At its peak, the Androscoggin paper mill in Jay, Maine, employed about 1,500 people. The community of 4,620 depended on the mill for generations. But in 2020, a pulp digester exploded, forcing a permanent closure. The site sat empty until a joint venture led by developer Tony McDonald bought it in 2023, demolished the machinery, and began shopping for a new tenant. That tenant turned out to be Sentinel Data Centers, with plans to build a $550 million facility—a neocloud data center designed for high-performance GPU computing and AI workloads.
Maine offers cool temperatures, lax land-use rules, and a 54 percent renewable energy mix, making it attractive for data center developers. Across the state, several similar projects are in the pipeline, prompting the legislature to pass a bill that would have imposed an 18-month moratorium on any data center consuming more than 20 megawatts. Governor Janet Mills vetoed the bill, citing one overriding reason: jobs. She argued that the Jay project would create 125 to 150 permanent, high-paying positions in a town that had lost its largest employer.
But economists and researchers say those job numbers are misleading. Michael Hicks, director of the Center for Business and Economic Research at Ball State University, published a study analyzing data center openings in 254 Texas counties. His conclusion: net job creation was effectively zero. Whatever long-term jobs appeared were offset by losses elsewhere. During construction, data centers employ hundreds of temporary workers—electricians, welders, site prep crews—who stay for weeks and then leave. Permanent staff numbers are minuscule. In Quincy, Washington, Microsoft’s facility once employed 500 during construction but now operates with just 50 full-time workers. Neocloud data centers like the one planned for Jay may require only 30 to 50 full-time staff, depending on size.
The economics of a hollow promise
Anthony Elmo of Good Jobs First, a nonprofit that tracks economic development incentives, notes that rural towns are often “outgunned” when negotiating deals with large data center builders. “They don’t have the resources to negotiate. They don’t know what to ask for. They don’t have the legal expertise, and they don’t feel like they have the leverage,” he says. On a national level, the price per job is staggering. Business Insider recently reported that subsidies for data centers exceeded $2 million per permanent job. In one New York case, a company received nearly $77 million in tax breaks for a facility that created exactly one permanent position.
Developers frequently tout “upskilling” as a benefit—training former mill workers for high-tech roles. But the educational reality in rural America undermines that argument. In Jay, less than 30 percent of residents hold a bachelor’s degree. Hicks points out that previous industrial revolutions—from factory work in the 1800s to post-WWII manufacturing—succeeded because waves of educated or skilled human capital coincided with new industries. Today, the US faces negative net immigration, low birth rates, and chronically underfunded education systems. There is no corresponding surge of trained workers to fill data center jobs. Even the construction trades that benefit during the build phase are often itinerant. “In fully developed data center markets, electricians and HVAC maintenance workers float from project to project as contractors,” Elmo says. “For states like Maine, it’s not a permanent job. It’s an 18-month job.”
Tax revenue: the real prize—if it isn’t given away
Michael Hicks argues that the jobs promise distracts from the one genuine benefit a data center can provide: tax revenue. A $550 million facility in Jay would have an assessed value exceeding the combined worth of every home and business in the town. Taxed at the same rate as commercial property, that revenue could dramatically reshape the community—funding schools, repairing infrastructure, and attracting residents. The old mill generated about $1.8 million in taxes annually before closing. Under standard rates, a data center could yield far more. “You could make that town into a Hallmark Channel town with those sorts of tax dollars, and then jobs would follow,” Hicks says.
But that scenario depends on whether towns offer tax breaks. McDonald has said he is not seeking incentives, yet he left the door open for potential tax benefits down the road. Maine’s legislature recently passed a law excluding data centers from some state tax breaks but allowing municipalities to offer their own deals. For a small town with limited negotiating experience, the temptation to offer a tax abatement can be irresistible—and disastrous. When companies receive exemptions, the community loses the primary source of economic gain. The jobs are illusory, and the tax base evaporates.
The tech ouroboros
There is a deeper irony at work. Data centers are built to reduce labor input. They power AI systems explicitly designed to automate work. Communities are asked to trade grid capacity, water resources, and tax revenue for jobs in an industry whose core product is labor displacement. Elmo sums it up: “It’s the biggest capital expenditure since the Manhattan Project, and it isn’t going to create tens of thousands of jobs in the long term. Meta, Amazon, OpenAI, Oracle—they’re shedding jobs in real time while spending billions on data centers so that other organizations can shed additional jobs through AI.”
Rural America is being sold a familiar bill of goods. For 50 years, civic leaders have embraced the next big industrial project—a mill, a manufacturing plant, a call center, a warehouse—only to see the jobs never materialize as promised, or vanish within a decade. Data centers are the latest iteration. Based on the economic evidence, they will not save rural towns. The one thing that could genuinely help—treating the facility’s tax base as a community windfall rather than a negotiating chip—is precisely what most states are legislating away.
As Hicks observes, civic leaders are “living 75 to 150 years in the past,” framing these deals in the old industrial-boom mindset without the educational and demographic conditions that made previous booms possible. The mill didn’t save rural towns, nor did the call center or the Amazon warehouse. Data centers will not either—unless towns recognize that the real value lies not in the jobs that never arrive, but in the tax dollars that can be captured. And that requires negotiating power that most rural communities simply do not have.
Source: The Verge News