There are steps that governments — and companies — can take to reduce negative data center impacts for residents, which can include increased energy costs and significant water usage.
Mississippi Gov. Tate Reeves announced Thursday that xAI is locating a data center in Southaven — the latest project in a nationwide trend of data center expansion — and the company is approved for the state’s Data Center Incentive, which provides a sales and use tax exemption on computing and equipment software for eligible data centers. The company, per the announcement, will create hundreds of permanent jobs, retrofit the building that is housing its operations and provide tax revenue for the city of Southaven.
Tucson Council Member Lane Santa Cruz said during an August City Council study session that construction jobs to support data center builds are temporary, underlining that data centers require “very few” long-term employees. The data center project in question, Project Blue, would not bring the jobs the community needed, she said.
“The jobs that data centers do create locally are typically low-wage, term-limited, non-technical positions such as security, maintenance and janitorial work,” according to research from the University of Michigan.
The decision to approve these data centers are happening largely at the government level, and are sometimes shrouded in secrecy involving non-disclosure agreements (NDAs), giving members of the public little say in if and how these builds will progress.
Job creation claims and community benefits touted vary based on project and location.
When Google announced its $1.7 billion plan to expand three data center sites in Ohio, it promised thousands of jobs. However, while about 1,200 jobs were expected to be created at each facility during construction, it was unclear at the time exactly how many permanent jobs would be created — although one Google official estimated permanent staff would be around 200 employees, as reported by Ohio Capital Journal.
Pennsylvania’s $20 billion investment from Amazon for data centers claimed it would create at least 1,250 jobs — notably, high-paying roles like data center engineers and engineering operations managers. This was in addition to the expected thousands of construction jobs. Officials said Amazon would partner with educational institutions and workforce organizations in the state to create training programs and STEM learning opportunities. In contrast to workforce investment, members of the Federal Energy Regulatory Commission opposed the proposal, arguing that costs would be shifted to ratepayers.
In Indiana, residents said recently xAI’s data center is impacting people’s health through air quality, and delivering only tens of jobs while receiving tax abatements.
Not all data center projects offer transparency about community benefits, and officials do not always disclose the benefits companies receive. One report found that most states offering incentives to data centers do not disclose which companies benefit. For example, the research found that Virginia forgoes nearly $1 billion in state and local sales and use tax revenue annually without public disclosure as to which companies are receiving these benefits.
GOVERNMENT CAN PUSH INDUSTRY TO DELIVER
Policymakers can take steps to protect communities, as a December report from Public Citizen outlined. These can include prohibiting NDAs and requiring a commitment to local hiring and apprenticeship programs. Officials can also require companies to deliver on minimum operational commitments, strict water conservation measures and renewable energy procurement.
Another strategy to ensure companies are benefiting the places where data centers are built is community benefits agreements. These contracts allow for data center expansion in ways that meet community-specific needs, as Brookings Center for Technology Innovation Director Nicol Turner Lee explained during a November panel discussion.
One example of such an agreement occurred in Lancaster, Penn. This pact committed the projects in question — multiple data center campus builds — to a water-use cap, and noise and air emissions controls. The developers also pledged to contribute $20 million to benefit the community; half will go toward economic development and half to sustainable development.
San Jose announced an agreement with PG&E in July to support the energy demands of new data center projects. City leaders were looking for a commitment of energy and infrastructure improvements; if their delivery timeline is not met, the city is able to step away from the agreement. While data centers in the city are not required to work with San Jose Clean Energy — which provides mainly carbon-free energy — many of them are, according to San Jose’s Deputy City Manager Manuel Pineda.
“We have been very upfront … with everything we’re trying to do with PG&E, with data center projects, and with all our communication — putting it out there so everybody knows what we’re doing and why we’re doing it,” Pineda said in November, noting that having data centers nearby supports the city’s innovation.
At the state level, Florida Gov. Ron DeSantis has introduced legislation to protect consumers from the costs of AI data centers, and plans to see it advance despite an executive order signed by President Donald Trump in December attempting to limit states’ regulatory authority on AI.
At the federal level, some legislators have proposed a national AI data center moratorium be enacted until consumer and environmental protections are addressed.
