When President Donald Trump announced Stargate in January, he said the massive AI infrastructure project—a joint venture formed by OpenAI, Oracle, and SoftBank—would create "over 100,000 American jobs almost immediately."
Little evidence supports the accuracy of Trump's statement, though he wouldn't be the first politician to suggest that data centers are a boon for job creation. The data center industry has grown rapidly in recent years, and state governors have touted the jobs it would create.
A new study from PwC supports these claims, reporting that data centers contributed 4.7 million jobs to national employment in 2023, up 60% from 2017. While the data center market has grown rapidly in recent years and has been fueled by the rise of cloud computing and AI, most of those jobs aren't direct tech jobs. Economic development experts are divided over the accuracy of the study, which was sponsored by data center industry lobbying group Data Center Coalition.
Big Tech companies spent a combined estimated $246 billion in capital expenditures last year, much of which was on data center expansion. Amazon, Microsoft, Google, and Meta are expected to spend another $320 billion in capital expenditures this year.
State and local government officials have touted the number of jobs that would result from all the new development. However, once built, data center facilities don't employ large numbers of permanent employees, and the economic development contracts they sign in exchange for tax incentives often reflect that.
In a press release announcing Amazon's $10 billion data center expansion in Ohio, Gov. Mike DeWine said in December that the investment would support "thousands" of jobs. Documents filed with the Ohio Department of Development showed that Amazon is committed to creating 1,058 new jobs, none of which are required to be full-time, salaried positions.
The data center industry overhypes job creation
Of the 4.7 million jobs attributed to the data center industry in the PwC study, only 603,900 were actual industry jobs, otherwise known as "direct" jobs.
The Data Center Coalition, an industry lobbying group that counts Amazon, Microsoft, Google, and Meta as members, commissioned the PwC study, which grouped jobs into three categories — "direct," "indirect," and "induced."
A "direct" job, the study said, is any job — full-time, part-time, or self-employed — tied to the operation of the data center. An "indirect" job refers to a full-time, part-time, or self-employed job created to produce necessary goods and services in a data center's supply chain. "Induced" jobs are jobs that result from spending that occurs in an area due to the data center's presence there.
Nearly 4.1 million data center jobs — the vast majority of the total number of data center jobs accounted for in PwC's study — were considered indirect and induced. Indirect and induced jobs can comprise a wide range of potential positions, from the construction and maintenance of data centers to jobs in the local service industry near the data centers. The service sector, which includes everything from tourism, hospitality, and retail, to healthcare and financial services, accounted for 60% of the data center industry's induced jobs.
"DCC asked PwC to quantify the economic contributions made by the data center industry nationally as well as in each state and the District of Columbia. The report and analysis were conducted independently by PwC using publicly available government data from the Bureau of Economic Analysis and Bureau of Labor Statistics," a Data Center Coalition spokesperson said.
Some economists say induced and indirect jobs can be difficult to accurately quantify.
Nathan Jensen, a professor at the University of Texas's Department of Government, questioned the study's estimate of the number of jobs created by the data center industry.
"The economic impact of these projects aren't particularly high," Jensen said. "It's head-shaking to me how you could come up with that jobs number."
PwC used IMPLAN, an economic modeling software that is considered an industry standard for economic impact analysis and data. While IMPLAN has been used since the late 1970s to demonstrate potential job creation for a variety of industries, Jensen said the program is vulnerable to misuse.
"There's a lot of controversy around IMPLAN," he said. "It's often used to justify economic development incentives."
IMPLAN's 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.
PwC determined that the data center industry has a multiplier effect of 7.5, meaning that every direct data center job leads to another 7.5 jobs elsewhere in the US economy.
Jensen said a multiplier effect of one or two is likely more accurate.
The data center boom creates construction jobs
Data centers do offer significant job creation opportunities, said John Boyd Jr., principal at site selection advisory The Boyd Co. — it's just that the jobs are in unexpected places.
Construction jobs are bigger and more important to the data center industry than people realize, he said. Boyd's firm has helped large corporations like AT&T, Dell, and Visa choose locations for major development projects, and it has also advised government agencies on economic development deals.
"The actual amount of on-site labor is enormous, and wages are over double the national average for construction workers," Boyd said of data center projects.
This is because data center construction requires skilled labor across a variety of expertise.
"You're looking at cooling systems, natural gas turbines, specialized server equipment," he said.
Construction workers often travel to data center sites and stay for extended periods of time, which leads to a need for hotels, restaurants, and other services. The data center development boom has led to a surge in occupancy rates at properties owned by Wyndham Hotels and Resorts, CEO Geoff Ballotti said on the company earnings call in February.
Data centers also require routine and specialized maintenance after they are built, leading to a continued need for skilled labor nearby.
The industry tends to cluster together. Once one data center is located in a certain area, others tend to follow. Ballotti said Wyndham's business development experts are focusing on expansion in areas near Jackson, Mississippi, and Columbus, Ohio, because of that.
"These aren't one and done," Boyd said.
