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Yahoo! or Boohoo?

When the federal government helps underwrite job creation, it often caps the subsidy at $35,000 per job.

The New York Power Authority has offered hydropower discounts worth $809,940 in an effort to lure a Yahoo! data center to Western New York.

I think the numbers speak for themselves.

Come to think of it, I'll let a few more talk.

I've built a database that tracks allocations of low-cost hydropower the Power Authority has made since 2006. The value of the discounts has worked out to an average of $12,446 per job, per year.

The richest of the deals worked out to $32,733 per head.

Yahoo! would come in at $53,996.

Multiply that by the 15-year contract and you're at $800,000 and change.

Server farmPower Authority boss Richard Kessel concedes the numbers don't look good on the surface.

"On a number basis this doesn't look like the greatest deal in the world, but we can't look at the numbers alone," he said. 

He quickly added, "Numbers matter less than jobs. We've just got to create jobs in Western New York."

Greg LeRoy of Good Jobs First, a national expert who I've used for years as a sounding board for economic development subsidies, said the proposed Yahoo! subsidy is one of the largest he's ever seen, and he questioned if the deal is the smartest way to leverage low-cost hydropower to create jobs.

"It really, really begs the question of what else cheap electricity could be doing to stimulate the regional economy," LeRoy said.

With that said, I'll leave you with a few more numbers to ponder.

If the authority could find takers for the 15 megawatts allocated to Yahoo! for the aforementioned average cost per job of $12,446, the result would be 542 jobs, not the 125 Yahoo! is guaranteeing.

A hypothetical situation, granted. But worth contemplating.

I'll have more on the deal in the days ahead.

 

tagged

Economic Development | New York Power Authority
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