Thanks to Good Government Policies & a Strong Wind Energy Sector, Iowa’s Booming Economy Attracts Facebook, Microsoft

Aug 6, 2014

Iowa's robust wind energy sector has helped attract investment from Facebook and Microsoft, who are building massive data centers in the state that'll be powered by clean energy. Photo credit: Alessia Pierdomenico/Bloomberg

Though it might not be the first thing that comes to mind when you hear the term “good government,” Iowa is, in fact, an example of a state that is supporting its economy by working with businesses to attract investment and create jobs.

Perhaps nowhere is this commitment to free enterprise more apparent than in the Des Moines metropolitan area. It takes about 20 minutes to make the drive from Des Moines to Altoona, which recently garnered a significant amount of media attention thanks to a technology giant’s announcement that it would expand its presence there.

Facebook, it turns out, had long mulled opening satellite buildings in Iowa, a state whose 4.4% unemployment rate is significantly lower than the national average of 6.2%. Aside from its strong labor market, Iowa has also benefited from initiatives undertaken by its governor, Terry Branstad, who has championed a number of programs aimed at drawing strategic investment in the state. Last year, for example, Branstad headed to California, where he urged business leaders to boost their presence in Iowa, the Associated Press reported. 

For its part, Facebook representatives said the company’s decision to build a remote data center in Altoona was spurred by, among other factors, the state’s robust renewable energy sector.

With slightly more than 3 million residents, Iowa ranks only 30th among all states in terms of population, according to the U.S. Census Bureau. Yet the American Wind Energy Association pegs the state’s installed wind capacity at just under 5,200 megawatts—the third highest such level in the U.S. Iowa’s wind power industry, moreover, provides 27.4% of the state’s total electricity needs, placing the Hawkeye State ahead of all other states. 

Additionally, Facebook cited Iowa’s workforce as yet another motivating factor. “We’re excited to have found a new home in Iowa, which has an abundance of wind-generated power and is home to a great talent pool that will help build and operate the facility,” Jay Parikh, a vice president of infrastructure engineering at the social network, said in a statement.

The Menlo Park, California-based tech giant also teamed with a local utility to develop and build its own wind turbine system capable of supplying electricity to the Altoona data center, explained Vincent Van Son, a Facebook data center energy manager. “When we settled on Altoona as the location for our fourth data center, one of the deciding factors was the opportunity to help develop a new wind project in the state,” Van Son wrote in a message.

“The project brings additional investment and jobs to the region, and in effect it makes it possible, on an annualized basis, for 100% of our energy needs to be met entirely with one of Iowa’s most abundant renewable resources,” he added.

Nonetheless, Iowa has done more to attract investment than simply cultivate its wind energy sector. According to the Iowa Workforce Development, lawmakers have also approved a spate of enticing incentives and tax breaks for companies that hire state workers and invest in depressed economic areas.

Indeed, it was these sorts of incentives that prompted Microsoft to develop its next $1.1 billion data center in Iowa instead of Washington, Erik Smith wrote in the Seattle Times. The Washington State legislature had failed to extend high-tech tax credits, Smith reported, which enabled Iowa to swoop in and offer the Redmond, Washington-based technology company roughly $20 million in tax incentives. According to the Cedar Rapids Gazette, scores of high-paying jobs will result from the deal. 

As Iowa continues to lobby business to set up shop in the state, it is also working to enhance its workforce. Late last year, Branstad embarked on an initiative that seeks to draw military veterans to the state, the Des Moines Register reported. By employing such an all-encompassing approach to stimulating its economy, proponents argue that Iowa is well on its way to reaching the governor’s lofty goal of creating 200,000 new jobs in just five years.

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