Economic Data Shows How the IT Sector Increasingly Powers the U.S. Economy

WASHINGTON—Industries vary in the relative contributions they make to national economies, but even among advanced industries, the information technology (IT) sector distinguishes itself with high-paying jobs, low price inflation for consumers, strong exports, and superior innovation, according to a new statistical report from the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy.

“America’s IT sector stands out as one of the country’s most strategically important advanced industries,” said ITIF President Robert D. Atkinson, who authored the report. “It is a job creator, it is globally competitive, it spurs innovation and productivity, and it acts as a deflationary force for consumers. Policymakers should take none of this for granted.”

The IT sector includes industries such as computing, data storage and processing, IT components, semiconductors, information services, and software. Together, they make an outsized contribution in powering the U.S. economy.

Among the statistics in ITIF’s report:

• Nearly one in five U.S. private sector jobs (19 percent) are enabled by IT, including nearly 6 million through direct employment in the IT industry, nearly 10.7 million through IT supplier jobs, and 8.7 million in IT-induced jobs.
• The average annual compensation per worker in the IT industry was $122,270 in 2020—more than double the average U.S. private sector wage. Even workers without college degrees make 50 percent more in the IT sector than in other sectors.
• The IT sector accounts for 28 percent of the establishments in U.S. industries that compete in the global economy, 22.4 percent of the jobs in globally traded sectors, and 30.7 percent of payroll expenditures.
• IT-based goods and services have been getting significantly cheaper compared with the rest of the economy: The average producer price index (PPI) rose 5.4 percent from 2012 to 2022 in 33 IT industries for which data is available, whereas the average PPI for all commodities rose 40.9 percent in the same period.
• Intermediate IT products are indispensible tools of production for other industries in sectors across the economy, and the 10 most IT-intensive industries alone make up 1.7 percent of the economy’s overall output.
• “The nation’s most strategically important industries have three main characteristics: They are driven by advanced technologies, they are globally traded sectors, and they contribute to both economic and national security,” said Atkinson. “Even among the select group that meet those criteria, the IT sector is a standout for the United States.”

“Nearly one in five U.S. workers have the IT sector to thank for their jobs, directly or indirectly. Meanwhile, low prices for IT products and services have a counterbalancing effect on inflation in the rest of the economy. And perhaps most significantly, U.S. IT firms hold nearly one-third of the global IT market, which is 35 percent more than you would expect based on the size of the U.S. economy. That shows how America is becoming increasingly specialized in IT.”

Read the report.