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May 12, 2019

Data Centers: Huge Economic Impact for Who?

by Adam Hardin

I was reading the article Why data centers fail to bring new jobs to small towns by Alison DeNisco Rayome.

 

In Boydton, VA, recently profiled in the New York Times, Microsoft recently built a large data center housing thousands of computer servers.

People thought when Microsoft came in it would create jobs, but that’s just not the case,” said E.W. Gregory, the head of the local International Brotherhood of Electrical Workers union. Instead, they brought in outside technicians to do most of the work, he added. About 25 local residents got jobs, primarily as administrative assistants or janitorial staff, Gregory said.

Hundreds of Boydton residents lost jobs in recent years, as several factories and a prison closed. Gregory said he believes Microsoft chose the town for a data center primarily because “land was cheap.”

It helps the community to a point, because restaurants, gas stations, and hotels are getting more business,” Gregory said. “The people are nice and hard working, but there is no industry for them to work in.

 

This is a subject that I can relate to as I’m from the area where Facebook plopped down a data center outside the rural town of Forest City, North Carolina. The chatter from elected officials and Facebook themselves was that this would be a boon for the local economy and create numerous new jobs. But, while the temporary outsourcing of local construction laborers was a small uptick, the same problem that was experienced by E. W. Gregory appeared. Data centers are, more or less, gigantic network closets. There is simply no need for that many technical staff. In any case, Facebook continued expansion projects, with the latest being as recent as 2016. An estimated “125 full-time jobs [and] full-time third party (sic) contractor positions” would be created. This is in a county with a population of around 65,000 with a workforce of roughly 26,000 people. Therefore, the presence of Facebook will theoretically have a 0.004% positive impact on a county that is already below the poverty line. Data USA states that the 2017 median household income was $38,573 (USD), which is $19,079 (USD) less than the median income of the country as a whole. The outlier in this instance is the Lake Lure area, which comprises the western half of the county (see below). Forest City (and my subsequent hometown of Ellenboro) is center and right.

Income by Location (Rutherford County, NC)

What an impact that data center is having, huh? When examining the most common and most specialized jobs, there was no change in the years since the data center’s operation:

rcjobs

I should also mention that Walmart is the biggest employer in the county. So why did Facebook choose Rutherford County and why did the county commissioners (and Duke Energy) bend over backwards to give them so much economic incentive? The answer is always the same: taxes. From the article Study: Facebook Data Center in North Carolina Has Massive Economic Impact, we see that $198,000 were added to local property tax rolls and $336,000 tax was paid on electricity usage (the state managed to get $194,000 in franchise taxes). The article goes on to boast that “[o]ver three years (since the site went live in April 2012) the data center resulted in addition of 4,700 across North Carolina, including direct creation of 2,600 jobs.”

Am I mad that Facebook built a data center in my former back yard? Hardly. I don’t live there and they are free to purchase land and set up shop wherever they want. What does irritate me is when they (in conjunction with the local government) start blowing smoke up the collective asses of the local populace. Of course, this is the same populace who keeps voting in the aforementioned local government, but what do I know? Apparently what’s good for the county’s (and state’s) goose is good for the gander.

So the next time someone suggests to you that a new data center is going to turn the town on its head and make waves, take it with a grain of salt.

Better yet, smack them with a car battery.

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