Louisville is extremely lucky (no, we’re not talking about bourbon — but you’re right). Our local media is faring better than most cities.
In recent years, the number of newspapers that have closed or faced severe cutbacks has risen, especially in the United States, where the industry has shed a fifth of its journalists since 2001. This map identifies the locations of newspaper closures from 1996 to 2015:
When local newspapers shut their doors, important stories no longer get coverage and those in power are no longer held accountable. Those changes can make a city seem poorer in terms of culture and government services. But the closure of local news sources can make a city poorer in a literal way.
Newspaper closures and the economy
According to a just-released paper, “Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finances,” spearheaded by Paul Gao, an associate professor of finance at the University of Notre Dame, when the media dwindles, local economics are affected.
The study, which will be presented to the Brookings Institution in July, examined the effect of local newspaper closures on public finance for local governments. Their findings:
Following a newspaper closure, we find municipal borrowing costs increase by 5 to 11 basis points in the long run. Identification tests illustrate that these results are not being driven by deteriorating local economic conditions. The loss of monitoring that results from newspaper closures is associated with increased government inefficiencies, including higher likelihoods of costly advance refundings and negotiated issues, and higher government wages, employees, and tax revenues.
Without watchdogs, government costs go up. A shortage of local, professional, and accountability reporting leads to problems like government waste, less scrutiny, more local corruption, less-effective schools, and other serious community problems.
The study, which tracked the decline of local news outlets between 1996 and 2015, found:
- Costs for bonds can rise as much as 11 basis points after the closure of a local newspaper — a finding that the authors say can’t be attributed to other underlying economic conditions.
- Three years after a newspaper closes, that city or county’s municipal bond offering yields increased on average by 5.5 basis points.
- Stocks lacking media coverage have higher expected returns in the cross-section and lower informational efficiencies.
- A local newspaper closure is a negative coverage shock that could affect public borrowing costs because potential lenders find it more difficult to evaluate the quality of public projects and the government officials in charge of these projects.
- Geographic areas with reduced local media coverage have fewer informed voters and lower voter turnouts, and takes away the incentives of local politicians to work hard on behalf of their constituencies.
Talent attraction and local news
Another way the loss of local media affects the city’s economy is that, without it, it’s difficult to attract talent to local companies. This is a big problem when it comes to millennials (currently the largest generation in the U.S. labor force). According to a Pew report, 56 million millennials were working or looking for work in 2017.
Why is this important? A study by the American Institute for Economic Research showed that around 70 percent of young college graduates don’t just move for a job. They choose to relocate based on quality-of-life factors, like a robust restaurant scene and other city amenities. Local news outlets like Insider Louisville shine the light on these assets and serve as a strong recruitment vehicle. In fact, Insider Louisville has heard from people who have chosen jobs here based on what they read on our site.
Keep our newsroom strong for a stronger Louisville
As a nonprofit media organization, Insider Louisville is committed to informing readers with impactful, public-service journalism so that they can help shape outcomes.
The outlook for local media doesn’t need to be bleak. Help us produce stories that improve local government, attract the best and brightest talent, strengthen the local economy, and tell the world about our world-class art scene and culture. Become a sustaining member today to support local journalism.