Economists: Incentives for Ohio data centers are a loser. So is banning new construction

Ohio’s push to attract data centers through tax incentives is facing sharp criticism from economists, who argue the policy is financially unsound and worsens rising electricity costs for residents. A survey of 14 economists found only one supported the incentives as an effective way to boost job growth, while 10 disagreed and three remained uncertain. The state’s subsidies, such as those granted to Google and Meta, have been estimated to cost taxpayers up to $1 million per job created, benefiting executives with net worths of $1.8 billion and $215 billion, respectively. Critics also highlight the strain on Ohio’s power grid, driven by surging demand from AI-powered data centers operated by tech giants like Amazon, Google, and Microsoft. Utilities profit from infrastructure upgrades to meet this demand, leading to higher bills for consumers—already burdened by record-high grocery prices, gasoline costs nearing $5, and projected $778 summer cooling expenses. Meanwhile, AI advancements threaten to displace thousands of Ohio jobs in the coming decades, deepening concerns about the long-term economic trade-offs of these incentives. The debate follows a history of utility corruption in Ohio, including a 2020 scandal where FirstEnergy paid $61 million in bribes to secure a $1.3 billion ratepayer bailout. Regulatory failures persisted under Gov. Mike DeWine, with his top utility regulator playing a key role in drafting the controversial legislation. Now, executives like Bill Fehrman, CEO of Columbus-based AEP, earn exorbitant salaries—Fehrman made $37 million last year, equivalent to nearly $12,000 per hour—while Ohioans face financial strain. Economists also dismissed a proposed alternative: banning new data center construction. They argue such a move could harm the state’s economic competitiveness without addressing the core issue of unsustainable subsidies. Policy Matters Ohio estimated that current tax breaks for tech companies offer minimal job creation benefits while draining public funds. The organization noted that Ohio’s approach contrasts with other states, where data center incentives are tied to stricter accountability measures. As Ohio grapples with these challenges, policymakers must weigh the short-term allure of tech investments against the long-term costs to residents and the economy. The economist consensus underscores a growing skepticism toward unchecked subsidies, particularly in an era where AI-driven demand is reshaping energy markets and labor dynamics.