Benefits

Economic

(Based on March 2020 Potential Impact on Large Data Center Development Study )

Maryland has a once-in-a-lifetime opportunity to become the epicenter of US tech innovation and generate enormous wealth for the state over the next several years. This opportunity arose as a result of Virginia’s population growth and inability to meet demand, prompting companies like Microsoft and Amazon Web Services to consider Maryland as an alternative solution for the first time.

The construction and operation of data centers in Maryland would have far-reaching consequences for the state’s economy. To empirically assess the statewide and regional economic impact of the data, a widely used regional input-output model and the characteristics of a hypothetical large data center project were employed. The regional input-output model quantifies the ripple effects of an expenditure as it moves through the economy. For this report, spending by the data center industry in Maryland would have a direct economic impact on the state economy in terms of people hired as data center employees, employee pay and benefits, and economic activity in the region for utilities, construction, and equipment. That direct spending by the data centers creates the first ripple of economic activity.

As data center employees and businesses (like construction contractors for data centers, power companies that supply data centers, and data center equipment suppliers) spend the money that they were paid by data center companies, they create another indirect ripple of economic activity that is part of the secondround effects of the data center industry.

In addition to the economic effects on the Maryland state and local economies of data center-to-other business transactions, there are also the second-round economic effects associated with data center employee-to-business transactions that ripple through local economies. These effects occur when data center employees buy groceries, pay rent, go out for dinner, entertainment, or other recreation, pay for schooling in Maryland, or make other local purchases. Additionally, there are the second-round economic effects of business-to-business transactions between the direct vendors of data centers and their suppliers.

Between 2001 and 2020, the average private sector data center employee saw their gross income increase 70% faster than the average. Wages paid in the data center industry are not only higher on average than other industries but also increase at a much faster rate. Because of this, the increase in tax revenue for Maryland would not only be derived from the tax revenue generated by the data centers themselves but also from the workforce they employ. The higher wages earned by these employees enable more spending within the local economy and help to bolster a variety of industries across the state while also enhancing capabilities to expand programs and improve essential services. Loudoun County, on average, spends approximately twice as much per capita on public safety, fire, and EMS services as does Frederick County, while also spending approximately two and a half times as much per student in their public school system. Our project will not only enable Frederick County to make up that ground but also spread the benefits throughout the state.