Labor Shortage May Hinder Data Center Building

MOSCOW, Idaho -- Labor constraints may determine whether communities can capitalize on the data center building boom, according to a new report from Lightcast, a provider of labor market intelligence which says, “workforce availability may be the deciding factor in whether those projects succeed.”

The report, entitled "Data Centers and the Local Workforce," finds that even if investors and communities can overcome land, power, incentives, and public opinion challenges to data center construction, they may still face labor challenges.

As demand for artificial intelligence and cloud computing drives a wave of data center construction, local leaders face difficult decisions about economic development, infrastructure, and community impact.

The report argues that those decisions should begin with an assessment of labor market capacity.

"The potential benefit of a data center is huge, but it's not automatic,” said Josh Wright, executive vice president of growth at Lightcast. “Just like you need the electrical infrastructure to build one of these facilities, you also need the workforce infrastructure. Communities need to invest wisely in building up talent pipelines in order to capture the value of the data center boom."

The report examines three questions communities should answer before pursuing a data center project:

• What economic benefits will the project generate?
• Are there enough workers available to build it?
• Can the region supply the talent needed to operate it long-term?

Using Lightcast's economic modeling tools, researchers analyzed a representative data center project in the Laredo, Texas metro area. A construction phase involving 1,000 workers generated an estimated $74 million in earnings and more than $4.6 million in tax revenue. But the report notes that these jobs are temporary. Long-term staffing needs are much smaller, typically ranging from 50 to 400 permanent employees.

The findings challenge a common assumption that large construction projects automatically translate into sustained employment growth.

The report also highlights growing competition for the workers data centers require. Global job postings for construction roles mentioning data centers rose 23 percent in the most recent six-month period analyzed and have roughly doubled over the past two years. Demand for data center technicians and engineers increased by a similar margin.

"When a company is trying to hire an electrician for a data center project, they're competing against other data centers, other construction developments, and also commercial and residential projects who all need an electrician. The same thing is happening across the skilled trades. You can't generate any economic growth from a data center if you can't find the workers to build one," said Wright.

At the same time, many of the occupations needed to build data centers—including electricians, HVAC technicians, construction managers, and equipment operators—are already in short supply. Previous Lightcast research found an annual shortfall of more than 1.7 million skilled-trades workers nationwide.

For operations roles, the report identifies several adjacent occupations that could serve as talent pipelines. However, most workers would still require additional training in data center systems, electrical infrastructure, networking, and facility operations.

The report also examines how automation and remote work may reshape workforce demand. While these approaches can help employers overcome hiring challenges, they may also reduce the number of permanent local jobs created by a project.

"If hundreds or thousands of construction workers come into your city to build a data center, they're going to need food and lodging, they'll go to local businesses and spend the money they earn, and that's great for a region in the short term, but it doesn't last," Wright said. "After a data center goes online, it will be a much smaller team onsite, or maybe maintenance will even be done remotely. The question facing community leaders is whether the short-term boost is worth the investment, knowing that those people eventually leave."

Workforce analysis should be a core part of any data center strategy, according to the report. Communities may be able to secure funding, land, and infrastructure, but without the workers to support the project, projected economic benefits may never materialize.

The full report, "Data Centers and the Local Workforce," is available now from Lightcast.

With a comprehensive database -- spanning over 3 billion job postings, 500 million career profiles, and 100+ government sources -- Lightcast delivers unparalleled insight into skills, jobs, companies, professional profiles, and workforce trends across 165 countries. It has offices in the United States, United Kingdom, Canada, Italy, New Zealand, and India.

Learn more at lightcast.io.