The ‘pound of flesh’ from data centers: one member’s response to AI job losses

Signs that AI could lead to mass layoffs are already piling up: entry-level job postings in the US have sunk 35% since 2023, mass layoffs have hit Big Tech, and even AI leaders themselves are warning of what’s to come.

After the Axios AI Summit in Washington on Wednesday, Sen. Mark Warner (D-VA) said a venture capitalist recently told him he was writing software investments down to zero in large part because of Anthropic Claude’s moves, and a large law firm told him they weren’t hiring first-year associates because AI lawyers could now handle most of June’s work.

Warner says the fear of AI-related job losses is “palpable,” as some AI company data suggests that AI has yet to take off. As that fear grows, a different battle ensues, which is who should pay the debt.

Warner has a proposal: tax the data centers that power the AI ​​boom and use that revenue to help workers during the transition. He hasn’t introduced legislation yet, but the idea is gaining momentum as public outrage over AI and data centers grows.

Across the US, there has been a backlash against data centers, including a bill Wednesday introduced by Sen. Bernie Sanders (D-VT) and Rep. Alexandria Ocasio-Cortez (D-NY), who is calling for a shutdown of the data center. The biggest concerns are about noise, pollution, and rising electricity costs. But there’s a deep resentment beneath that concern, a resistance to dealing with the potential negative consequences of having a technology-powered data center in your backyard and some fear it will replace workers.

Warner does not plan to support his colleague’s bill. On stage at the event, he said: “The establishment of the data center means that China will move quickly, and this is where we cannot lose.”

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

“I’ve been thinking for a long time that there’s a responsibility in the industry to help find this and help pay for it, but one of the questions I’ve been asking is, Who should pay?” Warner told TechCrunch. “Should it be the chip makers, Jensen [Huang, Nvidia’s CEO]? Should it be the big companies that model the language? Should it be the Goldman Sachs of the world using these tools to reduce the number of first-year associates?”

Ultimately, he said, he thinks “the easiest place to shed a pound of flesh will probably come from data centers.”

That could look like putting data center tax money into training new nurses or funding AI skills development programs — as long as there is a “tangible benefit to communities” as they navigate this economic transformation that AI companies have focused on.

Warner sees it as a way to balance the need to build data centers with some responsibility for communities to bear the cost.

The idea is not without example. Warner pointed to Henrico County, Virginia that used tax money from a local data center to start a new affordable housing project.

Finding a way to connect data centers for tangible benefit to society will be important, he says, because if not, “the pitchforks come out.”

The social situation suggests that he can do something. According to a recent NBC News poll, AI has a lower public approval rating than Immigration and Customs Enforcement (ICE), with 46% of registered voters viewing AI negatively compared to only 26% viewing it favorably. In Virginia, that plays into a proposal to repeal the state’s tax break for data center construction, costing the state and localities nearly $2 billion a year 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, he said, are “easy to demonize.”