Senator Proposes Data Center Fee to Counteract AI Job Losses

Warning signs that AI could trigger widespread job displacement are accumulating: U.S. entry-level job postings have plunged 35% since 2023, mass layoffs have rippled through Big Tech, and even AI industry leaders are sounding the alarm.

Backstage at the Axios AI Summit in Washington on Wednesday, Sen. Mark Warner (D-VA) shared that a venture capitalist recently admitted to writing down software investments to zero, largely due to the rapid advancements of Anthropic's Claude. A major law firm also confided it has halted hiring first-year associates because AI can now manage much of the work traditionally given to junior lawyers.

Warner describes the fear of AI-driven job loss as "palpable," even as data from an AI firm suggests widespread displacement hasn't begun. This growing anxiety is fueling a separate debate: who should bear the financial responsibility for the transition.

Warner has a proposal: tax the data centers fueling the AI boom and direct that revenue to support displaced workers. He hasn't yet introduced formal legislation, but the idea is gaining traction as public frustration with AI and data centers mounts.

Nationwide, data centers are facing growing opposition. A bill introduced Wednesday by Sen. Bernie Sanders (D-VT) and Rep. Alexandria Ocasio-Cortez (D-NY) calls for a moratorium on new data centers. The most vocal concerns cite noise, pollution, and soaring electricity costs. Underlying these issues, however, is a simmering resentment—a reluctance to endure the downsides of hosting a data center that powers technology many fear will replace human jobs.

Warner does not plan to support his colleagues' moratorium bill. On stage at the event, he stated, "A data center moratorium simply means China is going to move quicker, and this is one area where we cannot afford to fall behind."

There is no putting the AI genie back in the bottle, he added. While Warner advocates for strict requirements to prevent data centers from passing water and power costs to local residents, he told TechCrunch he believes there is another way for communities to secure their "pound of flesh" and address underlying job loss fears.

"I've long believed the industry has an obligation to help solve this problem and help pay for it, but one question I've been asking is, who should pay?" Warner told TechCrunch. "Should it be the chipmakers, like Jensen [Huang, NVIDIA's CEO]? Should it be the large language model companies? Or should it be firms like Goldman Sachs, which are using these tools to reduce their hiring of first-year associates?"

Ultimately, he concluded, the "easiest place to extract the pound of flesh is probably going to be from the data centers."

This could involve directing data center tax revenue toward training programs for new nurses or funding AI upskilling initiatives—provided there is a "tangible benefit to communities" navigating an economic transition forced upon them by AI companies.

Warner views this as a way to balance the imperative to build data centers with a duty to the communities that shoulder their burdens.

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

Finding a way to link data centers to clear community benefits will be essential, he argues, because otherwise, "the pitchforks are coming out."

The public mood suggests his concerns are valid. A recent NBC News poll found AI has a lower public approval rating than Immigration and Customs Enforcement (ICE), with 46% of registered voters viewing AI negatively versus only 26% positively. In Virginia, this sentiment is manifesting in a proposal to repeal state tax breaks for data center construction, which cost state and local governments nearly $2 billion annually in lost revenue in one of the world's largest data center markets. Warner predicts other states may follow Virginia's lead.

AI and data centers, he noted, are "easy to demonize."