Whenever big data center developers roll into town, their pitch ends up sounding something like this: hand over your land and your resources, throw in a decade of government subsidies, and we’ll give your ailing little burg some jobs, tax revenue, and a shiny new facility to boost the local economy.
Sounds like a no-brainer, right? Not so fast, cowboy.
In theory, more tax revenue means money for schools, roads, and first responders. In practice, states and counties are waving those taxes in order to entice tech companies to set up shop — while existing campuses put major strain on local communities. One analysis found that Georgia, Virginia, and Texas each lose over $1 billion a year to state data center incentives, while at least fourteen states don’t even disclose data center tax breaks in the first place.
The down-stream impacts don’t really materialize either. Researchers at Georgia Tech found that in rural areas, data centers typically employ fewer than 100 permanent workers and are likely to import specialized services from outside the community.
While this can temporarily boost unemployment numbers, any broader, long-term impacts are not guaranteed and are highly dependent on local conditions. As the Georgia Tech researchers explain, “the sweeping job and wage growth often promised during local recruitment efforts is unlikely to arrive on its own.”
But the jobs creation claim is where the pitch really falls apart. In Iowa, the Cedar Rapids Economic Development Center recently disclosed that two ongoing data center projects — one for Google carrying a price tag of at least $576 million and another for Blackstone firm QTS starting at $750 million — are contractually required to create a combined minimum of just 61 permanent jobs.
In other words, for $1.3 billion in combined capital coming into the city, Cedar Rapids is only guaranteed 61 permanent positions, a spend of $21.3 million per job. That’s even worse than the $136 million Ark Data Center going up in Northeastern Ohio, which is projected to create a whopping ten full-time jobs when all is said and done.
And while Cedar Rapids brags that these developments will bring “thousands of construction and trade jobs,” that may not be to the city’s benefit. Not only are data center construction jobs temporary — and therefore highly dependent on the whims of notoriously unreliable data center developers — they’re also putting quite the squeeze on the construction market.
As a recent analysis by the firm Turner & Townsend found, the rush to build so many data centers has created a “two-speed construction market,” where top-dollar AI projects drive up costs for other developments like housing, while sucking up the skilled labor needed in other sectors.
That report found that 87 percent of global construction markets are experiencing shortages of mechanical, electrical, and plumbing (MEP) specialists, while the cost and lead-time of acquiring MEP components rises. That’s great news for MEP contractors, but the trade-off is higher costs for everything else we might want to build.
That’s before we even mention how disastrous data centers are for the environment — making it all the more insulting that taxpayers are forced to foot the bill for the tech industry’s vastly exaggerated promises.
More on data centers: The Pollution Being Churned Out by AI Data Centers Is So Severe That It’s Almost Incomprehensible