The data center has grown rapidly in recent years and is often highlighted for the employment potential it offers even if not directly tech jobs…
When President Donald Trump announced the Stargate project in January, he claimed that this massive AI infrastructure — a joint venture between OpenAI, Oracle, and SoftBank — would create “over 100,000 American jobs almost immediately.”
There is little evidence to suggest that Mr. Trump’s claim is accurate, however. Still, he is not the first politician to tout data centers as a major source of jobs. The data center industry has grown rapidly in recent years, with state governors frequently highlighting the job potential they provide.
DATA CENTERS CREATE 4.7 MILLION JOBS IN THE US
A new study from PwC backs up those claims, finding that data centers will add 4.7 million jobs to the national employment total in the U.S. by 2023, up 60% from 2017. The boom is fueled by cloud computing and artificial intelligence (AI). But most of those jobs are not directly tech jobs. Economic development experts are divided on the accuracy of the study, which was funded by the Data Center Coalition, a lobbying group for the data center industry.
Big tech companies like Amazon, Microsoft, Google, and Meta spent an estimated $246 billion on capital spending last year, much of it on data center expansion. That number is expected to rise to $320 billion this year. State and local officials frequently tout the jobs these new developments will bring.
But the reality is that data centers don’t require many permanent employees once they’re completed, and the economic development contracts they sign in exchange for tax incentives often reflect that. For example, in a press release announcing Amazon’s $10 billion expansion of its Ohio data center in December, Governor Mike DeWine said the project would support “thousands” of jobs. But documents filed with the Ohio Department of Development reveal that Amazon has committed to creating only 1,058 new jobs, and none of the positions are expected to be full-time or salaried.
INFLATABLE JOB NUMBERS?
Of the 4.7 million jobs recorded by PwC, only 603,900 were directly related to data centers. The study, commissioned by the Data Center Coalition—an advocacy group whose members include Amazon, Microsoft, Google, and Meta—divided jobs into three categories.
Direct jobs are full-time, part-time, or self-employed jobs related to data center operations. Indirect jobs are jobs in the supply chain that serves the data center. And induced jobs are jobs that result from spending in the area due to the presence of the data center.
Nearly 4.1 million jobs are “indirectly related to technology” and induced jobs, ranging from data center construction and maintenance to positions in nearby local service industries. The service industry, including tourism, hospitality, retail, healthcare, and finance, accounts for 60% of data center induced jobs.
“The DCC asked PwC to quantify the economic contribution of the data center industry nationally and by state,” a spokesperson for the Data Center Coalition said. “The report was independently prepared by PwC using publicly available data from the Bureau of Economic Analysis and the Bureau of Labor Statistics.”
However, some economists say it is difficult to quantify indirect jobs accurately. Nathan Jensen, a professor at the University of Texas School of Government, questioned the study’s employment figures. “The economic impact of these projects is not really that high,” he said. “I don’t understand how they can come up with employment numbers like that.”
PwC uses IMPLAN, an economic modeling software that is considered the standard in economic impact analysis. Although IMPLAN has been used since the late 1970s to predict employment in many industries, Jensen said the software is vulnerable to abuse.
“There’s a lot of controversy around IMPLAN. It’s often used to justify economic development incentives,” he said. IMPLAN relies on the North American Industry Classification System (NAICS) to calculate a “multiplier”—a measure of a project’s overall impact on the local economy. PwC determined that the data center industry has a multiplier of 7.5, meaning that each direct job creates 7.5 additional jobs in the U.S. economy. However, Jensen said a multiplier of 1 to 2 is probably more accurate.
Data centers do create jobs in the construction sector, according to John Boyd Jr., principal of site selection consultancy The Boyd Co. He said data centers do create significant job opportunities, but not in the places people typically think.
“The on-site labor force is huge, and the average construction worker’s salary is double the national average,” Boyd said. Building a data center requires skilled labor in areas such as cooling systems, natural gas turbines, and specialized server equipment.
Construction workers often have to travel to sites and stay for extended periods of time, leading to demand for hotels, restaurants and other services. Wyndham Hotels and Resorts CEO Geoff Ballotti said on a February earnings call that the boom in data center development has increased occupancy rates at its hotels.
Additionally, data centers require regular, intensive maintenance after they are built, which maintains the need for skilled local labor. Data centers also tend to cluster: When one data center opens in one area, others often follow. Ballotti says Wyndham is focusing its expansion in areas near Jackson, Mississippi, and Columbus, Ohio, for this reason. “This is not a one-and-done project,” Boyd says.
(Source: https://vneconomy.vn)