"The sweeping job and wage growth often promised during local recruitment efforts is unlikely to arrive on its own.”
When major data center developers arrive in town, their pitch is always the same: hand over your land and resources, throw in a decade of government subsidies, and in return, we will rescue your ailing community with jobs, tax revenue, and a shiny new facility to supercharge the local economy.
It sounds like a no-brainer. But local governments should think twice.
In theory, a surge in tax revenue should translate to better-funded schools, improved roads, and stronger first-responder services. In practice, states and counties routinely waive those very taxes to lure tech giants into setting up shop. Meanwhile, existing data center campuses place a massive, uncompensated strain on local infrastructure. One analysis revealed that Georgia, Virginia, and Texas each lose over $1 billion annually to state data center incentives, while at least fourteen states do not even publicly disclose their data center tax breaks.
Furthermore, the promised downstream economic ripple effects rarely materialize. Researchers at Georgia Tech found that in rural areas, data centers typically employ fewer than 100 permanent workers and are highly likely to import specialized services from outside the community. While this influx can temporarily pad local unemployment numbers, broader, long-term economic benefits are far from guaranteed and remain heavily dependent on local conditions. As the Georgia Tech researchers caution, “the sweeping job and wage growth often promised during local recruitment efforts is unlikely to arrive on its own.”
Nowhere is this disconnect more glaring than in the actual job creation metrics. In Iowa, the Cedar Rapids Economic Development Center recently disclosed that two ongoing data center projects—one for Google valued at a minimum of $576 million, and another for the Blackstone-owned 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 capital investment, Cedar Rapids is guaranteed a mere 61 permanent positions. That amounts to a staggering public subsidy of $21.3 million per job. Even more absurd is the $136 million Ark Data Center in Northeastern Ohio, which is projected to create a grand total of ten full-time jobs once completed.
Proponents often counter that these developments will bring “thousands of construction and trade jobs.” However, this temporary boom often works against the city’s long-term interests. Data center construction jobs are inherently transient, leaving communities vulnerable to the whims of notoriously unreliable developers. Worse, they place an intense squeeze on the local construction market.
A recent analysis by the consulting firm Turner & Townsend found that the global rush to build data centers has created a “two-speed construction market.” Top-dollar AI projects are driving up costs for essential developments like housing, while simultaneously draining the pool of skilled labor needed in other sectors. The report noted that 87 percent of global construction markets are currently experiencing shortages of mechanical, electrical, and plumbing (MEP) specialists, while the cost and lead times for acquiring MEP components continue to rise. This is a windfall for MEP contractors, but the trade-off is inflated costs and delays for everything else a community might need to build.
And this is all before accounting for the severe environmental toll of data centers, which consume vast amounts of water and energy. When juxtaposed with the tech industry’s vastly exaggerated economic promises, it is deeply insulting that taxpayers are ultimately forced to foot the bill.