Opposition to data centers has become one of the main political movements of the year. What is the impact on local jobs and the economy when a data center comes to town?
Transcription
STEVE INSKEEP, HOST:
Let’s take a look at the fight over data centers in this country. A Pew Research Center analysis earlier this year found that more than 1,500 new data centers were in some stage of planning, and of course, there are plenty of protests. One of the selling points is that data centers will create local jobs, especially in rural areas. So is there any data to support that? From KUT in Austin, Mose Buchele reports.
ABIGAIL LINDSEY: And this is Old Zorn Road.
MOSE BUCHELE, BYLINE: On a hot August afternoon, Abigail Lindsey took me around her home about an hour from Austin and San Antonio. We passed fields dried by the Texas sun, bales of hay and cattle.
LINDSEY: Everyone here has animals, whether they’re chickens or goats, cattle or horses. We have many horses here.
BUCHELE: But our tour was about what comes next. Developers want to replace some of these farms with data centers, and Lindsey and some of her neighbors oppose those plans.
LINDSEY: They will touch every part of your life, from the value of your home to the quality of your air, water and light.
BUCHELE: Guadalupe County, where much of this land is located, has welcomed the centers with tax breaks. A 10-year agreement gives a company a 90% county tax cut in the first five years of operations. Slowly increase tax obligations for the next five years. And one of the reasons for these agreements is the economic growth promised by the developers. At a county commissioners hearing this spring, Cynthia Thompson of CloudBurst Data Centers promised 480 new jobs at the center. And that was just the beginning.
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CYNTHIA THOMPSON: We are an economic multiplier. The project will stimulate local spending and employment.
BUCHELE: Referring to an industry-sponsored study, he said each new job at the facility would create approximately another 6.4 new jobs locally, increasing wages and spending throughout the community. How do we know? Economists say there isn’t much academic research yet to support claims like these. This is despite the fact that data centers have been around for a while.
DANIEL YUE: These things are not new. They have been building since the beginning of the Internet.
BUCHELE: Daniel Yue is a professor at Georgia Tech’s Scheller College of Business. He recently co-authored a study showing that communities that were home to previous generations of data centers experienced some economic growth.
YUE: Something like 1% in the first three years of the entry of the first data center, and something like maybe 5% in the long term.
BUCHELE: But that growth did not occur everywhere. Yue found that the economic benefits were only really apparent in metropolitan areas where other businesses are more likely to open around data centers, something economists call spillover.
YUE: The implication is that rural counties may not be able to rely on spillovers to drive job growth or new business creation in the same way that metropolitan areas could.
BUCHELE: That spillover effect is important because the centers themselves typically don’t generate many permanent jobs, says Mark Muro, co-author of a different Brookings Institution study.
MARK MURO: There is certainly an initial explosion of construction jobs, but they are not sources of long-term employment.
BUCHELE: Representatives for CloudBurst Data Centers did not respond to emailed questions about how they estimated the impacts of their projects, and Guadalupe County declined to comment because of lawsuits filed by opponents of the data centers. But both Yue and Muro say there are reasons beyond jobs that communities might want these businesses. Increasing tax revenue for school districts is a big selling point. The question is whether those benefits outweigh the costs, such as increased demand for water, electricity and quality of life concerns.
Back on those rural Texas roads, Abigail Lindsey says she and her neighbors are against it.
LINDSEY: It’s always this: If we build one more thing.
BUCHELE: It is a skepticism that has reached the state’s main political leaders. Last month, Texas Governor Greg Abbott announced a pause on approvals for new data centers because of what it could mean for the state’s power grid.
For NPR News, I’m Mose Buchele in Austin.
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