Zak Podmore’s impact as a reporter for The Salt Lake Tribune went beyond the usual sensational articles. While he didn’t topple a corrupt mayor or expose an abusive religious institution, a 2019 story he wrote about San Juan County, Utah, shed light on the county’s payment of excessive lobbying fees to a single law firm. It was revealed that the firm had overcharged the county, the poorest in the state, by $109,500. As a result of Podmore’s investigation, the firm returned the money. The significance of this story, despite not involving billions of dollars, struck a chord with me. In just one article, Podmore managed to recover a sum that was triple his annual salary.
The decline of local news has been a well-documented issue over the past two decades. On average, two newspapers close each week, leaving 1,800 communities without local news sources. Those papers that survive often operate with skeletal staffs as their owners, frequently private-equity firms, look to cut costs. According to a Pew Research study, the number of newspaper newsroom employees dropped by 57 percent from 2008 to 2020. This has resulted in the creation of “ghost newspapers” that barely cover their respective communities.
Over the past 15 years, I have been actively involved in efforts to reverse this troubling trend. The threat of news deserts to American democracy has been a common topic of discussion. Democratic self-government relies on an informed citizenry who are aware of the actions of public officials. This is only possible with a vigilant press. Research has linked the decline of local news to decreased voter participation, increased corruption, heightened polarization, and the election of more extreme candidates. I can recite persuasive speeches on this subject in my sleep, complete with quotes from Thomas Jefferson. However, I have recently realized that I have been overlooking a more pragmatic argument: funding local news would prove to be a worthwhile investment.
Unlike other seemingly unsolvable problems, reversing the demise of local news won’t require a significant financial investment. Journalists are not highly paid individuals. Assuming an average salary of $60,000, it would only cost approximately $1.5 billion annually to sustain 25,000 local-reporter positions. This estimation represents the number of positions that have disappeared across the country in the past two decades. To put it in perspective, this amount accounts for just two-hundredths of a percent of federal spending in 2022. Personally, I believe that this would be a small price to pay to preserve American democracy. The incredible aspect is that this investment wouldn’t truly be a sacrifice at all. Directing more public or philanthropic funds towards supporting local news would likely generate financial benefits that far exceed the initial cost.
When officials are not held accountable, they often exploit their positions to benefit themselves or their allies at the expense of taxpayers. For example, after the local newspaper in Bell, California shut down, several city officials took advantage of the lack of scrutiny. They approved exorbitant salaries, including $787,637 for the city manager and $457,000 for the police chief. Eventually, the Los Angeles Times exposed the corruption, leading to the imprisonment of those involved. Prosecutors estimated that the inflated salaries cost taxpayers a minimum of $5.5 million. If just one reporter, with an annual salary of $60,000, had been present at the municipal meetings, the city could have potentially saved millions of dollars.
Journalistic investigations also have the power to trigger government inquiries into private entities, resulting in fines that benefit the public. When the Tampa Bay Times uncovered a battery recycler’s harmful practices, regulators fined the company $800,000. Similarly, a ProPublica investigation into a firm’s questionable mortgage-backed securities prompted the Security and Exchange Commission to impose fines totaling $435 million. Analysis of over 12,000 entries in the Investigative Reporters and Editors Awards revealed that roughly 10 percent resulted in government fines, with twice as many prompting audits.
Moreover, local news organizations can directly impact consumers by forcing better behavior from private institutions. MLK50, a local newsroom in Memphis, collaborated with ProPublica to expose Methodist Le Bonheur Healthcare’s practice of suing thousands of impoverished individuals for unpaid hospital bills. As a result, the faith-based institution forgave nearly $12 million in debt.
Of course, the financial impact of journalism is not always direct or immediate. It often has significant indirect effects. A study on toxic emissions at 40,000 plants found that when newspapers reported on pollution, emissions in those areas dropped by 29 percent compared to plants that were not covered. While the ripple effects were not quantified, it stands to reason that residents in less polluted areas would experience fewer health problems, resulting in reduced medical costs and less lost work time. Another study by Pengjie Gao, Chang Lee, and Dermot Murphy examined bond offerings in communities with and without local news coverage between 1996 and 2015. The study concluded that borrowing costs were higher by five to 11 basis points in communities with inadequate coverage, leading to additional costs averaging $650,000 per bond issue.
One academic researcher went a step further in tracking the economic consequences of local news. James Hamilton, a professor at Stanford University, studied a series by KCBS in Los Angeles that uncovered flaws in the restaurant-inspection program. As a result of the expose, L.A. County implemented a policy requiring restaurants to display their inspection scores. This led to a 13.3 percent decrease in hospital admissions for food poisoning in the county. Hamilton estimated savings of around $148,000. In another case study, Hamilton analyzed a series by the Raleigh News & Observer that revealed how the North Carolina criminal-justice system failed to adequately track individuals under supervision. The investigation found that 580 people on probation were responsible for killings between 2000 and 2008. Once the state implemented reforms, the number of murders committed by individuals on probation declined. Using the statistical “value of human life” employed by the U.S. Department of Transportation, Hamilton calculated that the policy changes saved society approximately $62 million in the first year alone. The production cost of this series was only about $200,000.
Ideally, it would be the federal government, with its long-term perspective, that would invest in local news. The Rebuild Local News coalition, where I serve as president, supports legislation that would provide a refundable tax credit to news organizations employing local reporters, as well as tax breaks for small businesses that advertise in local news. A new version of this bill has been introduced in the House of Representatives by Claudia Tenney, a Republican, and Suzan DelBene, a Democrat. Philanthropists dedicated to making a high impact should also consider investing in local news, given the potential societal returns. It is challenging to quantify the exact financial benefits that would be generated for the government and consumers by revitalizing local news. However, it is equally challenging to deny that such an investment would yield substantial returns. Preserving democracy would simply be a bonus.
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