribution of the software industry has been increasing over the past few decades. Here’s a crazy stat: Between 1997 and 2012, the software industry production grew from $149 billion to $425 billion in value.
Down the Line, History Will Repeats Itself Again
Engineering teams are already working on the next big wave of disruption. Driverless cars, 3D printing and robotics are all within the foreseeable future. Some folks worry that machine learning and artificial intelligence could deem a lot of jobs obsolete, like drivers, bank tellers and manufacturing professions.
While some existing jobs may be displaced, history has shown us that such technological innovation doesn’t just leave folks on the streets. Instead, the shift will result in a demand for entirely new types of jobs. Even though commercialized driverless cars and 3D printing aren’t too far from reality, it’s still really hard to fathom exactly what types of new jobs will be in-demand in the future.
If you think about software 20 years ago, who could have imagined that there would be an entire profession dedicated to creating smartphone applications? Better yet, as recent as 2007, there was no such job title as “app developer” in existence, but 5 years after the iPhone was introduced, nearly 466,000 app developer jobs popped up.
As Economist Michael Kende says, “In general, every wave of automation and computerization has increased productivity without depressing employment, and there is no reason to think the same will not be true this time.”
While technological advancements have contributed to the decline in manufacturing or factory jobs, there’s been a simultaneous spike in Internet and software industry jobs:
Source: The New Geography of Jobs
History repeats itself. If you look back to the early days of computing, people were afraid automation through computer-controlled factories would replace human labor completely. While it’s true that some jobs have been on the decline; over time, we’ve actually managed to work more hours than we have ever worked before.
More technology has never led to a massive decline in jobs, so why will this new era of tech disruption be any different? The New York Times created this great illustration comparing the obsolete jobs between 2000 and 2013 with new in-demand specialized jobs:
Back in 1930, even the famous economist John Maynord Keynes warned the public about this “disease” of technological unemployment.
This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.
Even further back in the 1800s, the invention of the automobile helped eliminate the demand for wagons and pushed many wagon builders, horse keepers and groomers out of jobs. But automobiles sprouted a whole field of new jobs for car mechanics, dealerships, sellers and more. The short-term expense of wagon-related job loss pales in comparison to the widespread increase in productivity that resulted from faster, scalable and easier auto technology.
Software may be eating the world, but our society has always benefited from and evolved with technological advancements and will continue to do so. We’ll never be able to satisfy software’s appetite for jobs. Even if some jobs are completely displaced with more efficient alternatives, there will be new challenges to solve. With each software engineer that creates more efficient, automated or cheaper alternatives, there will be new job opportunities from both the support it requires and its massive economic contributions. It’s up to us to make the choice of educating ourselves, adapting and evolving with technology as we’ve always done in the past.
Do you think software creates more jobs than it makes obsolete?
