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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

April 22, 2013 at 10:04 AM

Google’s Southern strategy

The first paragraph from the Charlotte Observer’s story might make one think that the South is getting ready to stick it to the high-tax, high-regulation West Coast again: “Google on Friday announced a $600 million expansion of its Lenoir data center, a development state and local officials trumpeted as proof of North Carolina’s attractiveness to high-tech companies.”

Not exactly. Remember that Google is expanding its campus in Kirkland with plans to hire another 1,000 engineering and other highly skilled employees. The North Carolina deal promises 150 jobs, people to babysit the vast complex of servers and other equipment. Winning Google there in the first place required 30 years of state and local tax breaks valued at $260 million, one of the priciest incentive packages in state history. Not only that, but the rural location is hours from Research Triangle Park, where the state is a formidable competitor with talent and start-up ideas fed by the University of North Carolina, Duke University and North Carolina State University.

Needy states bid against each other for data centers, which can be the slag heaps of the technology business with serious issues about high energy use, greenhouse gas emissions and whether the few jobs created are worth the massive giveaways the companies receive. In the “Don’t Be Evil” mode, Google has promised to work with Duke Energy to use renewable energy. Duke is a major nuclear-power utility.

In reality, Google is clustering its engineering and executive talent in or near attractive cities. For example, the company is adding space quickly in San Francisco, including near the Embarcadero. You get what you pay for, and quality urban centers are increasingly magnets for the most sought-after employees.

North (and South) Carolina deserve our sympathy, while we should keep an eye on all competitors. Both states were devastated by China’s entry into the World Trade Organization. Hundreds of thousands of decent-pay jobs in textiles, apparel and furniture manufacturing were lost, most in rural areas. The recession left the Carolinas with some of the highest unemployment rates in the country (Charlotte, as the nation’s No. 2 banking center was severely hammered, losing one bank headquarters). No wonder the heat is on officials to bring in anything to add some work — there are only so many jobs at the Wal-Mart Supercenter.

More than ever, North Carolina is divided into the better-off Raleigh-Charlotte I-85 corridor, with Research Triangle, banking and government — and a struggling everyplace else. In South Carolina, there’s the “Autobahn” of BMW and its suppliers around Greenville-Spartanburg, the growing Boeing presence in North Charleston, government and education in Columbia — and everyplace else. In March, unemployment stood at 8.4 percent in South Carolina and 9.2 percent in North Carolina. Washington’s was 7.3 percent and Seattle-Bellevue-Everett at 5.5 percent is nearing what economists would consider full employment.

And Don’t Miss: Five failures that show sometimes even Amazon checks out | Wired

Today’s Econ Haiku:

Make Sodo be cool

Fine plan if it doesn’t chill

The good jobs there now

0 Comments | More in Boeing, Google

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