Intellectual Property and the U.S. Economy

The U.S. Commerce Department recently released a comprehensive report, entitled “Intellectual Property and the U.S. Economy: Industries in Focus,” which identified 75 industries as IP intensive. The Report found that IP at such industries supported at least 40 million jobs in 2011. As of 2010, IP comprised more than $5 trillion dollars, or 34.8 percent of, U.S. gross domestic product (GDP) and accounted for 27.1 million American jobs. Between 2010 and 2011, the U.S. economic recovery resulted in a 1.6% increase in direct employment in IP-intensive industries, faster than the 1.0% growth in non-IP-intensive industries.

The Report concluded that the innovation protected by IP rights were key to creating new jobs and growing exports, all with a positive pervasive effect on the entire economy. IP-driven benefits flowed both upstream and downstream to every sector of the U.S. economy, and not just the final product of workers and companies: every job in some way produces, supplies, consumes, or relies on creativity and commercial distinctiveness to compete. Protecting ideas and IP promotes open and competitive markets, and will help ensure that the U.S. private sector remains America’s innovation engine.

Principal findings of the Report include: 

• The entire U.S. economy relies on some form of IP, because virtually every industry either produces or uses it.
• IP-intensive industries accounted for about $5.06 trillion in value added, or 34.8% of U.S. gross domestic product (GDP), in 2010. Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7% of total U.S. merchandise exports.
• IP-intensive industries directly accounted for 27.1 million American jobs, or 18.8% of all employment in the economy, in 2010.
• A substantial share of IP-intensive employment in the U.S. was in the 60 trademark-intensive industries, with 22.6 million jobs in 2010. The 26 patent-intensive industries accounted for 3.9 million jobs in 2010, while the 13 copyright-intensive industries provided 5.1 million jobs.
• While IP-intensive industries directly supported 27.1 million jobs either on their payrolls or under employment contracts, these sectors also indirectly supported 12.9 million more supply chain jobs throughout the economy.
• In other words, every two jobs in IP-intensive industries support an additional one job elsewhere in the economy. In total, 40.0 million jobs, or 27.7% of all jobs, were directly or indirectly attributable to the most IP-intensive industries.
• Jobs in IP-intensive industries pay well compared to other jobs. Average weekly wages for IP-intensive industries were $1,156 in 2010 or 42% higher than the $815 average weekly wages in other (non-IP-intensive) private industries. This wage premium nearly doubled from 22% in 1990 to 42% by 2010.
• Patent- and copyright-intensive industries have seen particularly fast wage growth in recent years, with the wage premium in patent-intensive industries increasing from 66% in 2005 to 73% in 2010. And the premium in copyright-intensive industries rising from 65% to 77%.
• The comparatively high wages in IP-intensive industries correspond to, on average, the completion of more years of schooling by these workers. More than 42% of workers aged 25 and over in these industries in 2010 were college educated, compared with 34% on average in non-IP-intensive industries.
• Due primarily to historic losses in manufacturing jobs, overall employment in IP-intensive industries has lagged other industries during the last two decades. While employment in non-IP-intensive industries was 21.7% higher in 2011 than in 1990, overall IP-intensive industry employment grew 2.3% over this same period.
• Because patent-intensive industries are all in the manufacturing sector, they experienced relatively more employment losses over this period, especially during the past decade.
• While trademark-intensive industry employment had edged down 2.3% by the end of this period, copyright-intensive industries provided a sizeable employment boost, growing by 46.3% between 1990 and 2011.
• Between 2010 and 2011, the economic recovery led to a 1.6% increase in direct employment in IP-intensive industries, faster than the 1.0% growth in non-IP-intensive industries.
• Growth in copyright-intensive industries (2.4 %), patent-intensive industries (2.3%), and trademark-intensive industries (1.1%) all outpaced gains in non-IP-intensive industries.
• Data on foreign trade of IP-intensive service-providing industries is limited. However, this Report does find that exports of IP-intensive service-providing industries accounted for approximately 19% of total U.S. private services exports in 2007.