Over the last three weeks, we've looked at the water and electricity consumed by AI data centers and why the United States is racing China to build the computing infrastructure needed for artificial intelligence. For our final installment, let's bring the discussion back home and look at the other side of the equation.
If a community is going to provide land, water, electricity, roads, and other infrastructure for one of these enormous facilities, there is a pretty obvious question residents should ask: What's in it for us? The answer includes jobs, taxes, infrastructure, and billions of dollars in private investment, but just like the concerns we've discussed over the past few weeks, the benefits deserve some context too.
Let's Be Honest About the Jobs
If someone tells you a data center will create thousands of permanent jobs, be skeptical. These facilities contain enormous amounts of equipment, but once they're operating, they don't necessarily require enormous numbers of employees. The permanent workforce tends to include technicians, engineers, electricians, security personnel, and facility operations staff.
Construction is a different story. Building a multibillion-dollar data center can employ hundreds or thousands of electricians, equipment operators, plumbers, concrete workers, truck drivers, engineers, and other tradespeople over several years. Nevada actually recognizes this distinction in its incentive program. To qualify for the state's 20-year data center tax abatement, a project must invest at least $100 million while creating only 50 full-time Nevada jobs. Those permanent jobs must pay at least the statewide average wage, and at least half of the construction workers must be Nevada residents.
The Bigger Prize May Be Taxes
Data centers are extraordinarily expensive buildings filled with extraordinarily expensive equipment. That creates a potentially enormous tax base even though relatively few people may work inside. Nevada offers substantial tax abatements to compete for these projects, which understandably gets attention, but an abatement isn't necessarily the same thing as paying no taxes. Certain sales, use, and personal property taxes are reduced for a specified period while other taxes and revenues remain.
The question shouldn't simply be, "Did they get a tax break?" The better question is what the community receives after those incentives are counted. A project investing several billion dollars can still generate substantial public revenue while receiving incentives, but every deal is different. This is where residents and local governments need to look at the actual numbers rather than either the company's sales pitch or the headline announcing the tax break.
Nevada Already Has Examples
We don't have to speculate about what these projects look like because Nevada already has several. Apple opened its Northern Nevada data center more than a decade ago. By 2024, the company reported investing more than $3 billion in its Nevada data center operations, far exceeding its original commitments, with more than 200 people supporting the facility.
Google provides another example. Its Storey County data center began with a planned investment of at least $600 million and a commitment to create at least 50 permanent jobs. The construction associated with Google's Nevada projects involved thousands of workers. These aren't factories employing 5,000 people when construction ends, but they're certainly not empty warehouses contributing nothing to the local economy either. iNFRASTRUCTURe CAN Be PART OF THe DeAL
Large data centers can also drive investment in electrical generation, substations, transmission lines, fiber networks, roads, and other infrastructure. Contractors provide maintenance, security, equipment, fuel, food, lodging, and other services, meaning some of the economic activity spreads beyond the property line.
But there's an important qualification here too. Infrastructure is a community benefit when the project helps pay for it. It's considerably less attractive if existing residents end up footing the bill. Just as we asked where the water and electricity will come from in Parts 1 and 2, communities should ask who will pay for the infrastructure required to deliver them.
Look at the Whole Deal
After four weeks, you've probably noticed a theme. Data centers aren't simply good or bad. They use water and enormous amounts of electricity, and they don't create as many permanent jobs as some economic-development pitches might suggest. They can also bring billions of dollars in private investment, years of construction employment, skilled permanent jobs, infrastructure development, and substantial tax revenue.
So, before supporting or opposing a proposed data center, ask what it consumes and what it contributes. Ask who pays for the infrastructure, who gets the jobs, what tax revenue remains after incentives, and what the community receives in return.
Then judge the project on the whole deal. That's considerably more useful than either the sales pitch or the scary headline. Stay sharp, Eureka!
Johnny is an insufferable Gen-Xer who escaped Southern California before the next Big One sinks it into the Pacific. He now calls Eureka home and refuses to leave. He can be reached for questions, comments, and ideas at [email protected]
