A ‘pound of flesh’ from data centers: one senator’s answer to AI job losses

Signs that AI could lead to massive job displacement are already mounting: Entry-level job openings in the US have too down 35% since 2023, mass layoffs have engulfed Big Tech, even AI leaders themselves warn of what is to come.

Backstage at the Axios AI Summit in Washington on Wednesday, Sen. Mark Warner (D-VA) said a venture capitalist recently told him he is cutting software investments to zero, thanks in large part to Anthropic’s Claude’s progress, and a major law firm told him it is not hiring first-year associates because AI can now handle much of the work once assigned to junior lawyers.

Warner says the fear of AI-related job losses is “palpable,” even though data from one AI company shows that AI has not yet started taking jobs. As those fears grow, they culminate in another battle over who should pay the bill.

Warner has a proposal: Tax the data centers that power the AI ​​boom and use those revenues to help workers through the transition. He has not yet introduced legislation, but the idea is gaining urgency as public anger over AI and data centers grows.

There has been a backlash against data centers across the US, including a bill introduced Wednesday by Senator Bernie Sanders (D-VT) and Representative Alexandria Ocasio-Cortez (D-NY) calling for a moratorium on data centers. The biggest concerns are about noise, pollution and rising electricity costs. But there’s a bubbling resentment beneath these concerns, a resistance to suffering the potential ill-effects of having a data center in your backyard powering the technology that some fear will replace workers.

Warner does not plan to support his colleagues’ bill. On stage at the event, he said: “A moratorium on data centers simply means that China will move faster, and this is one in which we cannot lose.”

There is no reason to put the genie back in the bottle when it comes to AI and data centers, he added. And while Warner believes in strict requirements that ensure data centers don’t pass on their water and power costs to residents, he told TechCrunch he thinks there’s another way for communities to extract their “pound of flesh” in a way that addresses the underlying fear of job losses.

“I have long thought that the sector has an obligation to figure this out and help pay for it, but one of the questions I asked was: who should pay?” Warner told TechCrunch. ‘Must be the chip makers, Jensen [Huang, Nvidia’s CEO]? Should it be the big language model companies? Should it be the Goldman Sachs of the world using these tools to cut back on first-year hires?”

Ultimately, he said, he thinks the “easiest place to gain the pound of flesh will probably be the data centers.”

That could give the impression that tax revenue from data centers is being spent on training new nurses or funding AI upskilling programs – as long as there is a “tangible benefit to communities” in navigating this economic transition. AI companies have imposed it on them.

Warner sees it as a way to balance the need to build data centers with some obligation to the communities that bear their costs

The idea is not without precedent. Warner pointed to Henrico County, Virginia, which used tax revenue from a local data center bringing new, affordable housing to life project.

Finding a way to connect data centers with a tangible benefit to the community will be essential, he says, because otherwise “the pitchforks will come out.”

The public mood suggests he could be on to something. According to a recent NBC News pollAI has a lower public approval rating than Immigration and Customs Enforcement (ICE), with 46% of registered voters viewing AI negatively, compared to only 26% who view it favorably. In Virginia this plays out in a proposal to withdraw state tax benefits to build data centers, costing the state and municipalities nearly $2 billion a year in lost tax revenue in one of the largest data center markets in the world. Warner says other states could follow suit.

According to him, AI and data centers are ‘easy to demonize’.