Data centers bring billions to Mississippi. Are the investments worth the risk?

Reeves has praised both data center projects. His office said the Amazon project would create at least 1,000 jobs when it was first announced. The office claimed the same for Compass Datacenters’ Meridian project 

New centers like these are being built in the South, and across  the country. Tech companies need their raw computing power to fuel the current AI boom. State leaders that welcome the projects into their community brag of the billions of dollars in economic development they secured. The Trump Administration also boasted of the economic impact of data centers earlier this year when announcing a $500 billion private sector venture to build out and support the centers. 

But some industry experts say those huge dollar amounts can distract from an inconvenient truth for the industry — that once these centers are actually up and running, they don’t lead to many jobs. 

Compared to other expensive-to-build worksites, like factories, data centers don’t require many employees to run. And while they provide the computing muscle that supports high-paying tech jobs, those jobs are often located in other parts of the country and not where the centers are located. 

Communities must also contend with these centers’ deep hunger for resources like power and water. For those with the land and resources to spare, a 10-figure investment pledge and the few permanent jobs that come with it are more than welcome. But some communities that are already straining for power or have a robust economy might decide the centers don’t offer enough benefits to justify the costs. 

“If you’re only seduced by the multi-billion dollar data center investment, be careful,” Kartik Hosanagar, the academic director of the Wharton School’s AI research center, said. “You have to really discount that number quite heavily when you’re trying to think through jobs.”

The carrot to bring these data centers and promised jobs to Mississippi are tax exemptions, but low benchmarks to fulfill required investments means these companies can perform well below their claims and still qualify. 

As long as they invest at least $20 billion in capital investment and create at least 20 full time jobs paying 25% more than the state’s annual wage, the centers won’t have to pay state income, franchise or sales taxes for 10 years. 

Local taxes and fees, however, are not exempt. 

“You’re talking about hundreds of millions of dollars coming to our community from fees and taxes just on this one project,” Bill Hannah, president of the East Mississippi Development Corporation, said about the Compass Datacenters project. “It’s huge.”

Both Mississippi and Louisiana lag behind the rest of the country when it comes to the size of their tech industries. Fans of the Mississippi data centers see them as a way of changing that. 

But Bill Rayburn is a data center skeptic. 

At their core, data centers are similar to the server racks often found in the back of an office, just scaled up to warehouse size. They require workers to maintain, but not many. Facebook parent company Meta’s data centers often require north of a billion dollars to build while hiring just a few hundred workers. 

“That’s not tech,” Rayburn, former chairman of Innovate Mississippi, said. “That’s support.” 

Rayburn made his name starting and running software companies, like his current venture mTrade, and argues those kinds of tech companies create significantly more jobs. A software company that invested as little as $100 million into building its operations — just 1% of the Meridian project — could create about as many jobs as the upcoming data center campus, according to Hosanagar. That’s because much of the centers’ investment goes toward hardware like GPUs, compared to software companies, which have a much greater need for tech talent. 

“It’s great Meridian’s got it,” Rayburn said. “But it’s not like a software company. It’s just not.”

Just like that back office server room needs to stay cool to protect sensitive hardware, data centers also require low temperatures. Scaling up from a few racks to a few hundred acres means inflating the electric bill, too. 

Google reported that its greenhouse gas emissions were up by 48% in 2023 compared to four years earlier. Much of that was driven by AI and the data centers that support it. 

It’s why Huntsville, Alabama, Mayor Tommy Battle is wary of opening a second data center in his city. 

Alabama’s tech scene would be in a similar spot as Mississippi and Louisiana — bottom of the list — if it wasn’t for Huntsville. The Rocket City earned its nickname by developing the Saturn V rocket in the ‘60s that made the first human moon landing possible. Since then, the city’s grown both its public and private tech sector, including breaking ground on a data center for Meta in 2018. 

Battle’s main concern with opening another data center is the trade off between power demand and jobs created. As a point of comparison, the Mazda-Toyota plant just outside of Huntsville employs about 4,000 workers. Data centers often require about seven times as much energy use but many only employ about 180 workers, he said. 

Battle hasn’t written off bringing a new center to Huntsville, but wants to make sure it’s worthwhile. 

“Their numbers of employees are small,” he said. “But they do eat a lot of your power."

That electricity hunger might cause some cities and states to pause, but not Mississippi. 

Mississippi Power, one of the state’s largest utilities, had planned to end its coal operations by 2027, but decided to extend it until the mid-2030s to fuel the upcoming campus in Meridian, with the unanimous support of the state’s Public Service Commission. 

Gerard Gilbert, chairman of Innovate Mississippi, said while others might be wary of the electricity requirements, Mississippi Power and the state are willing to bring more power online, and do it expeditiously.

“And by expeditious I mean two to three years,” Gilbert said. “Many states have onerous, burdensome, impossible regulations.” 

Gilbert acknowledges that the centers themselves bring few permanent jobs. But he predicts the centers in Meridian will act like a tech industry beacon, attracting high tech talent to live and work nearby. 

Proximity does matter to tech companies. Data between computers does not transfer instantaneously and being closer geographically to a center often means faster response times. Northern Virginia grew its tech hubs on the back of the centers built there. 

“It’s not guaranteed. It depends on the policies and strategies of the government,” Hosanagar said. “But having a data center in a region can have a halo effect as well, which causes other high tech companies to come and set up shop nearby.” 

The centers also create plenty of construction jobs over the long stretch needed to build these centers. And for a city like Meridian, with about 34,000 residents, Hannah said bringing in hundreds of permanent jobs should not be scoffed at. 

“When you put eight buildings out here and put 40 or 50 people in each building,” Hannah said, “well, that’s significant in a community like Meridian, Mississippi.”

This story was produced by the Gulf States Newsroom, a collaboration between Mississippi Public Broadcasting, WBHM in Alabama, WWNO and WRKF in Louisiana and NPR.