Building Trades Push for Data Center Tax Incentives Amid Stalled Infrastructure Package

Strategic Insights -

Minnesota lawmakers face pressure from building trades unions to extend tax breaks for data centers, which are a key driver of high-paying construction jobs. Despite ongoing trade war and federal funding cuts, data centers are expected to provide significant economic benefits, including $1.8 billion in construction jobs and 300 ongoing operational jobs per hyperscale facility. The push for tax incentives comes as President Trump has seemingly flipped on his opposition to the Japanese-owned Nippon's $14.1 billion bid to purchase U.S. Steel, despite initial concerns from the United Steelworkers union.

Key Takeaways:

  • Building trades unions are pushing for tax breaks for data centers to spur investment in high-paying construction jobs, with one hyperscale data center costing $750 million creating upwards of 1,800 construction jobs and 300 ongoing operational jobs.
  • The tax incentives also help justify prevailing wage requirements, ensuring much of the construction will be done by union workers.
  • Progressive lawmakers argue that giving tax breaks to tech giants like Amazon and Meta is unfair, especially with the state facing a looming budget deficit.
  • Minnesota lawmakers may extend sales tax exemptions on software, servers, and other equipment used to power data centers after a letter from a coalition of building trades unions, energy companies, and businesses cited a report showing $219 million in forgone sales tax revenue by 2029.
  • Public sector unions have expressed concern that lost revenue could cut into funding for schools, nursing homes, and state agencies.
  • Federal funding cuts and the ongoing trade war have impacted the economic outlook for construction jobs, with the construction sector facing a predicted 20% decline in employment.
  • Amazon has suspended plans for a big data center in Becker, citing ongoing negotiations at the Legislature.
  • Bishop Harding Smith, head of the violence intervention nonprofit Minnesota Acts Now, was charged with felonious wage theft and theft by swindle for shorting workers $150,000 from a county contract.
  • Planned Parenthood North Central States has announced the closure of eight clinics across Minnesota and Iowa, laying off 66 workers and reassigning three dozen more.
  • A federal judge dismissed a lawsuit challenging the nursing home holiday pay mandated by the Nursing Home Workforce Standards Board.
  • The International Labour Organization cut its global employment forecast by 7 million jobs, citing the trade war's impact on consumer demand.

Statistics:

  • Minnesota legislators are considering extending tax breaks for data centers to create high-paying construction jobs and attract tech giants like Amazon and Meta.
  • The construction sector faces a predicted 20% decline in employment due to federal funding cuts and the ongoing trade war.
  • A hyperscale data center costing $750 million creates upwards of 1,800 construction jobs and 300 ongoing operational jobs.
  • By 2029, $219 million in forgone sales tax revenue is expected due to sales tax exemptions on software, servers, and other equipment used to power data centers.
  • Planned Parenthood North Central States has laid off 66 workers and reassigning three dozen more after federal funding cuts and the near-total abortion ban in Iowa.
  • The International Labour Organization cut its global employment forecast by 7 million jobs, citing the trade war's impact on consumer demand.
  • President Trump's trade war has resulted in a 7% decline in the income of workers globally, from 53% to 52.4% of the world's gross domestic product.