Software Piracy Costs California 20,000 Jobs and $1.66 Billion in 2011

The Economic Consequences of Software Piracy on California study, conducted by Dr. Wallace Walrod, OCBC’s Chief Economic Advisor, was released Wednesday by Protect California Jobs & Innovation. The study highlights the economic impacts of software piracy on jobs creation, job retention, tax revenues and economic activity across California. The IT and Computer Software industry cluster is a large and growing driver of the state’s economy, and the health of this sector is vital to economic recovery. The key findings of the study include:

  • In 2011, California lost $1.66 billion in economic activity, almost 20,000 jobs, and $697.6 million in state and local tax revenue in 2011 due to Software Piracy.
  • In the United States, reducing piracy by 10% over four years would generate nearly $38 billion in the new economic activity, create 25,000 new IT jobs and create more than $6 billion in additional tax revenues by 2013. Estimates for California would translate into over $4 billion in new economic activity and $660 million in additional tax revenue in the state.
  • Software/IT is one of the few areas of growth since the economic downturn. The annual average growth rate of employment of Software/IT employment Publishers was 4.89% between 1990-2010, compared to overall California employment growth of only 0.50% annually during the same time period (Employment Development Department, State of California).
  • Manufacturing employment in California has decreased 31% between 2000 and 2010 due a less competitive California business environment compared to neighboring states and abroad. California’s manufacturing sector is concentrated in the high-tech manufacturing sector and therefore piracy and IP is of particular importance to California manufacturers.

Because Software and IT employment and economic benefits are concentrated in California, national and global software piracy is disproportionately hurting the state as workers and businesses lose billions in wages and revenue. Software Piracy is a competitiveness issue for California as piracy and counterfeiting floods the market with much cheaper products and diverts revenue from legitimate companies. The consequence is decreased potential profits, constraining companies from expanding and hiring additional production workers.For more information contact Dr. Wallace Walrod, Chief Economic Advisor.

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