U.S. APP ECONOMY UPDATE

U.S. App
Economy Update
Dr. Michael Mandel
May 2017

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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, aconsulting firm focusing on emerging occupations and emerging
industries; and Visible Economy LLC, which produced newsand education videos for the college market. Dr. Mandel is theauthor 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.
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U.S. APP ECONOMY UPDATE

U.S. App Economy Update

MAY 2017
Dr. Michael Mandel

INTRODUCTION

When Apple introduced theiPhone in 2007, that initiateda profound and transformative
new economic innovation.

While central bankers and national leaders
struggled with a deep financial crisis andstagnation, the fervent demand for smartphones
was a rare force for growth. Today, there are
four billion smartphone subscriptions, anunprecedented rate of adoption for a newtechnology.1 Use of mobile data is rising at
55 percent per year, a stunning number thatshows its revolutionary impact.2
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 (nowGoogle 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 thebeginnings of a global App Economy: an armyof app developers writing mobile applications
for billions of users. For the most part, thesedevelopers are not hobbyists writing games intheir basements. Instead, as more and more
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U.S. APP ECONOMY UPDATE

people are linked to the Internet through theirsmartphone and mobile data connections,mobile apps have become an essential way
for businesses, nonprofits, and governments
to interact with their customers, members, andcitizens. (Indeed, data shows that people spend
most of their internet time interacting withapps).

monitor or control work processes. These apps
will be highly functional and sophisticated,
serving an essential role in interacting with ourenvironment.
THIS PAPER
Building on previous work, this paper examines
the number of jobs created by the App Economy
in the United States. Our first estimate of App
Economy employment in the United States was
issued in February 2012, based on fall 2011
data.4 This figure of 466,000 was widely reported
in the media at the time.5 We then publishedadditional estimates in October 2012; July 2013,
which coincided with the fifth anniversary of
the launch of the Apple App Store; and January
2016.6

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 ecommerceapps is probably close to its peak. However, therise of the Internet of Things means that more
and more objects and physical processes will
be connected to the Internet.

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 UnitedStates has nearly quadrupled over the past
five years, growing at a 30 percent annual rate
(Figure 1).

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 toP4

U.S. APP ECONOMY UPDATETABLE 1: The U.S. App Economy

DECEMBER 2016

Total U.S. App Employment

Average annual growth since fall 2011

1.729 million

30%

Jobs

per year

Data: Progressive Policy Institute, Indeed, public job postings

FIGURE 1: U.S. App Economy Employment Over Time (thousands of jobs)
2,500
2,000
1,500
1,000
500
0
Oct 11

Oct 12

Oct 13

Oct 14

Oct 15

Oct 16
Trend line

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

This stunning growth in App Economy
employment roughly parallels the growth in thenumber of iOS and Android apps, which havemore than quadrupled over the same period.
Meanwhile, consumers spend vastly more timeon their smartphone apps today than they did
in 2011.

In addition, this paper estimates the breakdownof 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 aranking of the top 25 App Economy states in the
country, starting with California, New York, andTexas at the top, with states such as Missouri,
Tennessee, Wisconsin, Indiana, and Utah.

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U.S. APP ECONOMY UPDATECONTEXTIn this paper we focus on App Economy
employment in the United States. However,this paper is part of a larger research projectexamining App Economy employment indifferent countries and regions, including theEuropean Union, Japan, Australia, Mexico,
Argentina, Colombia, Vietnam, Indonesia,
and China.

that count exports have no category in trade
statistics for the revenues generated by theexport of domestically-created apps to othercountries, even though these revenues may bevery significant. Indeed, statisticians may not becounting these exports at all.8

The App Economy, because it
doesn’t fit neatly into the old
economic paradigms, is particularly
hard for traditional government
statistics to measure.

There are several reasons we have focused on
App Economy jobs. First, the invention of thesmartphone 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 iscreating.7 These are not numbers that can befound in government statistics, which typicallyhave trouble capturing the impact of newtechnologies.

The other reason we have focused on App
Economy employment has to do with thebroad ongoing debate about the link between
technological innovation and jobs. There’s apervasive worry, especially in the aftermathof the financial crisis, that new technologies
destroy jobs without creating very many
new ones.9 So we see reputable businesspublications 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

The App Economy, because it doesn’t fit neatly
into the old economic paradigms, is particularly
hard for traditional government statistics tomeasure. For example, statistical agencies

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U.S. APP ECONOMY UPDATEUnfortunately, government economic statistics
are much better at tracking the reduction ofexisting 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 inthe employment statistics, if it ever happens
at all. For example, the term “Web developer”
was only added to the Standard Occupational
Classification in 2010. However, the term wasin common use at least as early as 1995, when
visitors to the official White House Web pagewere invited to send emails “to the White HouseWeb developers and maintainers.“12makers 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 globallyand nationally. One report pegs global app
revenues at $45 billion in 2016, with the AsiaPacific market accounting for 56 percent ofthat.13 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.”14This 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 figureout if policies are succeeding or failing. Without
data—specifically data about the contribution of
the App Economy to individual countries—policy

However, the revenue metric, while important, farunderstates the full economic impact of the App
Economy. Many heavily-used apps from nongame companies, nonprofits, 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 benefits for their users.
Moreover, the revenue numbers for the appstores tell you where apps are generating
revenue, but not where they are produced. Most
game developers have operations around theworld. For example, Gameloft—a company
that makes games for iOS, Android and otherplatforms—is headquartered in Paris. However, it
has offices in 18 countries and was advertisingin October 2016 for game designers in locations
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U.S. APP ECONOMY UPDATE

such as Mexicali (Mexico), Lviv (Ukraine), andDa Nang (Vietnam). The Da Nang location wasestablished in 2010 and now has almost 500
employees. It would be misleading to attribute allof Gameloft’s app revenue to France.15 Similarly,
a non-tech company like Walmart or BMW thatoffers an app may develop it internally, or hire anapp developer anywhere around the world.

The Da Nang location wasestablished in 2010 and now
has almost 500 employees.
For these reasons, we have chosen to use
employment as our preferred metric formeasuring 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 typicallycontain information about the skills required
for the job and the location of the job. We arethen 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.

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-consistentand 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:This methodology uses what is known as“organic data.” As opposed to economic datacollected by government statisticians using
special surveys, organic data is generated byorganizations in the course of doing normal
business. For example, economists havesuccessfully used the prices posted by retailerson their websites to estimate the inflation rate
without the need to do the usual monthly surveyof businesses.16• An IT-related job that uses App Economy
skills—the ability to develop, maintain, or
support mobile applications. We will callthis 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.

Our methodology for using online job postingsto estimate the size of the App Economy was
originally introduced in 2012, in a widely-quoted
paper that reported the first estimate of U.S. App
Economy jobs.17 In December 2015 we extended• A non-IT job (such as sales, marketing,finance, human resources, or administrative
staff) that supports core app economy jobs
in the same enterprise. We will call this an“indirect” app economy job.
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U.S. APP ECONOMY UPDATE• A job in the local economy that is supported
either by the goods and services purchasedby 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 offices, 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 theindirect and spillover effects, as discussed
in the Appendix.

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 paceto help them gain a foothold in the market forconnected cars. Indeed, Michigan has almost
as many job openings for app developers thesedays as for machinists.18 And of course, themilitary and intelligence agencies are big hirersof 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 forthe lottery industry.

EXAMPLES OF APP ECONOMY JOBS
Core App Economy Jobs
App Economy workers are widely distributed
across the U.S. economy, both geographicallyand in terms of industries. Of course, top
tech firms such as Apple, Google, Amazon
and Facebook hire hundreds of workers withexpertise in building and maintaining mobile
applications and the underlying infrastructure.
Mobile game companies, too, need developers
with a deep knowledge of iOS and Android.

At the other end of the size scale, Verizon
posted a position for a Senior iOS Developer inAlpharetta, Georgia. Allstate, the giant insurancecompany, was hiring for a senior iOS developerin 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.

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 forreaching 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 andbusinesses away from expensive bank branches.
Moreover, these apps have to be continually
maintained and updated by app developers tokeep them secure.

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, outsideof 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, waslooking for a senior mobile software engineer
to build iOS apps. Rue La La, a Boston-based
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U.S. APP ECONOMY UPDATE

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 suchas connected vehicles and wearables. New
Balance was posting for a mobile architect
to join its ecommerce division in St. Louis,
Missouri.

is the application of information technology .
As of April 2017, John Deere was looking for amobile 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 tojoin its operations in St. Louis, MO. ForeFlight ,which produces apps for pilots and operators,
was looking for an iOS mapping developerin Portland Maine. Of course, as the postingsuggested, “a pilot-coder, or individual looking topursue his or her private pilot license, is a plus.”

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-MobileApps” 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 contributeto both “Computer Network Defense” and“Computer Network Exploitation.”

The App Economy is becoming a crucial partof 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 waslooking for a Mobile Device Security Analyst

Probably the fastest growing sector of the
App Economy is the Internet of Things, which
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U.S. APP ECONOMY UPDATE

in Reston, Virginia. And Bluegrass Cellular,
in Elizabethtown, Kentucky, was looking for a
helpdesk support coordinator with “exceptional
knowledge” of Android and Apple email andbrowsing systems.

consistent with an assumption that each App
Economy job created adds another job at thesame enterprise.

When we examine the distributionof occupations in software-relatedindustries, we find that employees
in computer and statisticaloccupations represent roughly
half the workforce.19

Social and religious organizations are investingin mobile apps as well. OkCupid, the dating
website, was looking to hire a Senior iOS
Engineer in New York City to help attract moredaters. Life.Church in Edmond, Oklahoma, waslooking for an iOS software engineer to help
build and maintain bible apps.

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 wewant to know whether the benefits of the
App Economy spread out to the parts of
the workforce that are not necessarily
technically trained.

And then of course the auto industry has
embraced the connected car with a vengeance.
Ford Motor Company was looking for “innovativeand highly skilled iOS Mobile Development
Engineers” to join its Advanced Mobile/
Embedded Apps team in Dearborn, Michigan.
Meanwhile Systems Technology Group was
hiring for fifty available positions for iOS orAndroid developers for a “large Fortune 500
Automotive firm” in Michigan. This is the wave of
the future.

Typically, economists who study economic
development distinguish between Type 1 andType 2 “multiplier effects.” Type 1 multipliereffects refer to the additional jobs created byincreased purchases by the enterprise hiring
the App Economy worker. Type 2 multipliereffects refer to the additional jobs createdbecause the newly hired App Economy worker
is spending more in the area. So, if a mobile
game development firm purchases additional
services and goods from local law firms andoffice suppliers, that’s a Type 1 multiplier. If thegame company’s workers go home and makeappointments to have dental work at the local
dentist, that’s a Type 2 multiplier.

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, financial
and legal professionals; and the office andadministrative staff.
When we examine the distribution ofoccupations in software-related industries,
we find that employees in computer andstatistical occupations represent roughly
half the workforce.19 In other ways, each techoccupation job in an enterprise is associatedwith roughly one other non-tech job. We use thatas our multiplier for indirect App Economy jobs
within an enterprise. In other words, the data is

A review of the existing literature, including theemployment 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 abroad impact across the whole service sector.20
That means more jobs at local healthcare andP11

U.S. APP ECONOMY UPDATE

education institutions, professional services
firms, building management, entertainment,
culture, financial 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 awide range of occupations. That might include
demand for additional commercial real estate
brokers, for example, as growing companies
need more space.

done for Alliance of Automobile Manufacturer,
estimated that every new job in the automobile
industry generated 3.7 additional jobs in the restof the economy.21 Another analyst estimatedthat each job in the software publishing industry
generated 3.3 jobs in rest of the economy.22
However, our use of a low multiplier increases
our confidence in the final result.
RESULTSWe estimate that total App Economy employment
in the United States was 1.729 million asof 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 figure does not include hobbyists or thesmallest companies.

We want to be conservative about the size ofthe spillover multiplier for the purposes of thispaper. Therefore, we assume that each core App
Economy job generates one indirect job in thesame enterprise and one spillover job in the restof the economy, with the benefits accruing to awide range of occupations.
Our assumptions for the size of the spillover
effect are quite conservative. For example, theCenter for Automotive Research, in a study
TABLE 2: Estimates of App Economy Jobs over Time
DATE OF ESTIMATEDATE OF PUBLICATIONAPP ECONOMY JOBS, THOUSANDSFALL 2011

FEBRUARY 2012

466

APRIL 2012OCTOBER 2012

519

JUNE 2013

JULY 2013

752

DECEMBER 2015

JANUARY 2016

1,660

DECEMBER 2016

MAY 2017

1,729

Data: South Mountain Economics, Progressive Policy Institute, The Conference Board, Indeed, BLS
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U.S. APP ECONOMY UPDATE

Note that, over the past five years, App Economy
jobs have grown at an annual rate of roughly 30
percent. This growth rate in App Economy jobs isroughly in the same ballpark as other measuresof app growth, such as the number of apps inthe various app stores and consumer usageof apps. For example, from the fourth quarterof 2012 to the fourth quarter of 2014, Nielsenreports that time spent on apps increased at an
average annual rate of 28 percent.23

five-year growth rate for all occupations is 1.6
percent. Employment in management andprofessional 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 andprofessional occupations has
risen at a 2.5 percent rate, with
the number of people working
in computer and mathematicaloccupations rising at a 4.9
percent rate.

Note that, over the past five years,
App Economy jobs have grownat an annual rate of roughly
30 percent.

In other words, the App Economy is one of themost dynamic parts of the economy in termsof adding jobs, but conventional statistics don’t
pick up these gains.

To see just how far the App Economy hasoutperformed the rest of the economy, justtake a look at Table 3. We see that the average

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U.S. APP ECONOMY UPDATETABLE 3: Five-year growth rate of employment, Fall 2011-Fall 2016
5-YEAR GROWTH RATEALL OCCUPATIONS

1.6%

MANAGEMENT AND PROFESSIONAL OCCUPATIONS

2.5%

COMPUTER AND MATHEMATICAL OCCUPATIONS

4.9%

APP ECONOMY JOBS

30.0%

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 tohave expertise. This enables us to assign jobs

to either the iOS ecosystem or the Android
ecosystem, or both.24
Table 4 shows the distribution of App Economy
jobs by mobile operating system.

TABLE 4: App Economy Jobs by Operating System
DECEMBER 2016 (THOUSANDS)

ALL APP ECONOMY JOBS

1,729

iOS ECOSYSTEM

1,530

ANDROID ECOSYSTEM

1,353

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.

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U.S. APP ECONOMY UPDATELOCATION
Generally, job postings have to contain thelocation of the position. In particular, we canidentify 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.

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

THOUSANDS OF JOBS

THOUSANDS OF JOBS

01

CALIFORNIA

419.1

14

NORTH CAROLINA

37.9

02

NEW YORK

135.6

15

MINNESOTA

37.7

03

TEXAS

118.6

16

MARYLAND

36.5

04

WASHINGTON

91.6

17

COLORADO

31.8

05

MASSACHUSETTS

73.6

18

ARIZONA

24.7

06

ILLINOIS

72.3

19

DISTRICT OF COLUMBIA

24.2

07

VIRGINIA

67.0

20

OREGON

21.9

08

FLORIDA

65.8

21

MISSOURI

18.5

09

GEORGIA

51.0

22

TENNESSEE

18.0

10

NEW JERSEY

47.7

23

WISCONSIN

17.6

11

PENNSYLVANIA

46.1

24

INDIANA

17.1

12

OHIO

45.9

25

UTAH

15.6

13

MICHIGAN

39.2

Data: Progressive Policy Institute

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U.S. APP ECONOMY UPDATE

We note that the order of this table is very
similar to the table we published in January
2016.25 California, New York, and Texas arestill at the top of the list, although New York’s
number is somewhat lower because we madea slight tweak to the methodology to eliminate

some spurious jobs. Washington has jumped
from #10 a year ago to #4, most likely on thestrength of Amazon’s hiring of App Economy
workers. Finally, note the large number ofMidwestern states in the top 25.

CONCLUSION
There’s an ongoing debate about whether thetech boom is generating enough jobs, and whatkind. This debate has been hindered, in part,by a lack of good data. The categories used bygovernment statisticians to track tech industries
are too old to correctly pick up the growth intech-related activities.

are distributed across the country and acrossindustries.

Apple released the first iPhone in
2007—there are now more than 1.7
million jobs in the App Economy.
These results directly address the questionof 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 theUS, but around the world.

In this paper we have focused on one importantslice of the tech boom: the jobs related to thedevelopment, maintenance, and support ofmobile applications. We showed that startingfrom nothing in 2007—before Apple released thefirst iPhone—there are now more than 1.7 million
jobs in the App Economy. Moreover, these jobs
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U.S. APP ECONOMY UPDATE

Methodology Appendix
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 byorganizations in the normal course of doing
business. In the past, organic data was noteasily accessible to analysts. However, much
more data is available on a consistent basis.

In practice, we compiled a short list of key words
and phrases that would generally be associatedwith App Economy-related skills. These included
iOS, Android, Blackberry, Windows Phone,
Windows Mobile, and app. We applied thesesearch 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.

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.”26
Using Indeed, we can search for online job
postings containing specific key words andphrases.

However, that’s only the start. Job postings
for an occupation are only a fraction of thenumber of people employed in that occupation,
since most positions are not empty.27 We
develop an estimate for the ratio between
the number of job postings for tech jobs andoverall tech employment.28 This ratio is applied
to the number of App Economy job postingsto generate a provisional estimate of core App
Economy employment. Crucially, we used avalidation procedure to ensure we are actuallycounting job postings that correspond to core
App Economy jobs.

In this Appendix, we will describe how thebaseline December 2015 estimate (published
January 2016) was calculated. Then we will
describe how the December 2016 update wasconstructed.

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 thisanalysis to be repeatable across a wide range ofcountries, we simplified the search terms.

DECEMBER 2015 BASELINE ESTIMATETo estimate the number of core App Economy
jobs in December 2015, we used a multi-stepprocedure based on data from the universe of
online job postings. Our first observation is thatonline 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.
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U.S. APP ECONOMY UPDATETHE METHODOLOGY CONSISTED OF SEVEN DISTINCT STEPS.
1. Identification of App Economy job postings
Using summary statistics generated by searches
on indeed.com, we identified job postings ads
for App Economy jobs containing one of thefollowing key words: iOS, Android, Blackberry,
Windows Phone, Windows Mobile and app.

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 theUnited States in December 2015.

2. Validation
Invariably, some job postings identified in Step
1 will not fit 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 fit our criteria of an App Economy worker.
This allows us to estimate a validation ratio that
we applied to the results of Step 1.

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.

3. Identification of IT job postings in the
United States, and estimation of the ratioof 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 andphrases commonly found in job postings for
IT occupations (such as “java” and “database”
and “app”).

6. Estimation of the total employment in the
iOS and Android ecosystems in the UnitedStatesOut of the set of job postings containing theterms “iOS” or “Android”, we identified theshare that contain terms belonging to the iOS
ecosystem (Apple, iPad, iPhone, iOS) and theshare belonging to the Android ecosystem(Android, Google). Then those shares wereapplied to all App Economy employment.

We then validated the outcome using the same
methodology as Step 2, manually examininga sample of job postings to assess which
actually correspond to IT occupations. Thenthe resulting number was used to estimate theratio of job postings to employment for overall IT
occupations.

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.

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U.S. APP ECONOMY UPDATEDECEMBER 2016 UPDATE
Organic data, such as online job postings,
are produced by organizations in theirnormal course of business. As such, theseorganizations have an incentive to make suretheir 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 decadeor more for government statisticians to update
the official statistical categories to match therealities of the economy.

companies. If a new job board opens up, thathas the potential to increase the count ofreported 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 istaken. In this case, we will use the “job trends”
data produced by Indeed, which, for any set of
keywords, gives a consistent estimate over timeof the share of job postings fitting those criteria
compared to all job postings.29
We then use the job trends data to estimate
the percentage increase in the total number ofcore App Economy jobs over time, as well as
the percentage increase in the size of the iOS
and Android ecosystems. We then apply thosepercentage increases to the December 2015
App Economy estimates in order to derive theDecember 2016 estimates. In other words, weestimate the rate of growth, and then use thatrate of growth to estimate the level a year later.

But there’s a downside to this business-driven
urge for improvement: The organizations thatgenerate 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
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U.S. APP ECONOMY UPDATE

Notes
1

“Ericsson Mobility Report: Interim Update,” February 2017, https://www.ericsson.com/res/docs/2016/mobility-report/emr-interimfebruary-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-birdsboom-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.files.
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/9See, 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/briefing/21594264-previoustechnological-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 athttps://innovationandgrowth.wordpress.com/2011/07/24/misinterpreting-data-how-the-wsj-got-the-wireless-jobs-story-wrong/

12White 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

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U.S. APP ECONOMY UPDATE

15

Unfortunately, it is common for analysts to attribute all economic benefits 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 apprelated trade by looking at a large sample of top apps in each market, and then identifying the city and country location for thedeveloper. However, they explicitly assumed that, “for larger firms with multiple offices, the headquarters location was selected“ asthe location of production (Page 15). This assumption is like treating all of GE’s $120 billion in global revenues as if it was produced inConnecticut, 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.

17Michael 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 amillion 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 UnitedStates”

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 significantly.

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 thispaper.

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

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