What $10 billion in data centers actually gets you

Summary

Summary of "What $10 Billion in Data Centers Actually Gets You"
The Indicator from Planet Money
Release Date: April 2, 2025

The Indicator from Planet Money delves into the ambitious $10 billion data center investment in Meridian, Mississippi, exploring its economic implications, job creation potential, and environmental impact. Hosted by Adrian Ma and featuring insights from Stephen Bassaha of the Gulf States newsroom, the episode provides a comprehensive analysis of how such large-scale investments shape local economies and the broader tech landscape.

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Introduction to Meridian's Big Investment

Adrian Ma introduces the listeners to Meridian, Mississippi, highlighting its small-town charm and economic challenges. Joined by Stephen Bassaha, they embark on a "road trip" to Meridian to uncover the significance of the latest investment.

Key Quote:
Adrian Ma [00:57]: "Bill says that big break could finally be here."

The $10 Billion Data Center Project

Bill Hanna, head of the East Mississippi Business Development Corporation, unveils Meridian's landmark announcement: a $10 billion private investment to establish a data center campus spanning 300 acres. This project stands as the largest private investment in Mississippi's history, signifying Meridian's entry into the nation's tech forefront.

Key Quote:
Bill Hanna [00:57]: "This is the largest announcement not in Meridian and Lauderdale county, but in the state of Mississippi."

Understanding Data Centers

To demystify data centers, the hosts consult Kartik Hasanigar, co-director of the Wharton Business School's AI Research Center. Hasanigar explains that data centers resemble vast warehouses filled with server racks, forming the backbone of the Internet and the burgeoning AI industry.

Key Quote:
Kartik Hasanigar [03:40]: "Yeah, it just looks like a warehouse, but instead of consumer products, you have, you know, racks of servers in there."

Economic Impact and Job Creation

While a $10 billion investment appears transformative, Hasanigar and Bassaha highlight a crucial downside: data centers create relatively few permanent jobs. Typically, a data center of this magnitude might employ only 100 to 200 people, as exemplified by Apple's $1 billion data center in North Carolina, which generated fewer than 100 permanent jobs.

Key Quote:
Kartik Hasanigar [04:23]: "They employ about 100 to 200 people as direct employees there."

In contrast, Hasanigar argues that investing in a software company could yield significantly more jobs for a fraction of the investment. Allocating just 1% ($100 million) of the $10 billion towards software could create a comparable number of jobs, offering greater economic benefits to the community.

Key Quote:
Kartik Hasanigar [05:51]: "Personally, I would rather take 10% of that up $1 billion software industry investment."

Government Incentives and Community Costs

Though the investment is privately funded, the state of Mississippi offers data centers a 10-year tax break contingent upon creating at least 20 high-paying jobs. However, Hasanigar points out that data centers also impose significant costs on communities, primarily through high energy consumption. In some states, data centers account for over 10% of total energy usage, exacerbating environmental concerns and hindering plans to phase out coal power.

Key Quote:
Kartik Hasanigar [07:08]: "It's projected in a matter of two to three years in most states, it'll be over 10% of the energy utilization."

The "Halo Effect" and Attracting Tech Companies

Despite the drawbacks, Hasanigar acknowledges a "halo effect" where the presence of a data center can attract other high-tech companies to the region. Proximity to data centers offers competitive advantages like faster data processing, encouraging software and tech firms to establish hubs nearby. The Northern Virginia region serves as a prime example, boasting over 17,000 tech companies partly due to its concentration of data centers.

Key Quote:
Kartik Hasanigar [08:40]: "Northern Virginia region ... credits those data centers for attracting business."

Conclusion: Weighing the Pros and Cons

The episode concludes by weighing the economic benefits of data center investments against their limited job creation and environmental impact. While Meridian's $10 billion project could serve as a catalyst for further tech investments, the community must consider whether the long-term benefits justify the short-term gains and environmental costs.

Key Quote:
Bill Hanna [09:27]: "You're at three or 400 people. Well, that's significant in a community like Meridian, Mississippi."

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Production Credits:
Produced by Lily Quiros, engineered by Sina Alfredo, fact-checked by Sierra Juarez. Edited by Cake and Cannon. The Indicator is produced by NPR.

Transcript

[NPR Announcer]

Npr.

[Adrian Ma]

This is the indicator from Planet Money. I'm Adrian Ma and today we're joined by friend of the show, Stephen Bassaha from the Gulf States newsroom. What's up, Steven?

[Stephen Bassaha]

Hey, it is good to be with you, Adrian. And you know I live in Birmingham, Alabama, but today we're traveling just across the state line to Meridian, Mississippi.

[Adrian Ma]

Road trip.

[Bill Hanna]

Thought we'd drive around, show it to you.

[Stephen Bassaha]

Yeah, please do.

[Adrian Ma]

Our tour guide is Bill Hanna. He's head of the East Mississippi Business Development Corporation. Basically think of him as Meridian's chief salesman.

[Stephen Bassaha]

Now Meridian, it is like a lot of small cities in the South. Great food, small town charm and hunting for that one big break to turn around its poor economic fortune.

[Adrian Ma]

And Bill says that big break could finally be here.

[Bill Hanna]

This is the largest announcement not in Meridian and Lauderdale county, but in the state of Mississippi.

[Stephen Bassaha]

It's the largest announcement like what ever or ever. And that is for a $10 billion private investment that would give Meridian a piece of the country's tech future.

[Bill Hanna]

All this stretch of land is about 300 acres and it's going to be a data center campus data centers.

[Adrian Ma]

These are those big computer packed buildings which are the backbone of the Internet and the AI boom. Tech companies are spending billions to build them across the country.

[Stephen Bassaha]

Yeah, but while billions flooding into communities like Meridian might sound like an economy transforming event, there's one important catch. Data centers just don't hire many people.

[Adrian Ma]

On today's show, why billions of dollars in data center investments will lead to a lot fewer permanent jobs than you.

[Stephen Bassaha]

Might think and why communities might still want them Any.

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[Adrian Ma]

This huge data center project in Meridian, Mississippi. It actually shares the record for the largest private investment in state history. And it's tied with. Drumroll please. Another data center.

[Stephen Bassaha]

The data center money is pouring in from all directions. You might remember President Donald Trump announced at the start of his presidency an initiative called Stargate. It's this investment of up to a half a trillion dollars from private sources to build and support data centers.

[Adrian Ma]

Yeah, but for all this hype and the sci fi names and such, the data centers themselves actually look pretty mundane, at least according to Kartik Hasanigar.

[Kartik Hasanigar]

Yeah, it just looks like a warehouse, but instead of consumer products, you have, you know, racks of servers in there.

[Stephen Bassaha]

Yeah, I'm imagining like that server rack you might see in the back of an office, but like scaled up to like warehouse or factory size. Is that right?

[Kartik Hasanigar]

That's exactly right. It's that same rack. But imagine rows and rows of those racks across a massive, like a Walmart warehouse size space.

[Adrian Ma]

Kartik is co director of the Wharton Business School's AI Research Center. We called him up to ask, what is the value of these data centers for the communities they're getting built in?

[Kartik Hasanigar]

When you see numbers like a $10 billion data centered investment and you are asking what does it mean for our local economy? You have to really discount that number quite heavily.

[Stephen Bassaha]

And that discount comes because, you know, beyond the temporary construction jobs needed to build data centers, they just don't hire many people.

[Kartik Hasanigar]

They employ about 100 to 200 people as direct employees there. In fact, when Apple created a $1 billion data center in North Carolina, the news stories reported that there were less than 100 permanent jobs created as a result.

[Adrian Ma]

Kartik says the reason for this is because data centers are all about hardware. It's things like computer chips that make these data centers so expensive. By contrast, if you took a software company employing the same amount of people, it would actually take a lot less investment for them.

[Kartik Hasanigar]

You know, what is the software company buying? They're buying computers and they're buying some software licenses. That's not much. A laptop for every person, a monitor for every person.

[Stephen Bassaha]

In fact, Kartik says when it comes to job creation, a software company could spend just a fraction of that $10 billion to make as many jobs.

[Kartik Hasanigar]

Personally, I would rather take 10% of that up $1 billion software industry investment. 10% of the investment.

[Adrian Ma]

I mean, that's like a full decimal place over Right. There's a pretty big difference in investment.

[Stephen Bassaha]

Yeah, you got to like shift it over by a whole zero, you know. But Kartik actually, as we kept talking, he kept adjusting that number lower and lower until finally he landed on 1%.

[Kartik Hasanigar]

Of that investment going into software. That would be bigger than, you know, a massive $10 billion investment into data centers.

[Stephen Bassaha]

So in that case, we'd be talking about $100 million versus $10 billion. You're saying that would mean more more for a community?

[Kartik Hasanigar]

I would say $100 million investment in software jobs should be comparable at least.

[Stephen Bassaha]

Okay, now to be clear, this money we're talking about, it's not coming from state or city pockets. These are private dollars tech companies are putting up themselves. They're not public funds.

[Adrian Ma]

That said, Ms. is giving these upcoming data centers a 10 year break from some state taxes. They just have to hit a few conditions. Like creating at least 20 high paying jobs.

[Stephen Bassaha]

Yeah, not setting a very high bar there right now.

[Adrian Ma]

None of this means that data centers are cost free for communities. In fact, they often come with a big cost, that is energy.

[Stephen Bassaha]

If you've ever been in an office with its own small little server room, you might have noticed it's a bit chilly in there. That's because all that sensitive equipment needs lower temperatures to prevent from overheating.

[Adrian Ma]

And the same is true for data centers, but on a much larger scale. Kartik says in some states, data centers are using up 5% of all energy generated.

[Kartik Hasanigar]

It's a lot. And in fact, it's projected in a matter of two to three years in most states, it'll be over 10% of the energy utilization. So data centers are energy hungry.

[Stephen Bassaha]

And of course, this is a problem for everyone because of climate change. Mississippi Power was planning to stop its coal operations at one of its power plants. But because of the extra power demand that will come from Meridian's data centers, the utility is going to keep burning coal at the plant for roughly another decade.

[Adrian Ma]

Now, we have sort of been pouring a lot of cold water on this data center hype. But Kartik says even knowing all the drawbacks, there's still at least one really good reason why communities might want a data center.

[Kartik Hasanigar]

Having a data center in a region can create a halo effect as well, which causes other high tech companies to come and set up shop nearby.

[Stephen Bassaha]

Yeah, like maybe some of those software companies with a lot less investment and a lot more jobs that Karthik mentioned.

[Adrian Ma]

And the reason they would want to be near a data center is because in the tech World proximity still matters, right? So it's easy to think about cloud computing as happening in the sky because it's literally in the name cloud computing. But the truth is all these ones and zeros zipping through the interwebs, they actually happen in real physical places, often data centers. It takes time to send data back and forth and being closer to a data center can actually mean having a competitive edge with things like faster uploads and downloads. So it makes sense that companies would want to be close by.

[Kartik Hasanigar]

In fact, if you look at the Northern Virginia region, that's a good example of how it's a big data center hub. But at the same time, the jobs there are not just the data center jobs, but lots of high tech companies have set up jobs there.

[Stephen Bassaha]

The Northern Virginia Technology Council says the region has more than 17,000 tech companies and credits those data centers for attracting business.

[Adrian Ma]

Kartik says because of the current AI and data center boom, companies are looking for new places to be hubs like Northern Virginia.

[Stephen Bassaha]

Of course, it is still a gamble that data centers will track those other companies. And there are all those drawbacks we mentioned to consider, like the power demands and the few permanent jobs.

[Adrian Ma]

And we did ask Bill Hanna, remember the chief salesman of Meridian, Mississippi. We asked Bill about these drawbacks.

[Bill Hanna]

These types of projects don't have lots of people. When you put eight buildings out here and put 40 or 50 people in each building, you know you're at three or 400 people. Well, that's significant in a community like Meridian, Mississippi.

[Stephen Bassaha]

And hey, just the work needed to construct a multi billion dollar facility means a lot of construction jobs for the seven or so years it'll take to build.

[Adrian Ma]

This episode was produced by Lily Quiros and engineered by Sina Alfredo. It was fact checked by Sierra Juarez. Cake and Cannon edits the show and the indicators of production of npr.

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