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We need jobs, not symbolism

State officials are talking with Yahoo! about putting a data center somewhere in WNY.

Reports my colleague Tom Precious:

A state official, speaking on condition of anonymity, said Friday that Gov. David A. Paterson directed the New York Power Authority to work with Yahoo on possible state assistance involving low-cost power to lure them to the Buffalo area. A plan could go before the Power Authority board as soon as next week.

Officials said the center would not result in a large number of jobs, and a source could not put a precise number on the center’s work force. But the official said the symbolism of luring a giant like Yahoo to the region could help with other economic development efforts aimed at high-tech companies.

“It’s a big brand that we can showcase, if Yahoo goes to Western New York, that sends a message that New York is open for business, that New York wants to generate jobs for the future and we want to attract cutting-edge companies,” the official said.

Jay Rey has a follow up in today's News.

Google was sniffing around for power a while back, but the Power Authority and the state board that allocates low-cost hydropower decided the deal didn't bring enough economic benefit for the considerable subsidies Google was seeking. Those decision makers should remain level-headed in dealing with Yahoo!

The numbers on investment, jobs and subsidy have not been disclosed, so I have no sense of whether the prospective deal represents a good investment of public resources, in this case, low-cost hydropower.

But as a rule, data centers require vast amounts of electricity and bring relatively few jobs. They also tend to locate in rural areas, blunting the potential for economic spin-off.

I've been tracking power allocations made by Power Authority since January 2006, and the value of power discounts, depending on fluctuating energy prices, have tended to average in the range of $10,000 to $15,000 per job per year.

Those figures are high compared to the typical government subsidy to create jobs. The feds cap assistance in some of its major job creation programs to $35,000 for the lifetime of the subsidy. Power Authority subsidies typically exceed that cap in fairly short order.

Yeah, I know, landing a big name like Yahoo! or Google sounds neat. Politicians talk about the symbolism of it all.

But it's not symbolism this region needs, it's jobs.

That requires using low-cost hydropower to it's highest and best use. Maybe Yahoo! fits the bill. Maybe it doesn't. Let's see what the numbers show.


Economic Development | New York Power Authority
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