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

Signs that AI could lead to a mass displacement of jobs are already accumulating: entry-level job openings in the US have fallen by 35% since 2023, mass layoffs have swept through big tech companies, and even AI leaders themselves are warning about what is coming.

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

Warner says the fear of AI-related job losses is “palpable,” although data from one AI company suggests that AI has not yet begun to take over jobs. As these concerns grow, they bleed into a different battle: who should pay the bill.

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

Across the United States, there has been opposition to data centers, including a bill introduced Wednesday by Sen. Bernie Sanders (D-Vermont) and Rep. Alexandria Ocasio-Cortez (D-N.Y.), calling for a moratorium on data centers. The highest concerns relate to noise, pollution and high electricity costs. But there’s a simmering discontent behind these fears, a resistance to suffering the potential ill effects of having a data center in your backyard powering technology that some fear will displace workers.

Warner does not plan to support his colleagues’ bill. “A moratorium on data centers simply means China will move faster, and that’s where we can’t lose,” he said on stage at the event.

He added that the genie cannot be put back into the bottle when it comes to artificial intelligence and data centres. While Warner believes in stringent requirements that ensure data centers do not pass water and electricity costs on to residents, he told TechCrunch that he believes there is another way for communities to extract their “pound of flesh” in a way that addresses the underlying concerns of job loss.

“I’ve thought for a long time that there’s a commitment from industry to help figure this out and help pay for it, but one of the questions I’ve been asking is: Who should pay?” Warner told TechCrunch. “Should they be the chip makers, Jensen [Huang, Nvidia’s CEO]? Should it be the big language model companies? Should it be Goldman Sachs that uses these tools to reduce headcount in the first year?

Ultimately, he said, he believes “the easiest place to extract a pound of flesh will probably be from data centers.”

This might look like putting data center tax revenue into training new nurses or funding AI skills improvement programs — as long as there is a “tangible benefit to communities” as they navigate this economic transformation forced upon them by AI companies.

Warner sees it as a way to balance the need to build data centers with some obligations 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 to start a new affordable housing project.

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

The overall mood suggests that he may be on to something. According to a recent NBC News poll, AI has a lower public approval rating than ICE, with 46% of registered voters viewing AI unfavorably compared to just 26% viewing it favorably. In Virginia, this is exemplified by a proposal to eliminate state tax breaks for building data centers, which costs the state and localities nearly $2 billion annually in lost tax revenue in one of the world’s largest data center markets. Warner says other states may follow suit.

AI and data centers are “easy to demonize,” he said.