Small town economics clash with Big Tech agendas

In which data centers are not new, infant formula is a tricky business, and it turns out cellos are in short supply. From American Public Media, this is Marketplay. In Los Angeles, I'm Kyle Rizdahl. It is Wednesday today. This one is the 21st of October. Good to have you along, everybody. You know, so much of the conversation right now about this economy, and so much of the economy itself, to be honest, is about artificial intelligence, and in particular for us today, data centers. But the reality is that data centers are nothing new. Big tech companies have been building them for decades. Facebook broke ground for one in Prineville, Oregon, back in 2007. Now it's one of Meta's biggest facilities in this entire country. Apple's got a big data center in town as well. And together, local officials say that is $8 billion of total investment. And that money has transformed Prineville. For better, and as Marketplace's Mitchell Hartman reports, not so better. Prineville is a city of 10,000 in the high sagebrush desert east of the Cascades. And this is the sound of its past prosperity. With mountainous pine forests nearby, it once supported half a dozen sawmills running three shifts a day. But by 2010, when Facebook broke ground, Prineville's timber industry was all but finished. Really, Prineville, economically and from a community perspective, was dying on the vine. We had a declining population. Caroline Irvin is Prineville's director of economic development. She says unemployment was near 20 percent. Median income was near the bottom statewide. Fast forward to now, we have a growing population and a thriving community. With unemployment at 6 percent and median income among the highest in the state, Irvin says that's nearly all down to the data centers. They sit up on the canyon rim in a high-security industrial park, emitting the quieter sound of Prineville's new prosperity. They've employed nearly 2,000 temporary construction workers and created some permanent jobs. Approximately 450 both direct and then operational contractors. So that's a really significant number for our community. They've put a lot of people to work. They've changed my life. It gave me a new career opportunity. Jason Beebe is the former mayor of Prineville and a technology trainer. He spent 22 years at a local tire company, then got a job at Meta's data center. I made pretty good money when I was a contractor there. Yeah, the benefit's probably a little better when you're a direct employee for those companies, but there's still good, high-paying jobs there. Meta and Apple have also invested millions in public infrastructure, and they pay millions in fees to local government. But they don't pay much in the way of property taxes. Local officials granted both companies a break under Oregon's Rural Enterprise Zone program. Crook County tax assessor John Solis explains that each company's major structures in Prineville are tax-free on all the improvements, everything except for the land, basically, so buildings, machinery, equipment, and also, like, the personal property, the servers and stuff like that. Assuming the companies meet annual employment and investment thresholds, each building's exemption runs for 15 years. Without those tax breaks, the data center's combined property tax bill last year would have been $31 million. With it? Meta paid, in this last year, $178,000. Apple, they paid $169,000 in property tax. Neither company is paying $169,000. Neither company agreed to an interview. It's not hard to find local data center skeptics. Carl Wilkerson runs Dad's Place, a diner on Main Street. He says the data centers don't generate much business for him, and he doesn't like the changes he thinks they've brought. When I moved here, I wanted the small-town vibe, the old cowboy kind of atmosphere, and I don't see that anymore. Others are worried about the center's power usage, and water usage in a region prone to drought and wildfires. Julie Thompson is one of them. She's a former veterinary manager and current candidate for county commissioner. She admits good has also come from the facilities, and it's landed close to home. My daughter works for Apple. She's been there 10 years, and, you know, without that job, she wouldn't be able to probably still be here and buy her house. But Thompson sees lots of local support for not building any more here. We have a big square footage of our land used up and water and all of that by data centers. Let them go somewhere else. Everybody should share the, I guess, burden of a data center and not just put them all in one spot. Meta's original 15-year tax break on its first data center expires next year. The company's tax bill is expected to jump from just under $200,000 to $4 million, representing more than a quarter of all county property tax receipts. In Prineville, Oregon, I'm Mitchell Hartman for Marketplace. Wall Street today. Meta shares up. A lot of technology stocks up as well. Everything's fine, I guess. We will have the details when we do the numbers. Corporate news of the day is brought to you by Similac, PediaSure, PediaLite, Glucerna, and Ensure. Laboratories, manufacturer of all of the above, said today it's going to spin off its nutrition business. That's how it frames all those aforementioned products. Abbott said, as companies do, that the move will set up each part of the newly formed units for, and this is a quote, maximum success in its respective market. As Marketplace's Stephanie Hughes reports, it may also be a sign of some of the unique challenges facing the infant formula business right now. In addition to baby formula and nutritional shakes, Abbott also makes pharmaceuticals and medical devices and diagnostics. UBS analyst Patrick Wood says it makes sense that it doesn't want to do all of that. Running a consumer goods business is very different from running a medical devices business. It's very different from running a diagnostics company. Wood says with the separation, the spun-off company will deal with retailers and consumer trends, and Abbott can focus on health care. But he says the spin-off also shows some of the challenges around manufacturing infant formula. You have a very emotive category when you have children with pediatrics, right? And so any kind of product quality related issues, it's particularly painful. Abbott has been dealing with litigation over some of its products, specifically allegations that some of its specialty formulas were linked to a potentially fatal illness in preterm babies. Some of that litigation is ongoing, and Marta Wyszynska of Brookings worries that liability will land with the new company. So Abbott might be offloading basically that legal exposure by spinning it off. To me, that would potentially increase the probability that they might decide to shut down that product line. Abbott didn't respond to a request for comment on the litigation or where that liability will end up. And this is all happening at a time of increased regulatory scrutiny of the industry after a nationwide formula shortage in 2022. Pediatrics professor Bridget Young at the University of Rochester says that made clear how concentrated formula production is. When a shutdown happens, it shouldn't compromise the entire national supply chain. But that is exactly what happened. Since then, a federal initiative called Operation Stork Speed has started examining ways to increase the resilience of the formula market. Young points out any changes to regulation that come from that will affect both existing formula companies and new players. I'm Stephanie Hughes for Marketplace. All right, there is another corporate story. Today, it's a bit, well, you decide. Elon Musk says his two biggest companies, that's SpaceX and Tesla, are talking about a merger. That would be rocket satellites, AI and social media merging with electric vehicles and solar panels and batteries. Marketplace's Sabri Beneschel reports. OK, did you see the video of the Tesla car that drives up a ramp and then turns upside down and then floats down through the air on thrusters? Yeah, those were SpaceX thrusters. It's just the most recent. collaboration between Tesla and SpaceX. Garrett Nelson is a senior equity analyst at CFRA Research. SpaceX and Tesla, and I should say I do own a few shares of Tesla, are also building a joint chip plant. So these companies already do a lot together. And the argument is they could do a lot more under one corporate roof. On the SpaceX side, Tesla is going to be a key supplier, especially when it comes to its solar panel and battery manufacturing. Seth Goldstein is a senior equity analyst at Morningstar. That can be a key contributor to SpaceX's ultimate plans to put data centers in space. In space, there's no power grid to strain and no neighbors to enrage. SpaceX, meanwhile, is going to be supplying Tesla with AI and satellite internet for its cars and robots. So you put it all together and you get one company making chips, plus the space data centers that use the chips, plus the spaceships that carry the space chips, plus the AI that runs on the data centers and all the robots. And the cars that use the AI. So by fully vertically integrating here, Tesla and SpaceX. can then capture the value of these upstream industries. There is one other benefit for Elon Musk specifically. The SpaceX governance structure gives Musk a tremendous amount of control, and I think he would like to extend that similar control to Tesla. Jill Fish is a professor of law at UPenn. Tesla and Tesla shareholders would lose control. Tesla's cash would become SpaceX's cash. SpaceX's priorities would become Tesla's. And all of it under the control of the world's wealthiest man. He's going to be able to exercise that power over an increasing slice of the world's economy. And do so, Fish says, with not a lot in the way of accountability. In New York, I'm Sabri Beneshour for Marketplace. The Census Bureau told us last week that retail sales in September were up 6.3 percent year over year. Which, yes, sure, some of that was driven by spending at gas stations. Remember, retail sales are measured in straight dollar amounts. But other spending is up, too, including at Knoxville Fine Violins. Wesley Rule and his wife, Lauren, proprietors. We've been very busy, especially with the back-to-school season. We have a lot of new orchestra students starting in public and private school, as well as a lot of homeschool families. And we provide a lot of instruments to those kids so that they can have rentals at home to practice on and to learn on. That keeps us really busy. We also have a lot of schools that do last-minute repairs on instruments that they themselves own and let the kids play on. Sometimes, you know, they open up a case after the summer is over and realize, oh, these instruments aren't playable. So we get last-minute calls and we do lots of last-minute repairs trying to get those ready as well. The biggest problem that we've had is our cello selection, especially our mid-to-intermediate and entry-level professional range. There used to be a lot of German workshop cellos and German-made cellos that were kind of in that $10,000 to $20,000 range retail. Those cellos have kind of dropped off the market. We're in the process of working with a couple of Italian distributors, as well as just our own shop. We're going to make cellos as well. You know, we have another luthier that works for me. We're going to have to start taking time to just make some cellos ourselves so that we can offer them for sale. But that's, you know, along with all the other work that we do here, it's probably. It's probably a year in the future before we're going to have those ready. As far as things that are going on at the shop that are big news for. Big news for us, at least. We're going to go to the International Bluegrass Music Awards. And it's always. We went last year. It was a lot of fun. It's a little bit of a vacation for me and my wife as well. We get to go and just relax a little bit, set up a table, and just sit there and watch players enjoy the instruments that we have to offer and the bows that we have. And we get to kind of go around Chattanooga, which is kind of fun. It's a nice, cute. It's a cute little town. So we're looking forward to that. Wesley Rule, Knoxville Fine Violins, Knoxville, Tennessee. Coming up. You know, this is something they don't teach you in econ grad school. Which is why we're here. Hello? First, though, let's do the numbers. Dow Industrial's up 360 points on the day. 7 tenths percent, 52,856. The Nasdaq jumped 278 points. More than 1 percent, 26,702. S&P 500 accumulated 44 points. About 6 tenths percent, 7,757. Had earnings reports from some companies like SpaceX and Capital One. SpaceX up about 7 and 8 tenths percent on the day. Capital One shares climbed about 2 and 1 half of 1 percent. And eBay is cutting 1,000 jobs. Represents about 9 percent of that company's workforce. Marks and eBay's second round of layoffs this year. Shares of the company nonetheless rose 1 and 4 tenths of 1 percent. Bonds down. Yield on the 10-year T-note up 5.12 percent. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. When Neela Richardson and I were in India last month for our series, The Age of Work, Neela is, as you know by now, the chief economist at ADP, there was this thing that she kept saying. We're chasing youth. Today's youth are the future of tomorrow's economy. That future specifically is the prime-aged workforce, people 25 to 54. So over the past two years, we've gone to five cities in four countries on three continents. Kai, what's happening? Welcome to paradise. Well, in Mumford. This is Mr. Jung. We are at Airborne Trampoline Park in Linden, Utah. It is hours and hours of audio. Some of which you've heard, most of which you haven't. I'm seeing my first pickleball game ever, by the way. How about we walk on the sidewalk? That might even be easier. Nothing like an open-air butcher shop, I'll tell you that. As historically rich countries like the United States and the UK and Japan, as they get older, that prime-age workforce is increasingly going to be in the global south. That's why Neela and I went to India last month and to Vietnam earlier this year. But we did our first interviews about how to get there. We did our first interviews about how changing demographics are reshaping the global economy two years ago. And since two years is a long time, we thought a review might be in order. My name is Melissa Ellis, and I live in Crossville, Tennessee. Our first stop was Cumberland County, Tennessee. It's got one of the oldest labor forces in the United States, in part because of transplants moving in to retire. It's got nice weather and golf. And those retirees have brought economic opportunity with them. But also obstacles for Tennessee locals like Melissa. The truth of the matter is, is we have been priced out of our home state. That was true when we talked to her in October of 2024, and it is true now. She's got four kids and four jobs. I always called them side hustles, and it just didn't seem honorable considering the fact that they did help pay for our groceries. They did pay for our electric bill. They did pay for our rent. So now she calls them something else. They are small businesses. Her main small business is working as a producer and a promoter for live events. But I'm making the same amount of money as I did before COVID, and my rent has gone up since then. My cost of living has gone up since then. I've had a car that said, I'm done. And her retirement plan? I'm going to work until I'm dead. I have no retirement. So that's Melissa Ellis in Cumberland County, Tennessee, a place where older Americans can get a job. And American-American families are driving up the cost of living for working-age people. More than 11,000 people hit retirement age every day in this country. But you can still find places with growing populations of prime-age workers. My name is Kat Benesch, and I run Kat's Cuts Hair Studio here in Eagle Mountain, Utah. Utah County, Utah, is among the fastest-growing regions in this country. It's also one of the youngest. Median age is around 27. Kat's salon is in the basement of her house because there's a shortage of commercial real estate space on account of how fast the city has grown. And since we were there last April? We have expanded the salon, and then also we actually had twins. Kat's twin baby girls are three months old now. She's back working 45 hours a week. And it actually was more affordable for us to have my husband stay home and take care of the twins, and us continue to run my salon. And me? We work full-time and doing hair. I should say that even in that younger economy, there are storm clouds. At Tyson's food plant, closed this month, more than 700 people are out of work. And I actually have, like, two or three clients that lost their jobs from it. We also went to the United Kingdom, where by 2050, one in four people are going to be 65 or older. That's not going to happen here in the United States until 2060. So to keep growing its economy with the people who are. there, the U.K. has to keep people in the labor force longer. We talked to Stuart Morris. He was 63 when we met him on a park bench in London. Not ready to retire. Still got lots to give. When we talked to him, he had finally landed a job as an I.T. consultant after being unemployed for two years. What I had to really think about was that it was that feeling of invisibility. And now? I'm 64. It was my birthday last year. Last week. He's still got that I.T. consulting gig at a law firm, but it is a contract job with an end date early next year. You know, it's been getting increasingly difficult since I was 50 to slide into new roles. It was hard enough to find this one. So if the consulting firm he works for can't put him in a new job? And I am on their bench. That reduces what they pay me substantially, which is. Not a great prospect. Not a great prospect for him or for the U.K.'s economy, which needs people like Stuart to keep driving its economy. So those are some of the updates. Neela Richardson has been listening. Hey, Neela. Hi, Ty. All right. Two long years, literally around the world. What are your big takeaways? Well, I have three. Okay. One, growth is really messy. You know? This is something they don't teach you in econ grad school. Growth is just an equation that's really buttoned up. But the equation cannot capture how messy real growth is. The second thing I learned was how connected these stories are. I mean, connected on a personal level. We can talk about the global economy. We can talk about trade and the US being Vietnam's primary market for their goods and India's being a primary market for US talent. And a lot of that is already in the discourse. But what occurs to me is how connected our personal stories are. The I'm going to work till I die in Cumberland, Tennessee is just as pervasive as in Mumbai, India. But the third thing, I just had a conversation with my 18-year-old that reflects this third learning. He said, I just want to do something that matters. Jobs, we don't want them to define us, but they give us purpose. And so that's another thing that I learned from this. Yeah, I like that last one. That resonates with me. Can we talk about that? One of the things that hit me through this whole thing is how government policies and sort of exogenous factors to actually running a business can affect even the smallest, tiniest businesses halfway around the world. The manufacturing plant we went to in Vietnam where he couldn't air the whole plant. And this is in Vietnam, mind you, because of tariff policy in the US and Jay Shroff in Mumbai and his sister Neha, who had to change the shipping routes because of the war in Iran. It folds into even the tiniest, smallest businesses, and they're basically powerless. They just got to kind of ride with it. Yeah, it's almost like the global version of the butterfly effect. Yes. Yeah. Like a little vibration. But these aren't little vibrations. Let's be honest. These are sweeping changes in how policy has been executed. And they're being felt in a really deep way around the world. This is part of that global connectivity, whether it's policy, whether it's an extreme climate event, whether it's an amazing, new, promising technology that we call AI. All of it connects all of us. And that is the demographics of this workforce. And that's what we're talking about. We're all affected by things that are happening around the world, whether we see them or not. You know what hits me every time that I tell people about this series? We got back from India and everybody was like, how's India and this and that. And so I told them about the project and how in 50 years, less probably, the economic advantage, if you will, among countries with prime age workforces who are on the rise is going to be really substantial. And they had no idea. And it hadn't even, it hadn't even entered their, their, their, you know, thought process. And I think probably we're not ready for that. You know, Kai, I think your perception on our recognition of a slow moving tidal wave is spot on. It's the fact that age and ageism, you know, it's the longest moving trend out there. It was almost like it's moving so slow. We didn't recognize it. I know time flies for me. I, I feel I'm still 25, but my birth date tells me differently, but we, we don't recognize these changes, but that doesn't mean that they're not meaningful and shifting the ground underneath our feet. And because we haven't recognized it, we haven't really prepared for it as a global economy. And I think that's what's next. How do you prepare for what is the eventuality of our century, that our demographics are changing and they're affecting not just the economy or our own, but our own personal lives. Neela Richardson, chief economist at ADP, our partner in this series. It's been so good traveling with you, Neela. Talk to you soon. It's been a pleasure. Thank you. This final note on the way out today, picking up on that last bit in Sabree's story about the richest man in the world holding sway over an increasing slice of the global economy with very little supervision. There is a political corollary to that that cannot be ignored. Politico posted a story last night about congressional Democrats investigating Musk and his immense economic power should they win in a couple of weeks. Musk on the social media site that's owned by the artificial intelligence and rocket company that he runs, that he wants to merge with the electric car company that he runs. He said this, and this is a quote, live by the sword, die by the sword. Those who pick fights with me should understand I will fight with you. I will fight with you. I will fight with you.