SpaceX is coming to town with $100 billion in investment. That’s supposed to create 3,000 new direct jobs and 8,100 new indirect jobs.
In response, Louisiana has rolled out the red carpet with an unprecedented incentive package to land the deals.
But what do these numbers actually mean? I thought it was worth taking some time to provide some context, the numbers behind the numbers, so to speak.
Let’s start with those 3,000 new jobs. If SpaceX hires all those people, it’ll have a massive impact on Vermilion Parish, which currently only has about 13,000 jobs — total. Plus these new positions are touted as averaging $92,000 in annual salaries, which is almost double the roughly $50,000 current average in the parish.
Though it could take some time for that impact to be felt. Based on the milestones in SpaceX’s deal with the state, it won’t be until 2031 that SpaceX hits its first 1,000 jobs, for example. From now until then, the average salary of these jobs ranges from $61,000-79,000, with most of them likely construction rather than launch-related.
SpaceX almost certainly aspires to move faster than these milestones — they’re an ambitious company. But that ambition also creates unknown future risks. Namely: will Elon still need all those jobs if he has super-intelligent AI and a robot army?
That might sound glib, but I’m being serious. Part of what we have to remind ourselves is how unprecedented what SpaceX is setting out to do actually is, as this StarBase is literally one of the largest experiments in human history.
Any of these numbers should be treated as statements of intent and ambition, rather than hard facts. Because I don’t think anyone can claim they know where this is all going to actually end up.
SpaceX could hit 3,000 jobs in five years instead of 10 and keep growing, or they could never hit it at all. Either because they failed, or because they succeeded so wildly in their other endeavors (AI, specifically), they’ve automated away most of those jobs. Or because they’ve left us all behind on their way to Mars.
Which brings us to the 8,100 new indirect jobs. An indirect job is created as a result of new money entering the local economy causing growth elsewhere.
For example, any new or existing local company that supplies goods or services to SpaceX during or after construction could create new jobs as a result of Starbase Louisiana. Also, all those new higher-paying jobs mean there’ll be more money in people’s pockets to spend in local restaurants and stores, which can both help grow existing businesses and spark the establishment of new businesses.
The actual math behind indirect job calculations is based on input-output models like IMPLAN and RIMS II that attempt to boil down all the complexity of how new money entering an economy ripples through it into a single number. For example, new manufacturing jobs supposedly create 1.5 – 2.5x new indirect jobs, depending on which model you use.
But the numbers these models generate are essentially unproveable.
There’s no way to track if they actually match real-world outcomes for any particular project. And they’re notorious for giving significantly different results based on which model you use and ignoring regional variation, which matters when an outlier project like this enters a rural economy. So really, they’re just fancy spreadsheets used to justify incentive packages and make press releases sound more impressive.
That doesn’t mean SpaceX’s investment won’t create indirect jobs. It might even create more than what’s being claimed. Especially as Acadiana, in theory, should be better positioned than most regions our size to absorb more of this impact because of the spare capacity we have in our oil and gas service sector.
But it’s too early to know exactly how much of this kind of indirect impact this project will have. And we shouldn’t put too much weight in how real any of those projections actually are.
This new competition for labor could hurt existing businesses. While most of the coverage around Starbase has been around creating jobs and positively impacting the local economy, their entry to the market will likely hurt some number of existing businesses.
That’s because SpaceX is going to be hoovering up talent, which will increase the cost of labor. While that should be great for the people getting hired, whatever jobs they’re leaving will likely struggle to retain or replace that talent without their costs going up.
Acadiana as a whole has actually experienced this dynamic in the past through oil boom cycles, when local employers outside of the oil and gas industry often struggled to retain staff against higher oilfield wages.
Companies arguably most at risk are those with skilled trade employees like welders and technicians that aren’t going to be involved in SpaceX. All of a sudden, their supply of available labor is likely to shrink, while salary expectations soar.
Ultimately, a core part of capitalism is creative destruction. New large market entrants will always lead to some amount of gains and losses, shifting market conditions for all businesses.
So we won’t actually know how big of an impact Starbase will have on jobs for some number of years to come.
But in a weird way, the more successful SpaceX actually is the more impact they’ll have on our economy, both for better and for worse.
