Data centers’ job impact is spread out

Published April 27, 2023 by Emily Freehling

The Lego Group’s July 2022 announcement that it would build a $1 billion Chesterfield County manufacturing plant came with the promise of 1,760 new jobs. Meanwhile, Amazon.com Inc.’s 20-year, $35 billion investment to expand its data center footprint across Virginia is projected to generate only 1,000 direct jobs.

The data center industry’s jobs-to-investment ratio is far lower than many other economic development categories.

In some ways, this is part of the appeal of the facilities. Not having lots of workers driving to and from data centers saves localities from having to pay for roads, emergency services and schools. But industry proponents also point to ancillary economic impact that data center construction has had in Virginia.

Chris Gregory, executive vice president with the Washington, D.C., office of SteelFab, says the family-owned steel fabricator has worked on more than 50 data centers in Virginia, and 170 around the country, and “that list just keeps getting bigger.”

Charlotte, North Carolina-based SteelFab announced in 2017 that it would invest $2.14 million to expand its Emporia fabrication plant. In the past couple of years, SteelFab has brought on 30 to 40 new workers at the plant, including forklift operators, welders, fitters and other production roles. SteelFab is also making capital investments to grow its paint bay, add robotics capabilities and further expand the plant’s footprint.

“We are doing everything we can to keep up, and we should be doing more because there is such demand” for data centers, Gregory says.

That demand trickles down to everyone SteelFab works with, from the mills that supply the steel to the construction firms that eventually build with it.

Gregory says Steelfab has purchased 75,000 tons of structural steel for data center construction in the past few years — much of it from the Gerdau Petersburg steel mill in Dinwiddie County — and 12,000 tons of metal decking, most of which was produced at the New Millennium Building Systems plant in Salem.

The Northern Virginia Technology Council’s 2022 economic impact report on the industry estimates that in 2021, data centers in Virginia directly provided around 5,550 operational jobs and 10,230 construction and manufacturing jobs.

The report estimates that in 2021, data centers generated $174 million in state revenue, and $1 billion in local tax revenue in Virginia.

The analysis concluded that for every job inside a Virginia data center, 4.1 additional jobs are supported in the rest of the Virginia economy.

But some residents of markets where intense development has occurred worry about negative impacts on small businesses who are located in the county’s targeted data center development zones. They fear the pressure for landowners to reap as much as $1 million per acre by selling to data center developers will push older businesses out.

“We have businesses in our data center overlay district in Prince William County that are being offered millions for their land,” says Kathryn Kulick of the citizen group HOA Roundtable of Northern Virginia. “This pressure is coming.”  

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