The AI boom’s benefits may be reaching ordinary Americans through construction jobs, tax revenue and consumer use, not just through the technology’s effect on office work. Noah Smith makes that case in a new essay, while acknowledging that data centres bring costs as well as gains.
Watch Desk analysis
What happened
Smith argues that the data-centre buildout is supporting construction employment and wages, bringing tax revenue to local and state governments, and adding to economic demand. He also points to consumer use of AI as a source of value beyond the jobs created to build the infrastructure.
The argument is a direct rebuttal to Paul Krugman’s view that AI’s benefits have barely reached ordinary Americans. Smith says the balance is not settled: data centres can strain electricity grids, create noise and crowd out other economic activity. His essay draws on employment, wage and tax examples, and argues that local governments can seek more from data-centre developers through taxes, fees and community-benefit agreements.
Why it matters
The debate over AI’s economic impact often gets reduced to a tally of jobs created or displaced. Smith’s case widens the ledger: construction work, local public revenue and consumer utility all count, while grid pressure and the use of scarce labour count against it. That is a more useful question than whether AI is simply “good for jobs”.
His argument also puts choices for local government in view. If data centres bring costs as well as investment, communities can negotiate taxes, fees or commitments to local infrastructure and services. Whether the benefits outweigh the costs will vary by place, and the essay does not settle that balance for every community.
Our read
Smith makes a case worth testing, not a verdict to rubber-stamp. His most useful move is to separate the data-centre construction boom from the consumer benefits of AI software, then ask who receives the gains and who bears the costs. Counting both is less tidy than declaring a winner, but it is closer to how the economy actually works.
What to watch
- Whether construction employment and wages continue to grow as data-centre investment expands.
- How local governments structure taxes, fees and community-benefit agreements.
- Whether consumer use of AI produces durable, broadly shared benefits alongside the costs of the buildout.
Discussion spark: Should local communities demand stronger commitments from data-centre developers, or risk deterring investment that could bring jobs and public revenue?
Sources and evidence
- What the AI boom is doing for Americans – Noahpinion (5 October 2026, 08:12 UTC)
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