Municipalities weigh economic benefits
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Attracting data centers from big tech names like Google, Meta and Amazon sounds appealing, but local leaders need to consider their economic priorities before offering incentives, says Peter Orazem, an economics professor at Iowa State University.
The big picture: If leaders' priority is jobs, there are better industries to compete for, Orazem says.
- But if they're counting on future property tax revenue, he says, the investment may be worth it.
Zoom in: Council Bluffs' $5.5 billion Google data center is one of the largest in the world, taking up 3 million square feet and receiving over $36 million in tax incentives.
- But it only employs 900 people — a small number considering the size of the project, Orazem says.
- However, Google has made other local investments, such as free, citywide Wi-Fi and a recent $1.3 million investment in clean water.
- It's up to local leaders to decide if they think it's worth it, Orazem says.
By the numbers: A 2023 state-commissioned report in Virginia, the country's data center hub, found the initial construction phase of a data center reaped positive economic benefits, but those fall off once the center is complete.
- Building a 250,000-square-foot data center employs up to 1,500 local employees for 12-18 months. But that declines to 50 full-time workers, half of them contracted.
The other side: A recent Data Center Coalition report touts the economic benefits of data centers beyond the jobs inside them.
- That includes bolstering supply chain businesses, employees' spending in the community, and companies' state and local tax contributions — which come without straining public services like schools.