Data centers added $54.2B to Va. GDP over five years

The data center industry contributed $54.2 billion to Virginia’s gross domestic product from 2017 to 2021, according to a PricewaterhouseCoopers study released Tuesday.

That calculation includes indirect impacts from other businesses as part of the data center industry supply chain and induced impacts resulting from household spending of income earned from the industry or its supply chain. The study, commissioned by the Loudoun County-based Data Center Coalition, found that the data center industry supported 86,290 jobs in the state in 2021, up 32% from the 65,500 jobs it supported in 2017. In total for that five-year period, the industry contributed $31 billion in labor income. In terms of total employment, labor income and GDP impact, Virginia’s data center industry outpaces the sectors in Arizona and Ohio, which are also included in the study.

In 2017 alone, the data center industry contributed $8.9 billion to Virginia’s GDP, and in 2021, that number was $13.5 billion. Labor income contributions to the state similarly rose, from $5.05 billion to $7.9 billion. Arizona data centers, by contrast, contributed $8.5 billion to the state’s GDP in 2021, and Ohio’s industry contributed $4.3 billion to its state GDP in 2021.

From 2017 to 2021, the data center industry added a total $2.1 trillion to the national GDP, according to the study. In 2021 alone, data centers contributed $486 billion in economic impact, reflecting value added — the difference between the total revenue of the industry and the total cost of its materials, supplies and services purchased from other businesses.

In 2021, U.S. data centers directly and indirectly supported 3.5 million jobs, up from 2.9 million jobs in 2017, and $294 billion in labor income, an increase from $209 billion in 2017. From 2017 to 2021, the industry contributed a total $1.2 trillion in labor income.

Counting direct and indirect taxes, the industry generated $403.5 billion in federal, state and local taxes from 2017 to 2021. Total tax impact in 2021 was $99.6 billion, up from $66.2 billion in 2017.

Based on preliminary government data for 2022, the data center industry is estimated to have added more jobs in 2022 than it did over the 2017 to 2021 period, according to the study, supporting 560,000 direct jobs.

More than 70% of the world’s internet traffic comes through Data Center Alley — six square miles in Loudoun’s Ashburn area. In 2022, the region accounted for 64% of the total new data center capacity brought online in primary markets across the U.S., according to the North American Data Center Trends Report by CBRE.

While some communities have referred to data centers as game changers, they also are subject to criticisms for being loud, unsightly and large consumers of electricity. Prince William County Board Chair Ann Wheeler lost her primary bid in June over backlash to the controversial proposed Digital Gateway campus, which she supported, and some Northern Virginia-based state lawmakers have attempted to place limits on locating data centers near historic landmarks, although legislation failed earlier this year.

Between 2011 and 2021, Amazon invested $52 billion in building data centers in Virginia, and the e-commerce giant expects to spend $35 billion more on data centers in the commonwealth by 2040. 

The industry’s job-to-investment ratio is lower than other economic development categories, but the Northern Virginia Technology Council’s 2022 economic impact report concluded that for every job inside a Virginia data center, 4.1 additional jobs are supported in the rest of the Virginia economy.