A brief professional interlude: Readers of this newsletter, or followers who know me from online generally, probably do not know that these days I am the director of policy at Rebuild Local News, the leading U.S. nonprofit that advocates for subsidies for local news. I took the job after taking a buyout from the Los Angeles Times.
This newsletter is usually more of a scratchpad for my other obsessions (I read a book a week and am currently on a diet of Garry Wills and Saul Bellow). But sometimes I also write about the state of today’s information ecosystem. This subject reliably produces pieces with lighthearted and optimistic titles like “Journalism’s fight for survival in a postliterate democracy,”1 “AI could cause newsprint to outlive the hyperlink,”2 or “You couldn’t create a more anti-news internet if you tried.”3 Infopessimism resonates with people, who will share such essays along with helpful comments like “smart but depressing,” “ugh” or sometimes even “ugh!!” Who’s to argue? Conditions in the trenches of the info wars are indeed ugh and have been getting ughlier overall.
But the poison pen of the media critic is not well suited for the actual work of media reform, which is earnest, practical and — are you sitting down? — produces good news from time to time.
This week is one of those “good news” times.
One of the coolest things I’ve been working on recently is California Assemblymember Christopher Ward’s Assembly Bill 2222,4 called the Community Newsroom Employment and Workforce Sustainability Act (the Community NEWS Act for short). This week, supermajorities in both the Senate and the Assembly voted to send AB 2222 to Gov. Gavin Newsom’s desk.5
AB 2222 is a local journalist employment tax credit and would be the largest local news subsidy of its kind in the United States, generating more than $40 million a year to make it cheaper to employ journalists at every kind of outlet covering every part of the state. (Details here.6) Bills like these have been snowballing in legislatures across the U.S.,7 and this one is the biggest and baddest yet.
AB 2222 would be fully funded by taking away California’s corporate tax deductions for executives who make more than $1 million a year. Is it sad that California taxpayers would stop subsidizing the salaries of a handful of overpaid CEOs so the state tax code would instead keep thousands of local journalists on the job covering your local schools, city councils and community life? It is not sad. Practically every local news association and journalist union in the business have endorsed the idea because it rules so hard.
A journalist employment subsidy is the answer to one of the simplest and most devious math problems in local media: MC > MR. At almost every local news outlet these days, the marginal cost (MC) of hiring a local journalist is likely to exceed the marginal revenue (MR) that journalist’s work brings in via ads, subscriptions, philanthropic grants, events, so forth.
MC > MR is a bad place to be, especially compared to MR > MC, which is where the revenue generated by hiring a new journalist exceeds the cost. When MR > MC, business is good: Hiring more journalists would mean getting more money, so you end up with more journalists. MR > MC is the magical condition in which jobs are “created.”
But when MC > MR, hiring more journalists means more bankruptcies. It is math. You are losing money with every extra reporter you hire to cover City Hall. So you stop hiring reporters to cover City Hall. Troublingly, when MC > MR, profits actually increase if you lay the City Hall reporters off. This condition is exactly why news outlets of all kinds are increasingly reliant on foundation grants to plug the gaps.
Here’s what would make the math make better sense: An employment subsidy that lowers the marginal cost of employing a journalist. This should be done for lots of reasons, but most importantly because local news acts like a “public good” with all sorts of positive side effects, like lower bond prices from less wasteful government spending, lower loneliness, higher civic engagement.8 This stuff benefits everybody, even the people who don’t directly consume local news, who are probably getting it filtered to them via AI and social media without paying.
The rub in economics is that the money for a subsidy always has to come from somewhere. In AB 2222’s case, decreasing the marginal cost of employing thousands of local journalists would be funded by increasing the marginal cost of employing a handful of corporate executives who make more than $1 million a year. I would call that a bargain.
On a very basic level, every society gets to choose how it wants to structure its information environment. On one hand, we could choose to spend years dismantling practically every economic incentive to pay journalists to produce original, accurate, high-quality work. On the other hand, we could choose to stop doing that; we could choose to do something more constructive instead.
Views here are my own, but the views — the views are very good.
There should be an independent review process for funding fully independent journalists.
Matt can you explain the definition of "local journalist" for who would be eligible for the credit? Or is there not really a definition yet?