The Northern Virginia Technology Council (NVTC) today released our research report that shows that the data center industry strengthens and diversifies the economy and drives innovation in Virginia. The Economic and Fiscal Contribution that Data Centers Make to Virginia 2018 updates our original research published in January 2016. We are honored to work with the report's lead sponsors, including AWS, CloudHQ, Dominion Energy, Microsoft, Mid-Atlantic Broadband Communities Corp., and NxtVn. Supporting sponsors include Equinix; Facebook; Loudoun, VA Economic Development; Sabey Data Centers; and Visa.
The data center industry in 2016 for Virginia accounts for 43,000 jobs, $3.2 billion in labor income, and $10.2 billion in economic output. While much of this impact is in Northern Virginia, the sector’s impact is increasingly spreading to other regions of the state and this economic activity will likely be accelerated by new subsea cables linking Virginia Beach to Europe and South America.
The industry is very sensitive to state tax policies. Virginia currently offers a sales tax exemption on equipment purchases to qualifying data centers through 2035.
Other major findings:
- Data centers pay wages more than twice the statewide, private-sector average.
- Over the last five years, data centers have experienced employment and wage growth that is four times the statewide, private-sector average.
- Additionally, the high wages in the industry have a disproportionate impact on state income tax revenue, by far the largest source of revenue for Virginia state government.
- The pool of highly skilled workers the data center industry employs also feeds the talent pipeline for other fast growing, high wage industries.
- In 2016, data centers made $2.6 billion in capital investments in Virginia and that investment was responsible for supporting 4,600 jobs, $254 million in labor income and $670 million in economic output in the state’s construction industry.
- Data centers generate significant tax revenue for local governments. In Loudoun and Prince William Counties, for example, for every dollar spent in county expenditures related to the industry, it provided more than $8 in tax revenue. Data centers in Loudoun County and Prince William County allow those localities to draw $13.4 million less from the state general fund for school budgets.
- Tax incentives are critical in the competition between states to attract data center investment.
- Data centers have emerged as one of the driving forces in the development of renewable energy resources in Virginia.