REPORT: Calif. Workers Lose Billions in Wages Due to I.T. Piracy

Orange County Business Council Study Finds California Lost $1.6 Billion in Economic Activity; Nearly 20,000 Jobs and $700 Million in Tax Revenue in 2011

"I will not stand by when our competitors don't play by the rules… It's not right when another country lets our movies, music and software be pirated. Its not fair when foreign manufacturers have a leg up on ours only because they are heavily subsidized."
- President Barack Obama, State of the Union, January 24, 2012

SACRAMENTO, Calif., Jan. 25, 2012 /PRNewswire-USNewswire/ -- Protect California Jobs & Innovation (PCJI) today released the findings of a study conducted by the Orange County Business Council quantifying the economic and job impacts of software piracy in California.

Dr. Wallace Walrod, Chief Economic Advisor to the Orange County Business Council, authored the study, entitled the Economic Consequences of Software Piracy on California.  Walrod found that California workers lost $1.1 billion in lost wages due to software piracy in 2011 and "California lost $1.66 billion in economic activity, almost 20,000 jobs, and $697.6 million in state and local tax revenue in 2011."

"California's information technology and computer software sectors are a large and growing driver of California's economy," Dr. Walrod said.  "The health of this sector is a essential to the State's meaningful economic recovery. Global software piracy disproportionately hurts California because the economic and employment benefits are concentrated here."

California has lost almost 400,000 manufacturing and I.T. jobs over the past decade to developing countries where piracy rates are as high as 80 percent.

Among the other findings:

• California workers lose billions in wages due to piracy. ($1.1 billion) Loss in business revenues translates to the inability for businesses to expand and hire more workers and increase compensation for their current workforce.
• Software Piracy negatively impacts economic activity, job creation, job retention, and tax revenues. 
• In addition to direct impacts on the economy and jobs, the additional damage to the California economy is enormous:
  • Software piracy is a competitiveness issue for California, including manufacturing/construction employment retention and attraction efforts.
  • Chilling effect that a lax software piracy policy framework has on California's R&D, knowledge, investment, innovation, and economic drivers.

The study also found that reducing piracy by as little as 10 percent would have a profound benefit for California workers and the economy. 

• In California, reducing piracy by 10 percent over four years would generate over $4 billion in new economic activity and $660 million in additional tax revenue.
• Reducing software piracy by 10 percentage points in half the time (two years), would increase the State's economic benefits with over $5.7 billion in new economic activity and $880 million in additional tax revenue for California.

"Stealing I.T. to cut corners hurts law-abiding California businesses, manufacturers and innovators and costs our state jobs, sales, market share and tax revenue," said Valley Industry and Commerce Association (VICA) President Stuart Waldman, a PCJI coalition member.

Curtis W. Ellis, Communications Director with the American Jobs Alliance (AJA), a PCJI coalition member added, "While progress is being made at the federal level to address unfair competition, our coalition encourages the State of California to take the lead by requiring state agencies to use only legal software on their computers and ensure their contractors do not use stolen software."

"The economic impact that stealing IT has on California businesses and workers cannot be understated," said Steve Van Dorn, President and CEO of the Santa Clara Chamber of Commerce and PCJI coalition member. "This is a tremendous problem and these figures on lost jobs, wages and economic activity show us exactly how big that problem really is. Our state leaders need to take a close look at this issue and find a remedy before more jobs and wages are lost." 

Protect California Jobs & Innovation is a coalition of California businesses, innovators, software and hardware solutions providers, workers, and individuals concerned about unfair competition from the use of stolen information technology (I.T.).

A copy of the study, Economic Consequences of Software Piracy on California, can be found on the Orange County Business Council's website www.OCBC.org/research or by clicking here.

STEALING I.T. = STEALING JOBS

For more information visit www.facebook.com/StopPiracyProtectJobs

SOURCE Protect California Jobs & Innovation