WSJ What’s News - Why New AI Data Centers May Not Bring a Jobs Bonanza

Episode Date: February 26, 2025

P.M. Edition for Feb. 26. As new data centers to power artificial intelligence pop up across the U.S., tech leaders and politicians have promised a hiring bonanza. But as WSJ reporter Tom Dotan tells us, the number of jobs created in the long term is often more modest. Plus, President Trump’s proposed tariffs are driving a wedge through the aluminum industry. Journal manufacturing and metals reporter Bob Tita discusses who is for and against the new tariffs, and the impact they would have on the industry. Plus, reporter Katherine Clarke talks about the newest category of the ultra-rich: the superbillionaire. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is sponsored by Northern Trust Wealth Management. There is more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more.

Find the road to why where you listen to your favorite podcasts. President Trump, in its first cabinet meeting, defends Elon Musk's government cost-cutting efforts. Plus, is the AI data center boom really creating the scores of new jobs it's promising? If you think about the resources that these things consume, you really start to ask questions about whether the cost that could be incurred on the people that live near the data center

is worth it given the relatively small number of jobs. And the rise and rise of the super billionaire. It's Wednesday, February 26th. I'm Alex Osolo for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. President Trump held his first cabinet meeting of his second term today. In it, he defended billionaire adviser Elon Musk, who was also in attendance.

Trump praised Musk's efforts to slash government spending. We're cutting down government. We're cutting down the size of government. We have to. We're bloated. We're sloppy. We have a lot of people that aren't doing their job. We have a lot of people that don't exist. The president asked his cabinet

if anyone was dissatisfied with Musk's efforts. Members of the cabinet seated around a long table in the West Wing laughed and none indicated any dissent. But several senior agency officials have instructed federal workers to pause or not respond to Musk's email, asking federal workers for a bullet point list of five things they accomplished last week.

["The New York Times"] This month, President Trump announced that duties on imported aluminum would rise to 25% from 10% starting March 12th, while expanding the range of aluminum products subject to tariffs. It's driving a wedge in the $92 billion U.S. aluminum industry. Producers are generally in favor of the expanded tariffs while buyers are against them. Bob Tieta, who covers manufacturing and metals industries for WSJ, is here to tell us more. Bob, let's start with the producers. Why do they like these proposed tariffs? Producers have generally been in favor of them because tariffs create higher import prices,

so it allows your domestic producers to raise their prices as well. Although it's not universally supported by all producers either. The biggest aluminum company in the United States, Elcoa, has a lot of operations in Canada, and so it would be exposed to a tariff when it sends that aluminum to the United States.

And what about the buyers? Well, it's a variety of companies that make things out of aluminum. So aluminum cans, automotive parts, the automotive industry, the car makers, they all use aluminum as well. So if it's going to cost more to use foreign-produced aluminum, where are buyers going to get it? Is there enough domestic supply? Well, that's one of the issues, particularly on high-purity aluminum that is not mixed with other metals that typically comes from a smelter. That type of aluminum is in short supply in the United States.

We consume more than we make here. About 60% of the aluminum the U.S. consumes in a year comes from imports. Okay, so let's say these tariffs do go into effect. What would the impact be on the industry overall? It would raise profits for companies that are producers because the tariff would get kind of passed through the supply chain. And of course, it ends up with consumers.

And that's the concern for the companies at the end of the supply chain that have a consumer-facing customer that doesn't like to pay higher prices. That was WSJ reporter Bob Tieta. Thank you, Bob. Thank you. A child who tested positive for measles has died in West Texas. That's according to the state health department.

The child who had not received the measles, mumps, and rubella or MMR vaccine is the first person to die in the outbreak that has sickened nearly 140 people in Texas and New Mexico. At least 18 people have been hospitalized and children make up the majority of those infected. The outbreak shows how quickly measles can spread in communities without high levels of vaccination. According to the state health department,

most Texans testing positive for measles are unvaccinated or their vaccination status is unknown. In US markets today, stocks struggled to shake off a four-day slump and major indexes ended the day mixed. The Dow dropped about 0.4 percent, the Nasdaq rose about a quarter of a percent, and the S&P 500 was flat. And the eagerly anticipated Nvidia quarterly results came in after the bell. The chipmaker said its sales rose 78% to $39.3 billion in the latest quarter, while net income rose 80% to $22 billion. Both figures came in ahead of Wall Street's expectations.

The company's outlook for its current quarter also exceeded expectations. The numbers show that spending on the company's artificial intelligence chips hasn't abated despite a two-year boom. Coming up, are new AI data centers creating the employment bonanza that political leaders are promising? That's after the break. This episode is sponsored by Northern Trust Wealth Management. There is more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build

a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more. Find the Road to Why where you listen to your favorite podcasts. To power the AI systems that Silicon Valley is hyped on, they need data centers. And a whole lot more of them. Business leaders and politicians promise that getting new data centers online also means more jobs.

At the press conference unveiling Stargate, President Trump said more than 100,000 new jobs would be created, quote, almost immediately. But the reality is a little more complicated. I'm joined now by Tom Dutton, who covers big tech companies for the journal. Tom, tell it to me straight. Do new data centers actually create as many new jobs as leaders are promising? I would really argue after reporting this story out, it's just not that many jobs. One of the biggest data center projects underway right now is this thing called Stargate, which

is part of a partnership between OpenAI and SoftBank and other financiers. And this could ultimately be $500 billion spent on building data centers all over the country. The only one that they've built right now is this ongoing project in Abilene, Texas, in West Central Texas. It's gonna be a million square feet, so a huge, huge plot of land. As of right now, the projected job numbers are around 100 once this thing is built. So a million square feet, basically 100 people working there. That's the numbers right now from the Abilene Development Corporation. And an interesting comparison is around the same time in Abilene, there is a cheese packing plant being put up and it's going to have 500 jobs, was what they're projecting.

So at one quarter the size, having five times the number of jobs, it gives you a sense as to like the relatively small number of jobs given the huge real estate footprint these things have. But it seems like there's a little bit of a disconnect between the actual process of building one of these centers and running it, is that right? Yeah, the process of building a data center is very labor intensive. Thousands sometimes of construction workers

will be on site to prop these things up, build them, install the computers, but long term, the actual people who are full-time employees once the data center is built is far smaller usually. As these data centers pop up in more rural locations, will the kinds and number of jobs being created there be meaningful for these communities? It depends on what meaningful means.

If you're in a rural part of the country, then a data center that has 500, let's say, and that would be fairly high, like number of employees, that could be a sometimes double-digit percentage increase in the number of jobs if you're in a fairly thinly populated area. If you are in a more urban location, then no, it's not very meaningful. And if you think about the resources that these things consume, you really start to ask questions about whether the cost that could be incurred on the people that live near the data center is worth it given the relatively small number of jobs.

That was WSJ reporter Tom Dothan. Thank you, Tom. Thanks for having me. Belonging to the billionaires club is no longer the status symbol that it used to be. Now there's an even higher category of ultra rich, the super billionaire. Those are people worth $50 billion or more. And according to global intelligence firm, Altrada, there are just 24 of them worldwide.

As of early February, their combined net worth totaled more than $3 trillion, equivalent to the nominal GDP of France. Reporter Catherine Clark covers residential real estate for the Wall Street Journal. So Catherine, $50 billion to me is simply an unfathomable amount of money. Give us a little bit of context for that. How much is that versus the average American household?

To put that in context, that's almost 300,000 times the median net worth of the average American household. And if you look at the net worth of the richest person in the world, according to El Trata's data, that's Elon Musk. And he's worth $419.4 billion, which is about 2.4 million times the net worth of the average American household. So you mentioned Elon Musk, but who are some of these other super billionaires and like what do they have in common? The main commonality we see between them is that they often work in the tech space or they work in businesses that have been propelled to new levels by technology.

So we're talking a lot of names that you would recognize. We're talking Elon Musk, Jeff Bezos, Larry Ellison, Mark Zuckerberg, Sergey Brin, and then there are a few that are not in the tech space like Bernard Arnaud, the head of luxury goods firm LVMH, and we're talking about the Walton family who are behind the Walmart empire. So, you write that this level of wealth is pretty different from even just a decade ago. What's changed? Over the past few decades, we've seen the rise of these sort of major tech companies and their founders whose wealth is tied so intrinsically to the rise of these sort of major tech companies and their funders, whose wealth is tied

so intrinsically to the value of those companies. Back in the day, when we looked at the wealth of people like the Vanderbilts or the Rockefellers, we're talking about actual physical assets, things that you could actually take stock of and put a value on. With this new set of billionaires, the value that they have is intangible. It's tied to future cash flow and future earnings and the promise of what these companies might deliver. And so the numbers that we're talking about are sort of pie in the sky to some degree. That was WSJ Reporter Catherine Clark. Catherine, thank you so much. Thank you for having me.

And that's what's news for this Wednesday afternoon. Today's show is produced by Pierre Bienneme and Anthony Bansi with supervising producer Michael Kosmitis. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. This episode is sponsored by Northern Trust Wealth Management. There is more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit?

What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more. Find the Road to Why where you listen to your favorite podcasts.