- Data centers contributed 4.7 million jobs for the US economy from 2017 to 2023, says a PWC study.
- Most of these jobs are attributed to the “multiplier effect”, a standard and controversial model.
- Data centers require a massive amount of capable work during construction, and less afterwards.
When President Donald Trump announced Stargate in January, he said the massive project of he – a joint venture formed by Openai, Oracle and Softbank – would create “over 100,000 US jobs almost immediately”.
Few evidence supports the accuracy of Trump’s statement, though he would not be the first politician to suggest that databases are a job creation aid. The database industry has increased rapidly in recent years, and state governors have protected the work they would create.
A new study by PWC supports these claims, reporting that databases contributed 4.7 million jobs to national employment in 2023, with 60% from 2017. While the database market has increased rapidly in recent years and has been driven by Cloud Computing growth and it, most jobs are not direct technology work. Economic development experts are divided on the accuracy of the study, which was sponsored by the database coalition for lobbying the data industry.
Large technology companies spent a rated $ 246 billion in capital expenditure last year, most of which were expanding the database. Amazon, Microsoft, Google and Meta are expected to spend $ 320 billion in capital expenses this year.
State and local government officials have defended the number of jobs that will result from all new development. However, after being built, database facilities do not use a large number of permanent employees, and economic development contracts they sign in exchange for tax stimuli often reflect it.
In a press release announcing the expansion of the Amazon $ 10 billion data center in Ohio, Governor Mike Dewine said in December that the investment would support “thousands” jobs. The documents submitted to the Ohio Development Department showed that Amazon is committed to creating 1,058 new jobs, none of which are required to be full -time, salary positions.
Data Center industry overlaps work creation
Of the 4.7 million jobs attributed to the Data Center industry in the PWC study, only 603,900 were current industry jobs, otherwise known as “direct” work.
The database coalition, a lobbying group of industry counting Amazon, Microsoft, Google and Meta as members, ordered the study of PWC, which grouped work in three categories – “direct”, “indirect” and “induced”.
A “direct” job, the study said, is any full-time, part-time or self-employed work-to-work-related work. An “indirect” job refers to a full -time, part -time or self -employed job created to produce the necessary goods and services in the supply chain of a data center. “Induced” jobs are jobs that come from expenses that take place in an area due to the presence of the database there.
Nearly 4.1 million jobs in the data center – most of the total number of databases calculated in the PWC study – were considered indirect and induced. Indirect and induced work can constitute a wide range of possible positions, from the construction and maintenance of databases to the jobs in the local service industry near the database. The service sector, which includes everything, from tourism, hospitality and retail, to health care and financial services, accounted for 60% of the jobs caused by the database industry.
“The DCC asked the PWC to determine the quantification of economic contributions made by the database industry nationwide, as well as in each state and the Columbia district. Report and analysis were conducted independently of the PWC using the public data available from the Economic Analysis Bureau and the Bureau of Work Statistics,” said a database.
Some economists say induced and indirect jobs can be difficult to measure accurately.
Nathan Jensen, a professor at the Department of the Government of the University of Texas, questioned the evaluation of the study of the number of jobs created by the database industry.
“The economic impact of these projects is not particularly high,” Jensen said. “It is shaking my head how you could come up with that number of jobs.”
PWC used implan, an economic modeling software that is considered an industry standard for economic impact analysis and data. While the implan has been used since the late 1970s to demonstrate the possible creation of jobs for an industry, Jensen said the program is vulnerable to misuse.
“There is a lot of controversy about implan,” he said. “It is often used to justify economic development incentives.”
The implant model relies on the North American industry classification system, which the federal government uses to classify businesses, to determine the “multiplier effect” of an economic development project to measure the overall impact on the local economy.
The PWC determined that the database industry has a multiplier effect of 7.5, which means that any direct database work leads to 7.5 other jobs elsewhere in the US economy.
Jensen said a multiplier effect of one or two is likely more accurate.
The database boom creates construction work
Data centers offer considerable opportunities for job creation, said John Boyd Jr., director in advising the Boyd Co. – It’s just that things are in unexpected places.
Construction work is larger and more important for the database industry than people understand, he said. The Boyd firm has helped large corporations like AT&T, Dell and Visa to choose countries for large development projects, and has also advised government agencies on economic development agreements.
“The current amount of work in the country is huge, and wages are over twice the national average for construction workers,” Boyd told database projects.
This is because the construction of the data center requires skilled work in a variety of expertise.
“You are watching cooling systems, natural gas turbines, specialized server equipment,” he said.
Construction workers often travel to database sites and stay for prolonged periods of time, which leads to a need for hotels, restaurants and other services. The database development boom has led to an increase in occupation levels in property owned by WynDham Hotels and Resorts, CEO Geoff Ballotti said in calling company profits in February.
Data centers also require routine and specialized maintenance as they are built, leading to a constant need for capable jobs nearby.
The industry tends to accumulate together. Once one data center is located in a particular area, others tend to follow. Balotti said Wynham’s business development experts are focusing on expanding in areas near Jackson, Mississippi and Columbus, Ohio, because of this.
“These are not one and are made,” Boyd said.