Facebook™, the social networking behemoth, recently broke ground on its first company-owned data center, to be located in the economically depressed town of Prineville, Oregon.
A combination of tax breaks, affordable electricity, and desirable weather, led the Palo Alto based company to select the central Oregon location.
The 177,000 sq.ft facility will house thousands of data servers, enable the exploding number of users to keep in touch with their friends, but will provide only thirty-five permanent jobs.
This is clearly an example of what a "jobless recovery" means. Normally a $200 million dollar expansion would create thousands of full time jobs, not thirty-five.
Tax Breaks Equal $80,000 Per Job
The Facebook facility will be built in one of Oregon's long-term rural enterprise zones, which will exempt the company from $2.8 million dollars in annual property taxes, which works out to $80,000 per employee. Facebook will pay Crook County $110,000 a year in "community impact fees."
The $2.8 million can't really be counted as lost revenue though since it's contigent on Facebook's decision to build the facility in Oregon. No tax break, no facility, no thirty-five jobs.
Every Little Bit Helps
My customer in Prineville said, "We have 1,500 empty homes here. Thirty-five jobs won't make much of a dent but every little bit helps." Crook County, at 17%, has the highest unemployment rate in Oregon.
The creation of thirty-five jobs is a good thing, but based on the size of the investment it's disappointing. Long gone are the days when a shoe manufacturer would open a facility in Prineville, unless there's a Prineville, Sri Lanka.
All Sizzle, No Steak
We have an economy that can grow our GDP without nearly a proportionate amount of job growth.
If Bill Gates makes $10 billion and nine hundred ninety-nine other people make zero, the U.S. Government would claim that the average income for the one thousand people was $10 million. Looks great on paper but it doesn't put much bacon on the table of the nine hundred ninety-nine folks.
Thirty-five lucky people will soon be working for Facebook in Prineville. Maybe more of these facilities will follow. But until we figure out a way to create labor-intensive jobs in this country we are faced with double-digit unemployment for years and years to come.
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kmike2012
Stephen Guy Hardin
Ted Frier
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For those not in Oregon, Bend has a population of between 60K and 100K (depending on how you draw the lines), and is a sort of Vail Wannabe of Oregon, a glitzy exterior on top of its former cow-town, mill-town self. It has skiing, golf, show homes, lots of foreclosed houses, and loads of people desperate to keep on living in a beautiful place.
I will be shocked if even one of those data center jobs goes to a person who actually lives in Prineville.
Another central Oregon town, Madras, was sold a similar boondoggle when the state built a minimum security prison there. The town lobbied hard to get the prison, ostensibly for jobs. Very little new population or jobs actually came to the town. Instead, people commute 45 miles from Bend.
Enterprise zones rarely have their intended effect.
marx warned of this.
the corporatocracy is actually a now a highly streamlined, well oiled, wealth disparity amplification apparatus.....
They paid no taxes because our system is fucked up. Most people here would do the same thing if given the opportunity.
The consumption Fair Tax would solve most of our tax problems.
The government is to blame for corporate welfare. Hand it out and they will come.
I have now begun exploring a long lost art. Sure, it's just mythical, but there does seem to be evidence that America used to manufacture stuff. This provided a lot of jobs for the buck and the theory seems to hold water as China is using it to kick our ass.
Now, the question is who what caused the disappearance of manufacturing? I have heard of fossils in the steel belt that can be studied. I'm no urban archeologist, but I'll do my best and get back to you... I must know the secret of this manufacturing society that existed long ago.
Thanks all.
It's some benefit to Prineville to have a bunch of construction workers drive in every day from Bend. They'll buy lunch in the local restaurants. They might buy gas. But they'll drive home again at night to their families and houses somewhere else.
I'll be very curious to see how this will benefit the actual town of Prineville in the long term.
Your analysis is spot on. Rated Highly.
I agree with Froggy - the workers will commute from Bend. Why? Because Prineville is a farming town. Do people honestly expect that there is a multitude of qualified IT people living there? If I was building a data center, I wouldn't even consider advertising the new IT jobs to the inhabitants of Prineville.
Corporations and people alike follow incentives. Low taxes + nearby fiber lines + low cost of energy = the perfect recipe for a data center with low operational costs. Facebook isn't some giant, evil corporation that is out to screw Prineville. I find it appalling that some people transform their sympathy of Prineville into disgust of Facebook.
Business and the economy is in a state of change. High unemployment is not a good incentive to stay in an area. Perhaps some of the people of Prineville need to find their own incentives, and follow them to economic fruition. There's still a lot of opportunity out there if people only look for it.