Yahoo's Big Bet on the Cornhusker State

Yahoo said today it plans to invest $100 million to build a data center and service center in two Nebraskan cities — a few days after is said it would cut expenses and lay off 1,500 people. The Internet portal company qualified for millions in tax breaks there, according to a Lincoln, Neb., paper, but the report didn’t say how much, or what the incentives entailed.

But Yahoo must invest at least $100 million in the state and create a 100 jobs with a minimum average salary of $68,700 to keep its economic development cash. The La Vista Sun, which covers the town where the data center will be, says the data center should employ about 50 people.

What puzzles me about the announcement is why a government would offer incentives for a data center to be located in their state. A customer service center with its many, mid-level jobs — that I get. But data centers don’t employ all that many people and can be huge drain on power resources. They’re not glamorous and don’t offer a community a lot of visibility with which to attract other knowledge workers. They don’t consume a lot of local goods and send money back into the local economy. What am I missing here?

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