The Impact of Data Centers on Local Economies

Whenever word gets out that an organization is planning a new data center, there’s always a whole plethora of government officials trying to convince that organization that their region is the best location. Tax breaks, energy incentives, real estate discounts…anything to get the data center in their city or state. For the most part, operators are glad to accept such gifts – after all, the cost of operation isn’t exactly negligible. But what about the reason these incentives are being offered? Exactly why do these governmental organizations want a data center in their area? It’s obvious that they benefit the economy, somehow – but in exactly what way?


First and foremost, there’s job creation – a data center has a phenomenal impact on the job market in whatever region it’s constructed, although not for the reasons one might expect. Even the largest facility doesn’t require a terrible large staff to operate it – at most, several hundred or so employees will suffice. Where the impact lies, then, isn’t in the people the data center employs, but the jobs its presence creates. The facility itself, notes Gigaom, is “but one element of a collaborative organization that includes research & development, marketing, sales, service, and support…a few thousand on-site employees could help a company employ tens of thousands more offering the services of that data center.” Not only that, there are part-time employees, temporary workers, consultants, contractors, suppliers, manufacturers…you get the idea.


These jobs, in turn, generate a considerable chunk of income, which ends up creating even more jobs as a result. After all, each employee is a living, breathing person, and many of them have families to care for – they’re going to need access to the same goods and services as the rest of us. Food, clothing, entertainment, construction, lawyers…If those services don’t already exist in the region where the data center’s situated, they’ll eventually make their way there out of necessity. Furthermore, each of the men and women who provide these services will, in turn, require access to services of their own.


Factor in that most data center employees are fairly well-paid and thus have a higher propensity for consumption, and you’ve got what’s essentially guaranteed growth in the economy of whatever region a data center happens to be. UC Berkeley Professor Enrico Moretti says that jobs such as these are “innovation jobs;” with each individual position generating five additional job openings. That’s an impressive number, particularly given today’s sluggish job market.


We also shouldn’t neglect the fact that many of these data centers are colocation facilities which are utilized by organizations from virtually every field and industry, all of which employ their own staff. This, in turn, translates to additional job creation, both within the region and without.


Last, but not least, there’s the money the data center organization is expending on utilities. In most cases, this is going back to the government (or, at the very least, utility organizations) in some way, shape or form.  This, combined with the immense potential of data centers where job creation is concerned, makes them an attractive prospect indeed.

Nicholas Greene
“I write for the same reason I breathe- because if I didn’t, I would die.”-Isaac Asimov There are two things everyone should know of me: First up, I’m a completely unapologetic tech geek. The development of modern technology has always been something of a fixation of mine, and I do my best to stay tuned in to every aspect of the tech industry. Seeing where we’re going and how we’re getting there is one of the most fascinating things in the world. Second, I’m a writer. Even if I wasn’t a writer by trade, I’d identify myself as one. There are few things I’m more passionate about than the written word. Ever since I was old enough to lift a pen, I’ve been putting my thoughts to paper. Now, I’m writing for a living, and loving every minute of it. Follow me @OmniscientSpork