The Commonwealth of Virginia celebrated on Thursday with the announcement that Facebook would be investing $1 billion to build a massive, new facility in the state.
There’s a catch. Facebook’s building will be a data center—and it will require almost no people to operate.
The project will mean plenty of money spent on construction and then 100 jobs in the data center afterward.
Let that sink in. Facebook’s $1 billion will go to a gigantic building where just 100 people work. That’s $10 million per job created. These data centers are key to Facebook’s future, but they require almost no people, which is kind of the entire point with tech these days. Less people and more machines generally mean more profit.
Despite the few jobs, states are still desperate for these investments—and they’re cutting deals to get them.
As noted by the Times-Dispatch, Virginia has been slashing tax rates in order to attract these investments:
The county has taken steps this year to attract other data centers by dramatically reducing its tax rate on computers and equipment related to data centers, which store and process vast amounts of digital information.
In April, the Board of Supervisors cut the tax rate by nearly 90 percent — from $3.50 per $100 of assessed value to just 40 cents per $100. The new rate went into effect July 1.
This is the game. Companies and politicians both know that their investments carry net benefits for their surroundings. That gives companies leverage to negotiate with politicians for incentives such as tax breaks but also breaks on environmental regulations or other local laws.
“Facebook’s decision to locate its newest data center operation in Henrico County is a tremendous economic win for the Commonwealth,” said Virignia Secretary of Commerce and Trade Todd Haymore, in a press release that quoted just about every single politician in the state. “Virginia’s information technology sector is booming, with nearly $12 billion in capital investment over the past decade and more than 650 data processing, hosting, and related establishments currently employing over 13,500 Virginians.”
The dance between companies and politicians is playing out most publicly with Amazon’s hunt for a new headquarters. Amazon has made it clear that tax breaks will play a part in its decision. The winning city will be in line for some 50,000 high-quality jobs and $5 billion of corporate investment, according to Amazon.
Comparatively, Facebook’s investment promises far fewer jobs-per-dollar than Amazon’s. The social network has been building numerous data centers across the country, with a similar project coming to Ohio with near-identical numbers: $750 million investment, 100 jobs.
CNN reported that the Ohio Development Services Agency estimated Facebook will receive around $37 million in tax incentives for its investment, or $370,000 per job. As Bloomberg noted, this scene has played out in a variety of other locations in the past few years, netting Facebook around $300 million in tax breaks for few jobs returned.
The sheer scale of these data centers—and the lack of humans involved—was best captured by HBO’s Silicon Valley:
Cities don’t have a lot of leverage to push back. Outsourcing of jobs remains a problem for politicians who are desperate to find investment for their constituents. To reverse this trend, localities have embraced corporation-friendly policies. Data centers are primarily just stacks of servers with a few technicians and some security, which is why there’s just not that many jobs despite the big-dollar headlines. But it’s better than nothing, though with the incentives it can be questionable.
In a perfect world, companies like Facebook would have to pay extra for the right to build their facilities, providing hard-hit areas with additional money to provide services to its citizens. Instead, a company that rakes in billions of dollars gets tax breaks to bring 100 jobs and a bunch of servers that will help it make even more money.
But at least there will be a ribbon cutting.