AI Data Centers: High-Tech Infrastructure, Low Job Impact

Rethinking the narrative around AI data centers is essential! While often seen as major job creators, these facilities may generate fewer permanent jobs than claimed. Many positions are temporary or require specialized skills that local workers might lack.

The Reality Behind the AI Data Center Boom: Jobs vs. Expectations

The rapid growth of artificial intelligence has driven the need for countless data centers to support its development. Politicians and business leaders often tout these projects as major job creators, promising tens of thousands of new positions as new facilities come online. However, the reality paints a more complex picture of the impact data centers have on local economies and communities.

When we listened to the WSJ podcast "Why New AI Data Centers May Not Bring a Jobs Bonanza" (link here), we had to blog about it.

The Disconnect Between Job Promises and Reality

AI data centers (as well as traditional data centers) are undoubtedly critical to powering the advanced technologies that dominate Silicon Valley’s innovations. Yet, while the construction phase of these centers involves thousands of workers to build and install the necessary infrastructure, the long-term employment impact is far smaller. For instance, the Stargate project—a $500 billion partnership between OpenAI, SoftBank, and others (but not Elon Musk) —aims to build massive data centers, including a million-square-foot facility in Abilene, Texas.

Crusoe's initial pitch for the site, which may have changed with Stargate

Despite its enormous size, this facility is projected to employ only about 100 permanent workers once operational. To put this into perspective, a cheese-packing plant in the same region, at one-quarter the size of the data center, will create five times as many jobs and use much less electricity and water to operate. This stark comparison highlights a significant gap between the perceived job creation narrative and the actual long-term employment provided by data centers. Not to mention the electricity and water needed!

The Resource Question

Beyond jobs, the resources consumed by data centers raise important questions for the communities where they are built. These facilities require significant amounts of electricity, water, and land, often in rural or sparsely populated areas. While a new data center may represent a meaningful percentage increase in jobs for a small town, the trade-offs—such as the strain on local utilities and infrastructure—deserve closer scrutiny. Are the benefits of hosting a data center worth the costs to the surrounding community?

The high water consumption of data centers poses a significant threat to local water tables, particularly in the western U.S., where around 20% of data centers draw from watersheds that are already classified as moderately to highly stressed (link to research). This intense demand for water not only exacerbates existing shortages but also places an additional burden on local water supplies, especially in areas prone to droughts and the impacts of climate change.

Data centers have become integral to a global economy that's powered by digital information. However, many of the facilities depend on water to keep from overheating. That is further straining water resources in places like California, where Lake Oroville is almost dry due to severe drought that's being fueled by climate change.

Justin Sullivan/Getty Images

Competition for Essential Resources

Furthermore, the establishment and operation of data centers in rural regions spark considerable competition for essential resources, including water, electricity, and land. This competition can strain local utilities and infrastructure, prompting critical questions about whether the perceived benefits of hosting data centers truly outweigh the potential costs to the surrounding communities. As WSJ reporter Tom Dotan aptly pointed out, "If you think about the resources that these things consume, you really start to ask questions about whether the cost that could be incurred onto the people that live near the data center is worth it given the relatively small number of jobs." This underscores the need for a careful evaluation of the trade-offs involved in supporting such facilities.

A Sustainable Future for Data Centers

As the demand for AI and cloud computing grows, data centers will remain a cornerstone of technological progress. However, stakeholders—including developers, operators, and local governments—must work together to ensure that these projects provide meaningful benefits. This includes finding ways to increase local employment opportunities, minimizing environmental impact, and ensuring that the resources consumed are justified by the value data centers bring to the communities they inhabit. Read our blog "AI's Power Grab" here.

At Platocom, we understand the challenges and opportunities that come with managing data centers. Our mission is to help operators optimize their facilities for efficiency, sustainability, and community impact. As the industry continues to evolve, fostering transparency and collaboration will be key to ensuring that data centers deliver on their promises without compromising the well-being of the communities they serve.