The AI boom is carving space for the data centers economy

Marketplace’s Stephanie Hughes spoke with William Martin, a branch manager with the Chicago-based electrical contractor Kelso-Burnett, a few months ago. He told her that of the 100-plus years the company has been in business, 2024 was one of the busiest ever. One reason: there’s a ton of work wiring new data centers. “As you can imagine, there’s a lot of power needed for those projects,” he said, “they eat up a lot of resources, [and need] a lot of electricians.”

Data centers are filled with servers, basically a bunch of beefed-up computers stacked on top of each other in buildings that can be as big as warehouses. So they do need a lot of electricity. And there are more of those projects in the works. For example, Meta has said it’s planning to build out at least one data center that’s going to be so big it could cover a good chunk of Manhattan.

Wall Street Journal tech reporter Meghan Bobrowsky explained to Hughes what kinds of companies are benefitting from this data center construction boom. The following is an edited transcript of their conversation:

Meghan Bobrowsky: So there’s this whole ecosystem — cables are another big part of this, so electricians, there’s plumbing aspects of this as well. There’s water that is used to cool the data centers, which these data centers get very hot, and so to prevent them from overheating, you cool them with water. So then you have this whole ecosystem of people who are plumbers, who are benefiting from this — electricians, obviously, another one. There are some local economies that are benefiting, like workers that you need to run these data centers, though far fewer workers are needed to run data centers than, say, at factories, because it’s a lot of this is operating on its own. But certainly it’s its own type of industrial revolution of sorts. These warehouses are popping up all over the country, and you need on-the-ground people to help build these things up.

Stephanie Hughes: Are there any parts of the country that are seeing a particular economic bump from this data center boom?

Bobrowsky: Yes. North Virginia and Texas are two of the places that are seeing the most interest in data centers. They’re building them out. Texas, in particular, is the site of project Stargate, which is the project that President Donald Trump announced with Sam Altman. That’s a big one that’s going to be built out there. But a lot of these other companies are also looking to doing this in Texas. One, because there’s a lot of land there, but two, because the government has sort of made it a place where people are willing to build these things.

Hughes: Tell me more about why Northern Virginia and Texas specifically are benefiting.

Bobrowsky: So one, there’s land — so places where there’s land, and then places where they’re facing fewer hurdles to building these things. So in some places, you’re going to have higher taxes, you’re going to have more regulation, more restrictions on things. And Texas has sort of proven itself to be a friendly place to build these data centers.

Hughes: Data centers eat up a ton of energy. A lot of big tech companies that are building them have, in the past, made pledges to reduce their carbon footprints. As these data centers get built, how are companies that work in renewable energy benefiting, if they are?

Bobrowsky: Well they’re probably getting more business right now, because people are interested in this issue. These data centers, the biggest ones, can use up to the same amount of electricity that powers 80,000 homes. So there’s interest in trying to figure out a way to make it so that these data centers are not environmentally impacting these communities as much. But for the most part, that’s still a work in progress. We’re very early days here, and for the most part, these data centers are tapping the local electricity grids. They’re tapping the local water sources. So it’s not like this has been solved at all yet.

Hughes: Where do you think we are in the data center building cycle, like are we sort of at the beginning of it, or is this something that you think will really take off over the course of the next few years?

Bobrowsky: Certainly, many data centers have already been built, but I do think we’re going to see more continue to be built, at least for the next few years. There’s still interest — and even beyond the AI boom, there’s potentially other uses for these things. You saw the same thing happen in dot com boom back in the early 2000s where you had all of these things like data centers and things we built out that then the market crashes, everything crashes, but they’re still useful, and they still end up being useful later on. And so I think the thought of these tech CEOs is that even if the AI boom doesn’t last as long as we think it’s going to last, owning these data centers and operating these data centers is still going to be very useful to them.