How the decline of local news is costing us
Less accountability--or even the perception of it--can make government borrowing more expensive.
Loyal readers—I made a last-minute pivot on this week’s newsletter after news broke Friday that we are losing yet another local news outlet. I promise this connects to public finance and the cost of government, so bear with me.
A local newsroom disappears overnight
While this is a story that most readers across the country have experienced in their home cities and towns, this week’s focus is on Washington, D.C. On Friday, NPR affiliate WAMU 88.5 announced it had shut down the beloved local news site DCist and laid off more than 15 people at the station, including those who contributed to DCist. Nearly six years ago, WAMU had come to the rescue and acquired the DCist when its then-parent company had announced plans to close. The DCist reporters quickly turned into radio reporters as well, making WAMU the best and most popular station in the D.C. region.
Talented journalists have voluntarily left as of late, most recently its top editor and former Governing colleague Natalie Delgadillo. That's certainly a big warning sign that something is amiss, but I was still surprised to see Friday’s announcement.
Unlike most media layoffs, this came with no warning or wind down period for reporters. “A curt email on Thursday followed by a short Friday morning announcement undid years of work,” said the WAMU Union in a tweet on X. “That’s thousands of daily stories, countless hours of work, and many, many community voices… all gone.”
Let’s get my bias out of the way before I continue: As a journalist, survivor of a similarly surprising layoff at Governing Magazine, former D.C. local news reporter, and daily consumer of DCist/WAMU news, I definitely have a point of view from my own experience. Still, I think it’s fair to say that these news layoffs are the worst thing to happen to the District’s local news scene since the Washington Examiner (where I worked from 2010-2012) shuttered its local coverage in 2013.
I’d wager that everyone reading this newsletter lives in a place where their main source for local news-you-can-use is a shell of what it once was. That’s certainly true for every place I’ve lived from my hometown in California, to the D.C. area, to where I now live in Maryland.
For example, the paper of record in my region is my only source of city-focused news about a publicly financed baseball stadium project in the county seat. While the reporting has been informative, it has not been probing because the reporters are spread thin. I often wonder what we’d find out about how our tax dollars are being spent if newsrooms looked like they did 30 years ago.
The cost of losing the Fourth Estate
Because D.C. is the home of the federal government, local news can easily get drowned out and deprioritized by the media outlets there. Fewer reporters with eyes on city hall—in any city—is bad for accountability. The press is called the Fourth Estate for a reason and in fact, there’s even research to prove that it costs cities (and ultimately, taxpayers) financially when local news outlets close.
Research in 2018 from University of Illinois at Chicago and University of Notre Dame found that municipal borrowing costs increased by as much as a tenth of a percent after a newspaper shuttered, even when accounting for declining economic conditions. For the local governments included in the study (counties with three or fewer newspapers), that translated to millions in additional costs between 1996 and 2015.
Counties with just one or two local papers paid the biggest penalty because there weren’t enough media outlets to absorb the shock.
Researchers also found a correlation between newspaper closures and higher government wages and tax dollars per capita.
From my Governing archives: When Newspapers Close, the Cost of Government Goes Up
It’s an intuitive relationship: Fewer government reporters nosing around in city halls and statehouses means less daily accountability for government officials. Less daily accountability means that slipups—whether intentional or not—can go on for months or even years before they get flagged by an auditor.
Consider the beats of the following reporters in D.C. who have been laid off:
Availability of information matters a lot in the municipal market. Previous research has found that frequent disclosures and financial transparency can reduce the cost of borrowing. That means the reverse can be true: The 2018 study on newspaper closures noted that “potential lenders have greater difficulty evaluating the quality of public projects and the government officials in charge of these projects.”
Perception also matters to bond investors. Later work by the University of Chicago’s Center for Municipal Finance (which produces the Public Money Pod) has connected bond trading prices to investor sentiment. From my Route Fifty archives:
Bigger picture…it’s the first time market stakeholders have been able to quickly assess changing sentiment about a government’s fiscal health. For instance, looking at the current data offers clues about how investors are reacting to work-from-home trends playing out in different parts of the country, with places that are seeing more remote work, like San Francisco and Seattle, sliding compared to the overall index.
Filling the void
It’s been one of the worst years for the media sector since the 2008 Financial Crisis, according to an analysis by Fast Company. News layoffs have made up a fraction of the losses but they’re on the rise in part because of total shutdowns.
Newsletter platforms like
have succeeded in part because of these developments in the media world. But aside from the lucky few, it’s an income supplement for writers rather than a replacement. Moreover, the content isn’t subject to the standards required by newsrooms, so readers have to trust that writers are doing their due diligence on the facts. (One of the reasons that I am so link heavy in my posts!) And let’s face it—by and large, newsletter writing is not original investigative reporting. I use this platform to add a fiscal lens and my perspective to the news but I’m not trying to break any news.I don’t know what the answer is to keep governments accountable on a daily basis. But I do know that the problem will cost us.