Data centers will soon be part of the Mississippi vocabulary after Governor Tate Reeves announced a $10 billion project that is bringing two Amazon data centers to Mississippi.
Data centers are big business in other states such as Virginia. While some grumble about Mississippi using economic and tax incentives to land Amazon, such tactics are standard practices for states trying to land such projects.
The Federal Reserve Bank of Richmond studies the data center industry in Virginia and whether the incentives paid for themselves. The Fed concluded the state's investment in developing its data center industry more than paid for itself. The report opened:
For Virginia, data centers have been a consistent contributor to economic growth. Leveraging some of its natural advantages, the state has encouraged the industry's development over the years through tax incentives and other initiatives. These efforts put Virginia in a position to become a major player in the data center industry and to take advantage of a global boom in the demand for cloud computing services.
Virginia now is home to hundreds of data centers. Much of the growth has occurred in Northern Virginia's "Data Center Alley." It is home to the data centers operated by public cloud providers such as Amazon Web Services (AWS), social media companies such as Meta, and financial firms such as Capital One...
Although Virginia's data centers only employ a few thousand people, they are quite the economic multiplier:
When people think about an industry's local economic effects, their initial focus is often on job creation. As highly capital-intensive businesses, however, data centers require relatively few workers. In 2021, for example, Virginia's data centers directly employed only 5,500 workers in their operations — a figure scarcely greater than 0.1 percent of the state's workforce of more than 4 million people.
The flip side of the story is that the jobs that data centers do create tend to be highly productive jobs that require elevated skills and pay high wages. In 2020, the average private sector employee in a Virginia data center earned an estimated $134,308, which was more than double the estimated $62,250 earned by Virginia's average private sector employee. This wage gap has been growing for roughly the past two decades, as wage hikes in Virginia's data industry have outpaced those of other industries in the state on average.
In addition to creating high-paying jobs, data centers also support local economies through their demand for services. "Data centers purchase unusual amounts of services such as security and HVAC maintenance, so their impact through business-to-business purchases tends to be disproportionately large," says Mangum. The industry has also employed a lot of construction workers. In 2021, there were almost twice as many people employed in the construction of new data centers as in operations of preexisting centers.
Mangum's firm, Mangum Economics, recently conducted an economic impact study of Virginia data centers on behalf of the Northern Virginia Technology Council. The study estimated the ripple effects that data centers create as their expenditures — both on operations and new construction — work their way through Virginia's economy. Taking these effects into account, the study estimated that data centers supported 45,460 jobs and $15.3 billion in economic output in Virginia in 2021. Those figures corresponded to roughly 1 percent of Virginia's jobs and 2.5 percent of its economic output.
So after it is all said and done, did Virginia lose money recruiting data centers?
Mangum's study also included estimates of data centers' effects on the budgets of the counties in which they operate. Although Virginia offers sales tax incentives to qualifying firms, the data center industry has paid substantial amounts in state and local taxes over the years. But they have also used state and local resources. To estimate data centers' overall fiscal cost to Virginia's counties, Mangum's analysis focused on the main costs that businesses impose on local governments — the costs of providing primary and secondary education as well as other services to the business' employees.
Mangum estimated that, in 2020, Loudoun County received $424.7 million in tax revenue from data centers — more than thirteenfold their estimated budgetary cost of $32.3 million. The figures for Prince William County were smaller but in similar proportion, with revenues estimated at $64.2 million and costs of $4.8 million. Mangum views his estimates as conservative. "The benefits only take into account the direct local revenue generated by data centers as reported to us by the localities themselves," says Mangum. "They do not include any local tax revenue generated by employees."
In 2019, Virginia's Joint Legislative Audit and Review Commission published a report in which it evaluated the effectiveness of the state's tax incentive program for data centers. Looking at the period between fiscal years 2010 and 2017, the study noted, "The data center sales and use tax exemption is by far Virginia's largest incentive in terms of forgone revenue, representing more than one-fifth of Virginia's total spending on economic development incentives during this period." Despite the program's cost, however, the report found that it had been relatively effective, stating that it had "a sizable influence on data center decisions to locate or expand in Virginia." The report, which found that the incentive program had yielded positive net benefits, asserted that it is reasonable for the state to continue the program.
The report is posted below.
31 comments:
Thank you, KF, for putting down the haters. The sales tax provided by ancillary services alone will make the tax incentives net neutral. Add the employer taxes and employee economic impact, this will more than pay for itself.
Go democrats go
Thanks, KF, for your success at losing everybody in the weeds of endless minutia. What the fuck has this got to do with Old Dominion? It's a truck-line.
KF do not reply to 3:46 comment about Old Dominion. Wait he is joking....right?
Hold on, 3:33. The "haters" (such a juvenile buzzword; you hate inconvenient facts, I guess) are not "put down." In fact, the dissent is verified. We quote Forbes, and you quote spoon fed drivel. Call the experienced risk analysts or wise, instead.
Here's what he posts: " In 2021, for example, Virginia's data centers directly employed only 5,500 workers in their operations"
So, with 178 data centers, there are only 30 workers per center on average. Math.
As Tate lied about "1000 jobs" by not admitting those are temporary construction jobs, it's proving what dissenters are saying about this obvious GubMint giveaway and boondoggle. 2 x 30 is 60, Hoss. Not 1000.
Then, it reiterates the falsehoods presented by Chinese commie lovers and Bezos Fan Bois here:
"The industry has also employed a lot of construction workers. In 2021, there were almost twice as many people employed in the construction of new data centers as in operations of preexisting centers." Yes, 900 temp jobs. He lied on jobs and he lies on "paying for itself."
So, yes, as we have called out Tater Et Al, the "1000" jobs are temporary. And, he didn't bring up the "controversial" fact that those must be at a "living wage" to gain more Gubmint welfare. He wouldn't want that idea sticking around. But he lied and misrepresented these projects.
These things suck massive power and water, just as we had a huge drought last summer. And we have a weak power grid. And you can dang sure bet that the wages in MS will be nowhere near NoVa wages. For those 60 or less "jobs" Tater lied about. Another huge white elephant in the future after Bezos, Japanese corporations, and the Chinese EV folks he loves have moved on.
And I can't wait till the Boomers now whining about a simple gas station get the power lines installed, the substations built, and the roar of diesel generators firing up (at least for test loading). Then, the brownouts, the blackouts, the higher electric bills arrive.
So predictable. Cut and paste "hurry hurry" anonymous backdoor Corporate Welfare. For the people who hate us, Bezos, Soros, and the Chinese. It's laughable to consider Tater Et Al conservative or patriotic.
Did anyone seek guarantees that the workers will not be all low paid H1B foreign contractors? How about security, etc??? ALL of these will be low wage no job security outsourced crap jobs. For desperate IT imports. Well, at least for 60 crap jobs. And 1 manager and the AWS PR dept and lobbyists on speed dial to reassure Mayor Goober IV and Mayor Mary.
So, run those pie in the sky projections by us again in 5 years after the huge place is humming, run by a skeleton crew, and enjoy. Fools. And sellouts. Our GuvNah and Legislature.
“I’ve spent way too much of my life watching city councils say, ‘We need a big tech company to show that we’re future-focused,’” says Sebastian Moss, the editor of Data Center Dynamics, which tracks the industry. Towns will give away tax breaks worth hundreds of millions of dollars, his reporting has found, and then express gratitude toward tech companies that have donated a few thousand computers—worth a fraction of the tax breaks—to their cash-strapped school systems. “I sometimes wonder if they’re preying on desperation, going to places that are struggling.” The 'Sip. Suckers to a T.
At the time, with all the tax and other incentives offered to Nissan, I thought that was just too much, but 20ish year later, it turned out to be a great investments. The entire metro area would have flatlined long ago without Nissan. Nissan has built houses all the way north to Winona and south to Magee.
Old Dominion is one of the best-known nicknames for Virginia, Einstein.
Metro Jackson would be as dead as the city center without Eaton (Vickers), SIEMENS (Energy), Entergy, Raytheon, Continental Tire, Ergon, Sanderson Farms, Southern Farm Bureau, CSpire, and more. And, their employees support the construction, food service, banking, and healthcare businesses.
These datacenters may include some kind of administrative presence or division headquarters which would add significantly to the professional-level employment tally. They also have tremendous maintenance operations which will either fuel growth in local trade businesses or spawn new startups.
For a state like Mississippi, it's grow or wither.
Democrats would rather have a $10 billion Medicaid office.
4:11. Have you possibly thought on 758 acres, just one of the sights there might be more than 1 plant. Say 5 on each sight, running 24 hrs a day 7 days a week. Say 30 per shift, 90 a day. Same on other sight, 6 plants? 12? 75 employees? 100 a day a sight? Tell me you are not dumb enough to just believe 1 plant on 758 acres? Let’s wait and see, old Tater may be correct. I hope so!
January 27, 2024 at 4:11 PM, we have a saying where I come from, dude, we'll see.
Many of the hugest things have happened in Mississippi!
Only the haters don't think almost anything is possible.
Thats a fack!
411 your cut and paste math is about as good as my second grader could do when given a reading math problem. You can't count the total number of 'data center jobs' from this report, (which is looking at multiple data centers of all sizes and operatiaons) divide by the number of centers, and make the comparison that the average you came up with would be applicable to the centers being located by AWS in Mississippi.
These two facilities are going to occupy over 1700 acres of land with multiple buildings each being around 250,000 square feet (thats roughly five acres for your math-short mind). If your number of 30 employees was correct, each employee would have to cover almost 60 acres of land to do his/her job and that would have to be done in multiple buildings. Recognizing that these centers run 24/7/365.25 - that would really really stretch those 30 employees since there would be ten employees per shift -and that would be assuming that they all work seven days a week - no holidays, vacation, or sick time. Since that's obviously not the case, there would only be five to six employees per shift, and that is across two separate sites. Gotta wonder what kind of Jetson's air vehicle these folks are going to be operating to cover the multiple buildings across these 1700 acres to do their job.
Get a clue -- you don't know shit about what you are saying, but feel comfortable spreading your shit because you won't have to answer up after AWS is up and operating with over 2000 employees on these sites.
And - IF AWS doesn't create the 1000 jobs, they don't get the few benefits being offered by the state, so your bitch would still fail.
4:11 You obviously don’t have a dang clue about the details of the project. Please, stop embarrassing yourself. I get that you think you are smarter than the governor, the legislature, city & county leaders, respected economic developers, local business leaders and so on. However, you clearly are not & 5:07 easily eviscerated your “Ah, ha! Gotcha” moment. Stop. Just stop.
If it’s not more welfare benefits or more PERS, most Mississippians won’t support it. That tells you why we’ve always been last in everything.
This is comical if you’re trying to find a parallel between Mississippi and Virginia before VA landed their data centers
Hey 411 - the 'construction jobs' you demean will total over 7,000. Guess you never have been involved in anything like this, but when you are building several acres of buildings scattered over hundreds of acres of land, you ain't going to do that in two years with your 1000 (less AWS workers, but who's counting) workers
Take your hate and cram it. As has been pointed out, your math skills are as dull as your understanding of something as massive as this.
No hate here, but the reality of MS is that the demographic of the "poor" is growing far more rapidly than the skilled, and wanting to work. The academics are leaving for greener pastures.
Poverty is a cancer that will erode the healthy parts and eventually overcome the body. Mississippi's educational systems are morally bankrupt, so the high quality workforce the politicos report creating (and often brag about) is a opium pipe dream.
Mississippians should start learning Mandarin.
where was all the fawning over C Spire when they built a $30 million Tier 3 datacenter in Starkville in 2014 that still operates today and serves customers cloud services?
Hey 6:58. I see you got your medical marijuana card.
These data centers use far less power as they move away from spinning hard discs to solid state memory.
@9:28
SSDs are only used for caching in Data Centers.
Enterprise grade mechanical hard drives still win in capacity and durability.
The TBW for a mechanical HDD is about 100X more than an SSD.
The memory controllers and NAND in Enterprise SSDs simply don’t have the endurance yet.
at 9:28 AM -- The disks are only 5-10% of the power load in a server. The rest is split between cooling and processing.
"Old Dominion is one of the best-known nicknames for Virginia, Einstein."
Thank you, numbnuts. Old Dominion is also a nationwide freight carrier founded in Richmond 90 years ago this year. That's right at a century for those of you in Rio Linda and Pearl.
7:36 must be related to 4:11 because they both suck at math, logic and reason. Let me explain it to you 7:36….$10 billion is a hell of a lot more than $30 million. Nobody knows about CSpire in Starkville, but folks around the country in big tech all know about Amazon’s investment in Madison County. They are taking notice.
January 27, 2024 at 4:01 PM
Where is Old Dominion University located? I'm not a football guy but even I know that. The majority of KF comments could be classified as brainlet peanut gallery comments.
1:08 - Pardon me for admitting I've never heard of Old Dominion University, but, then again, why exactly should I have?
Someone said: "The entire metro area would have flatlined long ago without Nissan."
Nissan has not even kept Canton from flatlining, much less the entire metro area.
Well...let's think a minute rather than just react.
First of all, will a Mississippi company and Mississippi sub contractors be involved in the construction?
Are there Mississippians trained for the higher paying jobs that will be generated or will the companies existing employee base that they hire nationally be transferring in and out?
Do they have plans to train Mississippians for the lower paying jobs? Even for cleaning, sometimes extra skills are needed around sensitive equipment.
What is the source of income for the taxpayers and how long will it last? Is it temporary housing or state sales taxes or state corporate taxes? If the high paying jobs aren't going to be paying property taxes, that's a problem. These new employees aren't going to be paying state taxes...that's gone.
The De Buekelaers came and stayed and expanded. Yates, a Mississippi native, expanded to be an international company but never left. I don't recall either needing to be paid to build their businesses here and both hired Mississippians and trained them. Both had businesses that weren't likely to become technically obsolete or be a business at risk of having a short profit span before losing popularity. Will a data center? And, will our grid support increasing demands? I don't know.
I would like to think we had a Governor and legislature that would ask these questions. At one time, we had a few Governors and enough legislators who were smart enough to find smart people to keep them well informed when they didn't have expertise on a subject. I'm afraid I don't have that kind of confidence now...not after seeing Venture Capital, The Meat Packing plant, and Favre et.al. scandals when the legislature got to be filled with those whose primary income came from politics not from having been successful on their own either in government or business or a profession. We have a minority of elected officials (of both races) still trying to do a good job and actually working, but it's an uphill climb juggling party nonsense with doing what they know is sensible. The rest get elected by catering to the extremist elements of their parties.
Thinking is better than emoting. Asking questions is good and the only way you learn. Try it.
What a shame! We put a political party and their drummer boys before either our Nation or our State.
@4:11 How in the world could this be anything but good for the state of Mississippi? Do you have a plan that brings a company like Amazon to the state? What are you doing to create jobs? This is the biggest get in Mississippi in my lifetime. The residual effects of this deal will enable our universities to offer new computer science/tech based degrees, and potentially stem the brain drain of our brightest people from leaving Mississippi for greener pastures.
I see nothing but positives from this deal, and I applaud the powers that be for having some foresight to get it done. Quit wasting your time criticizing real efforts to make Mississippi better and do something for your state.
Democrats would rather have a $10 billion Medicaid office.
January 27, 2024 at 5:03 PM
Post Of The Day Right There...
@9:27
It literally says in the first part of the press release that the state funds are for land and "training the workforce". So, yes, training and education are part of the budgeted items.
"Will the grid support increasing demands?" Again, are you shooting off the hip or did you actually read the press release? Entergy is the main driving force of this project. They are the ones that brought it to MS. I'm pretty sure the grid will support it. Entergy is putting millions into infrastructure for this project. (Yes, Entergy is a LA company but it has a majority of its workforce and stakeholders in MS.)
While some elected officials do have some extremist roots and cater to that crowd, this project is not one of those times. As an outsider, I see nothing but good coming out of this project... economies of scale for energy, more high paying permanent jobs, temporary construction jobs, and a better educated/trained public. If we show that this type of project can be successful here, there are a lot more similar projects that can head this way... Google, MS, and IBM are also looking to invest hundreds of Billions in cloud centers over the next 10 years.
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