The New York Times continued its excellent iEconomy series with an article on the job prospects for app developers. The lengthy piece gives a few snippets of labor market data for software developers and touches on the work of economist Michael Mandel in measuring the “App Economy.”
The gist of the NYT piece, and something that Mandel doesn’t go along with, is that the majority of entrepreneurs in the app writing realm have a difficult time making a living — despite all the buzz that surrounds the growing field.
Mandel’s recent paper (PDF) on the subject “makes it clear that large companies are hiring droves of app developers in-house to create and maintain apps,” he writes on his blog. (Note: Mandel’s paper was written for a software development industry association, and his previous App Economy paper was written for advocacy group TechNet.)
Using all this as a jumping-off point, we explored EMSI’s data on software developers — both those in traditional employment settings and those who are self-employed or write code on the side. Our analysis shows that while wages for independent app developers significantly lag those of salaried employees in the field, proprietors have grown at a faster pace than their salaried counterparts in app development over the last decade.
Mandel relied on job posting data for his research. For this post, we used standard labor market data from EMSI — understanding its limitations in measuring relatively new occupations such as this one — and specifically focused on application software developers (SOC 15-1132). Not all these workers create mobile apps for the iPhone or Android mobile operating system, but this is the closest we can get to approximating the labor market characteristics of app developers with historic, detail-rich data.
Background & Wage Comparison
Mandel estimates there are 519,000 jobs in the App Economy, with only a portion of those being app developers. Meanwhile, as the Times writes, there are roughly one million software developer jobs in the U.S., and the growth has been robust outside hiccups during the 2001 and 2007-2009 recessions (see the image to the left). When we narrow our focus to application software developers, removing systems software developers from the picture, the national job total shrinks to fewer than 570,000. Self-employed app developers and those who work on the side on top of their primary job (what EMSI refers to as “extended proprietors”) account for another 40,000-plus estimated jobs, or 7% of the total app developer workforce as of 2012.
We should note here that EMSI’s proprietor datasets offer a window into entrepreneurial activity for app developers and any other occupation, but we caution against labeling all workers in the self-employed or extended proprietor classes as entrepreneurs. More accurately, inside the extended proprietors dataset are those who pursue extra work opportunities while maintaining their day job, while the self-employed dataset includes those who have taken the additional step and are primarily on their own. Once start-up owners incorporate their business, they fall under the traditional wage-and-salary worker datasets.
| SOC | Description | Salaried Jobs (2012) | Proprietor Jobs (2012) | Proportion of Proprietors |
|---|---|---|---|---|
| Source: QCEW Employees, Non-QCEW Employees, Self-Employed & Extended Proprietors – EMSI 2012.3 Class of Worker | ||||
| 15-1132 | Software Developers, Applications | 568,953 | 42,819 | 7% |
| 15-1133 | Software Developers, Systems Software | 410,202 | 27,983 | 6% |
| 15-1131 | Computer Programmers | 330,067 | 82,802 | 20% |
| 15-1179 | Information Security Analysts, Web Developers, and Computer Network Architects | 285,478 | 115,136 | 29% |
| Total | 1,594,700 | 268,741 | 14% | |
The U.S. has nearly twice as many proprietors classified as generic computer programmers (SOC 15-1131) as app developers — and nearly three times as many proprietors in SOC 15-1179: information security analysts, web developers, and computer network architects. Still, with proprietors and salaried employees taken together, there are more app developers than any programming-related occupation, and it’s the second-highest paying programming-related occupation behind systems software developers.
What’s really eye-opening, however, is the difference in hourly earnings for salaried app developers and independent app developers. As shown in the chart below, the wages for proprietors are substantially lower than their traditional counterparts. The earnings disparity for app developers at the bottom 10% in wages — what can be considered entry level — isn’t huge, but it quickly escalates. At the median wage level, salaried app developers make 1.5 times more than proprietors ($43.18 vs. $28.22 per hour); that jumps to almost twice as much among the top 10% of earners ($63.45 vs. $32.13).
This wage gap isn’t confined to app developers; across the board, self-employed workers and extended proprietors make far less (see “Characteristics of the Self-Employed” for more). But what stands out for application developers is how dramatically the gap widens for salaried workers from the bottom to top 10th percentile of workers, and how comparatively small that gap is for proprietors. The top earners among proprietors make just $8 more per hour more than the bottom 10th percentile; for salaried workers, the difference is $36 per hour (or an additional $75,000 per year).
Job Growth and Proprietor Breakdown by State
We’ve already mentioned that 7% of application software developers nationwide are either self-employed or write code as a side gig. That’s up from 6.8% in 2001. Not a huge bump. But this segment of the app developer workforce has grown 13% since 2001, compared to 9% growth for standard salaried workers. Since 2007, when the App Economy took off, each group of workers has grown 6%.
The following table provides the salaried employee/proprietor breakdown by state. It also gives the median hourly earnings and top 10% earnings for both classes of workers.
A few items of note:
- Wyoming (22.7%) and Nevada (21%) have the largest share of proprietors in app development. Both have small app developer workforces, a common thread among the other top states in this category (Montana, Louisiana, Mississippi, Hawaii, New Mexico, and Idaho). With fewer established software companies in these states, developers could be more likely to go at it on their own (though we should mention: many software developers can work from anywhere).
- Washington (3.8%) and Virginia (3.9%) have the smallest proportion of proprietors. These two states have also seen the largest percentage increase in salaried app developers since 2001, at 35% and 38% respectively.
- In addition to having the second-highest percentage of proprietors in app development, Nevada has seen the fastest proprietor growth since 2001 (52%). Among states with more than 1,000 self-employed and extended proprietors in this field, Georgia has increased the fastest (39%), followed by Florida (36%), Texas (32%), and Michigan (31%).
- While Michigan’s proprietor growth has been strong, salaried app developers there have declined 11% since ’01. At least some of those laid-off developers could be fueling the proprietor growth by starting their own businesses.
- For salaried app developers in the top percentile for wages, California ($71.00) and Maryland ($70.27) lead the U.S. with the most lucrative wages. It’s not a surprise to see either of these state at the top: California has the most developers in the nation, many of which are clustered around San Jose, the nation’s highest-paying metro area; part of Maryland feeds into the high-paying Washington, D.C., metro area.
- For proprietors in the top percentile for wages, New Jersey ($41.02) is the highest-paying state. According to Mandel’s latest study, the App Economy has a more than $1 billion annual impact in New Jersey, based on wages generated in the sector. That’s the sixth-highest impact in the nation. New Jersey is also fifth among all states in its concentration of app developers, at 68% more per capita than the national average.
| APPLICATION SOFTWARE DEVELOPERS | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Source: QCEW Employees, Non-QCEW Employees, Self-Employed & Extended Proprietors – EMSI 2012.3 Class of Worker | ||||||||||
| SALARIED EMPLOYEES | PROPRIETORS | |||||||||
| State Name | 2012 Jobs | % Job Change (2001-12) | Median Hourly Earnings | Top 10% Hourly Earnings | 2012 Jobs | % Job Change (2001-12) | Median Hourly Earnings | Top 10% Hourly Earnings | Proportion of Proprietors (vs. Total Workforce) | |
| Wyoming | 214 | -10% | $29.52 | $41.29 | 63 | 15% | $25.89 | $29.47 | 22.7% | |
| Nevada | 1,520 | 8% | $38.40 | $55.09 | 404 | 52% | $30.96 | $35.26 | 21.0% | |
| Montana | 555 | 3% | $28.29 | $50.62 | 145 | 37% | $22.52 | $25.64 | 20.7% | |
| Louisiana | 1,373 | -12% | $34.58 | $55.34 | 355 | 18% | $29.00 | $33.02 | 20.5% | |
| Mississippi | 905 | -8% | $33.37 | $52.31 | 177 | 30% | $24.81 | $28.25 | 16.4% | |
| Hawaii | 749 | 6% | $37.43 | $60.07 | 145 | -3% | $27.79 | $31.64 | 16.2% | |
| New Mexico | 1,328 | 2% | $37.31 | $56.69 | 225 | 22% | $22.82 | $25.98 | 14.5% | |
| Idaho | 1,390 | -12% | $30.83 | $50.86 | 232 | 41% | $27.57 | $31.39 | 14.3% | |
| Tennessee | 4,978 | 0% | $36.77 | $51.50 | 717 | 34% | $25.68 | $29.24 | 12.6% | |
| Rhode Island | 979 | 4% | $45.67 | $63.27 | 136 | 12% | $28.53 | $32.49 | 12.2% | |
| Maine | 1,355 | -9% | $35.04 | $55.23 | 187 | 21% | $22.32 | $25.41 | 12.1% | |
| Oklahoma | 2,531 | -10% | $31.26 | $48.06 | 337 | 6% | $23.18 | $26.39 | 11.8% | |
| West Virginia | 835 | 10% | $38.51 | $56.25 | 112 | 11% | $20.80 | $23.68 | 11.8% | |
| Arkansas | 1,773 | 3% | $34.81 | $47.36 | 234 | 42% | $24.04 | $27.37 | 11.7% | |
| Alaska | 697 | 24% | $35.27 | $53.22 | 86 | 18% | $26.40 | $30.06 | 11.0% | |
| Utah | 4,801 | 18% | $38.49 | $55.51 | 587 | 40% | $22.95 | $26.13 | 10.9% | |
| Vermont | 939 | 14% | $34.87 | $65.49 | 104 | 11% | $23.88 | $27.19 | 10.0% | |
| Kansas | 2,901 | -11% | $39.30 | $61.35 | 317 | 8% | $27.35 | $31.14 | 9.9% | |
| Florida | 22,102 | 14% | $36.68 | $56.37 | 2,411 | 36% | $25.29 | $28.20 | 9.8% | |
| Georgia | 12,450 | 2% | $40.86 | $56.96 | 1,347 | 39% | $27.86 | $31.72 | 9.8% | |
| Connecticut | 6,441 | -1% | $43.78 | $59.87 | 691 | 14% | $33.66 | $38.33 | 9.7% | |
| Oregon | 7,632 | 4% | $41.57 | $61.26 | 786 | 28% | $21.86 | $24.89 | 9.3% | |
| South Dakota | 809 | -14% | $33.84 | $52.85 | 83 | 20% | $21.83 | $24.85 | 9.3% | |
| Arizona | 8,822 | 13% | $42.05 | $62.32 | 885 | 25% | $26.79 | $30.50 | 9.1% | |
| South Carolina | 3,853 | 15% | $35.42 | $52.29 | 384 | 42% | $24.66 | $28.08 | 9.1% | |
| Michigan | 12,865 | -11% | $36.02 | $54.46 | 1,228 | 31% | $27.02 | $30.77 | 8.7% | |
| Indiana | 6,189 | 12% | $34.08 | $51.57 | 585 | 9% | $25.33 | $28.84 | 8.6% | |
| Pennsylvania | 16,123 | 6% | $40.93 | $58.46 | 1,460 | 8% | $27.36 | $31.15 | 8.3% | |
| Texas | 40,230 | 15% | $43.17 | $64.35 | 3,590 | 32% | $30.82 | $35.09 | 8.2% | |
| Alabama | 4,295 | 8% | $40.13 | $58.05 | 381 | 30% | $23.81 | $27.12 | 8.1% | |
| Maryland | 13,183 | 25% | $43.61 | $70.27 | 1,086 | 16% | $29.93 | $34.08 | 7.6% | |
| Illinois | 19,390 | -1% | $42.78 | $67.65 | 1,581 | 2% | $27.55 | $31.37 | 7.5% | |
| Kentucky | 4,100 | 16% | $33.66 | $49.69 | 328 | 21% | $25.85 | $29.43 | 7.4% | |
| California | 91,783 | 5% | $49.69 | $71.00 | 6,813 | -5% | $30.66 | $34.91 | 6.9% | |
| New York | 33,554 | 2% | $44.44 | $70.12 | 2,325 | -11% | $29.27 | $33.33 | 6.5% | |
| Wisconsin | 9,682 | 16% | $36.75 | $52.95 | 658 | 36% | $22.10 | $25.16 | 6.4% | |
| North Dakota | 970 | 20% | $30.38 | $41.90 | 64 | 28% | $20.22 | $23.03 | 6.2% | |
| North Carolina | 16,122 | 13% | $41.49 | $58.84 | 1,044 | 24% | $24.85 | $28.30 | 6.1% | |
| Delaware | 2,072 | 0% | $43.28 | $64.27 | 130 | 43% | $33.01 | $37.59 | 5.9% | |
| Iowa | 4,574 | 15% | $34.54 | $49.23 | 280 | 8% | $25.58 | $29.12 | 5.8% | |
| New Hampshire | 4,412 | -3% | $44.45 | $65.62 | 274 | -8% | $28.08 | $31.97 | 5.8% | |
| New Jersey | 27,617 | 5% | $44.89 | $68.60 | 1,631 | 15% | $34.38 | $39.14 | 5.6% | |
| Colorado | 19,887 | -3% | $42.75 | $62.44 | 1,156 | 16% | $28.58 | $32.54 | 5.5% | |
| Ohio | 23,378 | 19% | $38.56 | $54.45 | 1,305 | 8% | $27.77 | $31.62 | 5.3% | |
| Massachusetts | 25,567 | 0% | $46.04 | $67.52 | 1,385 | 1% | $27.23 | $31.01 | 5.1% | |
| Minnesota | 14,893 | 4% | $42.59 | $58.43 | 776 | 13% | $26.56 | $30.24 | 5.0% | |
| District of Columbia | 2,720 | 33% | $45.28 | $67.89 | 138 | 10% | $36.03 | $41.02 | 4.8% | |
| Missouri | 12,671 | 11% | $39.57 | $56.53 | 603 | 11% | $25.18 | $28.67 | 4.5% | |
| Nebraska | 4,128 | 10% | $34.43 | $51.57 | 193 | 21% | $27.55 | $31.37 | 4.5% | |
| Virginia | 33,599 | 38% | $47.87 | $69.49 | 1,350 | 20% | $31.72 | $36.12 | 3.9% | |
| Washington | 33,016 | 35% | $46.34 | $65.56 | 1,305 | 23% | $27.26 | $31.04 | 3.8% | |
| Total | 568,953 | 9% | $43.18 | $63.45 | 42,819 | 13% | $28.22 | $32.13 | 7.0% | |
Further Reading
Measuring the Impact of Apple and the App Economy
An IT Worker Shortage? It Depends on the State
INDUSTRY REPORT: Internet Publishing, Broadcasting, and Search Engines
The Emerging Professional, Scientific, and Technical Sector
Data and analysis for this infographic came from Analyst, EMSI’s web-based labor market tool. Follow us on Twitter @desktopecon. Email Josh Wright if you have any questions or comments, or would like to see further data.
Illustration by Gabe Stevenson
Comments
43 responses to “Entrepreneurial Software Developers and the App Economy”
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