Data Centers Good for Tax Base, But Don’t Create Many Jobs

More data translates into increased opportunities for companies, but also more problems—chief among them a need for more data centers to store, manage and serve it up to workers.

For states and counties, however, a rising need for data centers can translate into a significant economic boost. Virginia recently announced that Capital One Financial Corp. will build a $150 million data center in Chesterfield County. In exchange for choosing the state as the location for its new data center, Capital One will receive grants and be eligible for a tax exemption.

“Cutting-edge information technology is now a priority for all companies in the domestic and global marketplace,” Jim Cheng, Virginia’s secretary of commerce and trade, told The Washington Post after the deal was announced. “Winning this project was a priority, and we are thrilled to gain an investment of this magnitude and 50 new jobs.”

News of Capital One’s planned data center emerged a few days after the Reno Gazette-Journal reported that Apple plans on opening its own data center in the Nevada town of Sparks, a little bit east of Reno. Although Apple managed to keep the deal under wraps for months, Nevada officials eventually posted documents online that detailed the plans—with a variety of other publications, including Wired, quickly picking up on the story.

Apple’s investment in the area will reportedly top $1 billion over the next decade; in addition to the data center, a business and purchasing center in downtown Reno is apparently in the works. An estimate released by Washoe County estimated that the data center portion of the project, once construction is finished, will sustain up to 41 full-time jobs, along with 200 contract employees and 88 “indirect” workers.

If data centers bring an influx of cash into communities, though, they also don’t bring a massive amount of jobs. When Microsoft recently announced plans to begin work on a data center in Wyoming, Cheyenne economist Dick O’Gara told a local news Website that any local benefit would derive more from the extra taxes than job creation. Other officials and analysts in other states have echoed that opinion, although some highlight the high-tech nature of the jobs being created.

In other words, a data center in one’s backyard is probably good for the town and county’s bottom line, but it won’t spike the local employment figures.


Image: asharkyu/