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Column: A Trump judge blocks another pro-worker Biden initiative, this one involving noncompete clauses

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Column: A Trump judge blocks another pro-worker Biden initiative, this one involving noncompete clauses

Noncompete clauses in employment contracts are sterling examples of the give-them-an-inch-and-they’ll-take-a-mile principle in business behavior.

Once applied chiefly to executives, engineers and others with access to a company’s trade secrets, they have expanded to cover almost anybody — low-wage security guards, rank-and-file factory workers and even fast-food counter workers.

A recent academic survey estimated that nearly 1 in 5 American workers, or about 30 million people, are subject to noncompetes.

Noncompetes have long faced significant legal hostility because of their often blunt prohibition on employee mobility.

— Starr, Prescott and Bishara (2020)

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Although the provisions are often described as noncompete “agreements,” the survey found that the vast majority of workers haven’t negotiated any such agreement with their employers, and about one-third are presented with the restriction after they’ve already accepted a job offer.

A couple of other points: Noncompetes tend to suppress wages. They also undermine innovation.

For these and other reasons, the Biden administration took aim at noncompete clauses in 2021, instructing the Federal Trade Commission to “curtail” those that “may unfairly limit worker mobility.”

After more than a year of study, the FTC followed through with a proposed rule, issued April 23 and scheduled to take effect Sept. 4, that banned new noncompetes and forbade the enforcement of existing clauses except for senior executives who were already subject to the restrictions.

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You probably know what happened next: Big Business, in the guise of the U.S. Chamber of Commerce, sued to block the FTC’s rule. The lawsuit was filed not in Washington, D.C., where the agency resides, but in Texas, where it was almost certain to come before a conservative judge appointed by a Republican.

Sure enough, it came before Federal Judge Ada Brown of Dallas, a Trump appointee, who on July 3 blocked the FTC from implementing or enforcing its rule until further notice.

Brown says she will rule by Aug. 30, less than a week before the rule is set to take effect, on whether her decision will give relief only to the plaintiffs in the case — a Dallas tax firm founded by a former tax advisor to then-President Trump, the Chamber of Commerce, and other business associations — or apply nationwide.

Here’s the background.

As the academic economists observed in their survey, published in 2020, “noncompetes have long faced significant legal hostility because of their often blunt prohibition on employee mobility.” But they’ve been tolerated as long as they applied only to high-profile executives or professionals who might have access to proprietary information or clients.

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Only three states outlaw noncompete clauses: California (where they were rendered unenforceable by law in 1872), Oklahoma and North Dakota. The New York Legislature voted to outlaw them last year, but Gov. Kathy Hochul vetoed the bill, bowing to pressure from Wall Street and business lobbyists.

The chamber’s lawsuit is chock full of risible misrepresentations. “For hundreds of years,” it says, “employers and workers have had the freedom to negotiate mutually beneficial non-compete agreements.” Among their virtues, the chamber asserts, is that they “incentivize investment in research and development … and facilitate the sorts of collaborative work environments needed for firms to innovate.”

The truth is just the opposite. Leaving aside the flagrant lie that noncompete clauses are the product of employer-employee “agreements,” evidence for the drawbacks of noncompete clauses — and for the value of eliminating them — is indisputable. One need not look further than the explosion of innovation in Silicon Valley, which was built by talented scientists and engineers who had the freedom to move from firm to firm, or start their own without interference from their employers.

Among the 400 engineers attending a 1969 conference in Silicon Valley (which had not yet been christened with that name), all but a couple of dozen had worked at one time or another for a single firm, Fairchild Semiconductor — which had been founded by eight former workers at Shockley Semiconductor Laboratory, some of whom would go on to found Intel Corp.

Nothing obstructed their movement — or the extraordinary level of innovation that made the valley what it remains today, the world’s leading center for technological research and development.

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The economists — Evan Starr of the University of Maryland and J.J. Prescott and Norman Bishara of the University of Michigan — found that noncompete clauses keep wages low by blocking competition for workers among competing businesses. Some employers, they wrote, impose noncompete rules even when they’re legally unenforceable, in hopes that the mere threat of liability for breaching an employment contract will keep workers in place.

Big Business doesn’t have much of a case in favor of noncompete clauses. They’re the antithesis of the principles supposedly honored by “right to work” antiunion laws so beloved by employers and conservative politicians. They do, however, have a well-marked capacity to suppress wages and lock workers in lousy jobs.

There can be no question that the imposition of noncompete clauses has reached an absurd level.

The fast-food chain Jimmy John’s, for example, prohibited its employees from working at any other business that sells “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches” within up to three miles from any Jimmy John’s store and for two years after leaving the company, according to a lawsuit filed in 2016 by Illinois Atty. Gen. Lisa Madigan. The franchisor agreed to drop the clause to settle Madigan’s lawsuit and a second lawsuit filed by New York state.

Last year, the FTC sued two affiliated Michigan security firms, Prudential Security and Prudential Command, for requiring low-wage security guards to sign contracts prohibiting them from working for any competitor within 100 miles of their jobs for two years of leaving Prudential. The firms threatened the guards with $100,000 in penalties for violating the clause.

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The agency also sued two glass container firms, O-I Glass of Ohio and Luxemburg-based Ardagh Group, over noncompete clauses imposed on a combined 1,700 furnace workers and other employees. Those clauses stifled innovation and competition in the glass industry, the FTC said, because it prevented rivals from finding skilled and experienced workers in an already highly concentrated industry.

Prudential’s owners and the glass companies all agreed to bans on imposing or enforcing their noncompete clauses on present or future employees.

In its current lawsuit in Texas, the Chamber of Commerce asserts that the FTC’s proposed ban on noncompete clauses exceeds the authority it was granted by Congress.

Its point, which was accepted in full by Brown, is that the agency is authorized only to make rules dealing with “unfair or deceptive acts or practices,” not “unfair methods of competition.” (The FTC responds that the “clear language” of the 1914 FTC Act gives it full authority to “prevent unfair methods of competition through … rulemaking.”)

There’s more to the chamber’s lawsuit, however. It’s part of a concerted effort by the business community to undermine FTC Chair Lina Khan, who has worked hard to turn the agency into the vigorous protector of consumer rights that Congress envisioned in 1914, but which a succession of leaders allowed to fade into near-uselessness.

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Taking a cue from attacks by Elon Musk and Trader Joe’s on the National Labor Relations Board, the chamber contends that the FTC itself is unconstitutional, because its commissioners can’t be removed by the president at will — they serve for seven years and can be removed only for “inefficiency, neglect of duty, or malfeasance in office.”

(Franklin Roosevelt learned this the hard way, when the Supreme Court overturned his firing of a Republican FTC commissioner in 1935; FDR’s irritation at that decision contributed to his decision to pursue a court-packing scheme, which failed.)

The federal courts generally haven’t looked kindly on these collateral attacks on federal agencies, however.

In filing its lawsuit, the chamber followed Big Business’ familiar and cynical practice of “forum-shopping,” or hunting for a federal court predestined to see things its way and willing to issue nationwide injunctions blocking Biden initiatives. For this case, it settled on federal court in Dallas, where only one of the eight sitting judges was appointed by a Democrat (Bill Clinton). Of the remaining seven, three are Trump appointees, including Brown.

Forum-shopping, especially among federal courts in Texas, has become such an embarrassment to the federal judiciary that the Judicial Conference of the United States, which sets policy for the federal courts, issued a statement in March calling on the district courts to find fairer ways to assign cases so they don’t all go to GOP-appointed judges.

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David Godbey, the chief judge of the Northern District of Texas, where the chamber’s case landed, has refused to do so. Godbey is an appointee of George W. Bush. In any event, the likelihood that random assignment of the chamber’s lawsuit would be heard by a Republican appointee was obviously strong. Any appeal from Brown’s ruling would come before the U.S. 5th Circuit Court of Appeals, the dumbest and most reactionary appellate court in the land.

It’s likely that this issue will land before the Supreme Court. A second case challenging the FTC rule brought by a Philadelphia-area tree-trimming service backed by a right-wing legal foundation is being heard by a Biden-appointed judge, Kelley Brisbon Hodge, who says she will issue a preliminary ruling by July 23. If she backs the FTC and is upheld by the U.S. 3rd Circuit Court of Appeals, the Supreme Court may have to take the case to resolve any conflict. That means the FTC rule is likely to remain in limbo well into next year, or even beyond.

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California's long-awaited indoor heat standard has gone into effect. Here's what to know

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California's long-awaited indoor heat standard has gone into effect. Here's what to know

More than a million workers laboring in warehouses, kitchens, laundry rooms and other hot indoor settings across California are now protected by new safety measures that went into effect on Tuesday.

The indoor heat illness prevention rule, adopted by the standards board at the California Division of Occupational Safety and Health last month, regulates indoor workplaces that reach or surpass 82 degrees.

After years of delays, labor leaders celebrated the implementation of the rule. They had pressed in recent weeks for a mandated legal review of the rule to be expedited in order to get the protections in place as early on in the summer as possible.

“[W]e are relieved that the indoor heat protections are now finally in effect in California,” said Lorena Gonzalez, head of the California Labor Federation, in a statement Wednesday. “This long-overdue victory for workers cannot be overstated; these protections from extreme heat will save countless lives.”

Here’s what you should know about the new rule:

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What are the new protections?

The new safety measures require employers to provide water, cooling areas and monitoring of workers for signs of heat illness whenever indoor workplace temperatures reach or surpass 82 degrees.

If temperatures climb to 87 degrees, or workers are required to work near hot equipment, employers must cool the work site. If doing so is not feasible, they must allow for more breaks, rotate workers out of hot environments and make other adjustments.

Designated cool-down areas are supposed to be as close as possible to where employees are working, and large enough that workers can sit normally without touching each other. They must be blocked from direct sunlight and shielded from heat sources, with adequate ventilation and cooling.

Drinking water must be available in multiple locations and should be “fresh, pure, suitably cool, and provided to workers free of charge,” the new rule says.

In guidance Cal/OSHA officials issued to employers, supervisors are advised to taste the water and pour it on their skin to check that it is adequate.

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Employers should remind and encourage workers to drink water frequently in training sessions as well as throughout the work day, as workers “may not feel how urgently their bodies need water,” according to Cal/OSHA guidance.

Under the new rule, employers are required to allow workers to take cool-down rests if they feel they need to protect themselves from overheating.

“Waiting until symptoms appear before taking a cool-down rest may be too late,” Cal/OSHA guidance says.

More details about the indoor heat standard are available on Cal/OSHA’s website. The safeguards are similar to an existing rule establishing regulations for workers in outdoor settings.

Which workers are covered by the new rule?

The indoor heat standard applies to most workplaces. The state estimates the new rule will apply to about 1.4 million people who work indoors in conditions that can easily become exposed to extreme heat. Industries anticipated to be most affected include warehouses, manufacturing and restaurants.

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The indoor heat rule does not apply to correctional staff or inmate workers in prisons, local detention facilities, and juvenile facilities.

The Department of Corrections and Gov. Gavin Newsom’s administration are in the process of consulting with worker advocates to create a separate indoor heat rule for these facilities. It is unclear how long it will take to develop and implement those protections.

The newly implemented rule also does not apply to employees who are working remotely from places not under the control of their employer.

What happens if an employer doesn’t follow the heat rule?

Workers who believe their workplaces are not adequately protecting them from extreme heat conditions can file a complaint with Cal/OSHA online or by calling (833) 579-0927.

It’s possible, however, that enforcement will be slow. California agencies responsible for enforcing labor laws have also been beset by inadequate staffing and claims of ineffectiveness.

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Cal/OSHA is grappling with a 38% job vacancy rate and faced sharp criticism at a February hearing of the Assembly Committee on Labor and Employment, where farm workers testified that they’d been exposed to extreme heat and pesticides on the job.

“We will continue pushing Cal/OSHA to prioritize enforcement so that bad employers can’t get away with subjecting workers to life-threatening working conditions from indoor heat exposure,” said Gonzalez, the California Labor Federation president, in her Wednesday statement.

Are there similar protections at the federal level?

California in 2006 became the first state in the nation to establish permanent heat protections for outdoor workers and is among just a handful of states that have adopted indoor heat regulations.

There is no similar standard at the federal level, although the U.S. Department of Labor’s Occupational Safety and Health Administration this month released details of its proposed rule to protect indoor and outdoor workers from high temperatures. The move is a major step forward, though the rule must receive feedback, among other steps, and likely will not be finalized for a while.

Louis Blumberg, a senior climate policy advisor at Climate Resolve, said California’s move to finally adopt the indoor heat standard means that it “automatically becomes a model, or at least a floor for federal agencies to consider and adopt.”

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“This is very important as a labor issue. But it’s bigger than that. It’s an important step toward building climate resilience on a society-wide basis,” Blumberg said.

A federal standard would be particularly significant in states such as Florida and Texas — which have passed laws blocking cities or employers from establishing heat rules.

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This California city lost its daily newspapers — and is living what comes next

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This California city lost its daily newspapers — and is living what comes next

For years Richmond City Councilmember Cesar Zepeda has been on an unsuccessful crusade to persuade the grocery store chains of America — or at least one of them — to bring a supermarket back to his industrial city on the edge of the San Francisco Bay.

He’s persistent. He’s called corporate headquarters. He’s emailed customer relations. Occasionally, he’s gotten executives on the phone, and listened to them stammer on about why Richmond isn’t the right place for them to locate a store, despite its population of 117,000 in the heart of the Bay Area.

After years of disappointing conversations, Zepeda has concluded something basic about his city: It is paying a big price by not being able to tell its own story.

Richmond has not had its own daily newspaper for years. The loss came during a period of profound struggles for the town, which has dealt with fluctuating crime, economic problems and environmental challenges. Zepeda and others say there is a lot of good and bad going on in Richmond, but the dearth of local news coverage offers a skewed view of the city — oversimplified and years out of date — as an impoverished and violent community.

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“The lack of coverage puts us into deserts of everything. We have a hospital desert. We have a grocery store desert,” Zepeda said. “Just the lack of any coverage, it affects the perception.”

In this news desert, the main information source has been the Richmond Standard, a news website funded by Chevron, Richmond’s largest employer. It offers reports on youth sports, crime logs and things to do in town. Recent articles have highlighted a mural project, a car caravan supporting racial justice and upcoming closures to Interstate 80.

But the Standard is conspicuously silent when it comes to hard-hitting reporting on the Chevron refinery, which activists blame for the city’s high rates of hospitalization for childhood asthma. On June 19, the City Council voted to put a measure on the November ballot asking local voters to levy a tax on the refinery that would generate tens of millions of dollars a year to be used as the city sees fit. The lead-up and follow-up to this hugely consequential development were nowhere on the Standard’s homepage.

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Richmond is one in a swelling number of California communities that in recent years have had to navigate civic life without a traditional newspaper. The city — a onetime shipbuilding hub that fell on hard times and is now in the midst of a rebound — was once served by multiple papers, but the grim economics took them out one by one.

All the while, in-depth daily coverage of Richmond, a city with 23 distinct neighborhoods and cutthroat politics, with a refinery of vital importance to the state’s energy economy, shrank and shrank.

“The lack of coverage puts us into deserts of everything. We have a hospital desert. We have a grocery store desert.”

— Zepeda Richmond City Councilmember Cesar Zepeda

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A man wearing a suit and tie.

Councilmember Cesar Zepeda says the dearth of local news coverage in Richmond has resulted in a skewed portrayal of his city, making it harder to draw retailers.

(Josh Edelson / For The Times)

The issue of California’s growing news deserts — and the fallout on civic engagement — has become a heated topic in the state Legislature, where Assemblymember Buffy Wicks (D-Oakland) is pushing a measure, Assembly Bill 886, that would require leading social media platforms and search engines to pay news outlets for accessing their articles, either through a predetermined fee or through an amount set by arbitration. Publishers would have to use 70% of those funds to pay journalists in California. Lawmakers are also considering state Senate Bill 1327, which would tax large tech platforms for the data they collect from users and pump the money into news organizations by giving them a tax credit for employing full-time journalists.

AB 886 is sponsored by the California News Publishers Assn., whose members have argued for years that online search engines and social media platforms are gutting the newspaper business by gobbling up advertising revenue while publishing content they don’t pay for. (The Los Angeles Times is a CNPA member, and its business leaders have publicly supported the measure.)

The legislation has drawn staunch opposition from Google and other tech companies, which contend it would upend their business model.

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The rise of the search engine is one of many factors pushing California newspapers out of business. Richmond’s news decline began well before eyeballs and advertising migrated online.

But Richmond’s story is not just about the loss of news. It also shows how a community gets information in a post-newspaper world.

Richmond is now a laboratory for online journalism startups, including the one owned by Chevron, whose massive refinery looms over the city and has been the focus of ongoing concerns over toxic emissions.

People hold signs that say "Make polluters pay."

Protesters rally in support of putting a measure on the November ballot that would levy a new tax on Chevron’s refinery, generating millions of dollars annually for city coffers.

(Josh Edelson / For The Times)

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The region’s independent online publications are sometimes hard-hitting and admirably hardworking, but they are limited in size and reach. The students at UC Berkeley’s journalism school operate Richmond Confidential, a news lab for student reporters that is funded by a grant from the Ford Foundation. Since late 2020, the husband-and-wife team of Linda and Soren Hemmila have put out the Grandview Independent, whose website proclaims: “For us, there is no story too small.”

There is also a youth-focused site, the Pulse, and a publication that focuses on the area’s Black community. In late June, the team behind the well-regarded local news websites Berkeleyside and Oaklandside launched a sister publication called Richmondside.

Still, said City Councilmember Doria Robinson, “the unfortunate best source” for much of the day-to-day goings on in recent years has been the Richmond Standard.

A woman in a pink sweater, with an American flag behind her.

Councilmember Doria Robinson finds it troubling that Richmond residents get their daily news from a site funded by Chevron, the town’s biggest employer and a source of controversy.

(Josh Edelson / For The Times)

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Robinson is a third-generation Richmond resident who was elected to the council in 2022 and for years before that ran a nonprofit farm in North Richmond. She said she is grateful for the work of all the reporters laboring on a shoestring to bring news to her city. But it doesn’t replace the weight and influence of the local paper she remembers from her youth.

And as for the Chevron paper, she said: “It is just unfortunate to have to depend on a project that is openly and proudly funded by our local petroleum [company].”

In 2011, the news group that owned the West County Times made an announcement that had become all too familiar to Richmond readers: More layoffs and cuts were coming to the chain that published the West County Times along with several other outlets in the East Bay. There would be less news out of Richmond.

Former Councilmember Tom Butt, who sends out an email about Richmond that doubles as an informal newsletter, lamented the decision and urged citizens to complain, writing: “What will this mean for Richmond? Undoubtedly, it will mean reduced coverage of local news.”

Five years later, in 2016, the ax swung again, and the West County Times was merged, along with a number of other newspapers, into two. Another chunk of the reporting staff was cut.

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“The level of connection we were able to maintain with people in the community really evaporated in a significant way,” said Craig Lazzeretti, a journalist who covered the region for 30 years, much of it in Richmond. Over time, Richmond lost its education and public safety reporters, he said, and while City Hall remained a priority, coverage of sports and entertainment also declined.

In its heyday, the coverage was rigorous, and “it did play a significant role” in civic life, Lazzeretti said. “You had a lot of strong political personalities in Richmond.”

He admits the local newspapers of that era were not perfect: “We were covering an ethnically diverse city, and there wasn’t a lot of ethnic diversity in our newsroom.” But reporters did try to reflect what was going on in the city.

A bridge spans a bay.

The Richmond-San Rafael Bridge spans San Francisco Bay, connecting Contra Costa and Marin counties.

(Josh Edelson / For The Times)

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As the 21st century dawned, the West County Times, the lone paper still covering Richmond vigorously, was facing a menacing economic shift: the rise of the internet. Advertising dollars — long the financial mainstay of traditional newspapers — moved online, budgets dwindled, and soon there were almost no reporters left to cover Richmond on a daily basis.

Meanwhile, life in Richmond was entering a dark period. The city’s better-paying manufacturing and industrial jobs were evaporating because of economic shifts, spawning an exodus of middle-class earners to the suburbs.

Chevron, which had long been one of the biggest influences on local politics, stayed. But as concerns mounted about the effects of its refinery on air quality, progressive candidates began organizing to counter the weight of the oil company.

An aerial view of a sprawling complex of tanks.

The Richmond Standard, funded by Chevron, has been conspicuously silent when it comes to hard-hitting reporting on the company’s refinery.

(Josh Edelson / For The Times)

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By 2010, candidates backed by the Richmond Progressive Alliance had pressed the company to contribute more fees to the city to compensate for environmental damage. And then came the disaster of August 2012, when a corroded pipe at the refinery sprung a leak, igniting a series of fiery explosions that shrouded the East Bay in choking black smoke. More than 100,000 people were ordered to shelter in place, with windows and doors sealed shut, and thousands sought medical treatment after inhaling toxic air.

The episode set off a wave of activism that included investigations into Chevron’s operating practices. In August 2013, Chevron agreed to plead no contest to criminal charges stemming from the fire and pay $2 million in fines.

Five months later, on Jan. 23, 2014, Chevron launched the Standard.

“We think it’s good for us to have a conversation with Richmond on important issues, and we also think there are a lot of good stories in this city that don’t get told every day,” the company wrote to readers in announcing the news site.

Progressives were alarmed: The entity that in their eyes most needed watchdogging was now a leading source of local coverage.

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A woman in baseball cap holds a sign saying "Make Polluters Pay."

Tina Szpicek rallies in support of a November ballot measure that would levy a new tax on Richmond’s Chevron refinery.

(Josh Edelson / For The Times)

Still there was now a reporter roaming the neighborhoods, reporting on a new baseball field, a burglary, local businesses and even some local politics.

In June, while the Standard ignored the City Council’s vote on taxing the refinery, it did cover a Little League triumph, a shooting that left two people dead and the schedule of movies to be screened this summer at “Movies in the Park.”

Ross Allen, a spokesperson for Chevron, said the community didn’t need the Standard to cover the council’s vote — it was a big enough event that it received ample coverage in mainstream California publications.

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He added, however, that Chevron opposes the proposed tax, and that “we will have coverage on the reasons why that is a terrible idea for Richmond in the Standard. We’ll have it everywhere.”

The Times interviewed Richmond residents in June to gauge whether the long absence of a local newspaper mattered in their lives. Many said they were unaware of Richmond’s news media history, but in interview after interview stressed their hunger for news about their city.

Juan Alfredo, 27, recently moved to Richmond from Guatemala after a stopover in Los Angeles. He paused to chat while walking his little white poodle in the city’s Miller/Knox Regional Shoreline Park. Across the sparkling waters of the bay, the San Francisco skyline and misty green hills of Marin County rose in the distance.

An aerial view of a refinery with a bridge in the distance.

Richmond is one of many smaller working-class cities that saw its local newspapers buckle as print advertising revenue and paid circulation dropped.

(Josh Edelson / For The Times)

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Alfredo said that he loves Richmond’s physical beauty, but that his new home struggles with some quality-of-life issues, including trash and messed-up streets. And he has no idea where to turn for information about what is going on in the city.

A few miles away, Elaina Jones, who moved from nearby Orinda last year, said she enjoys the community in the Marina Bay neighborhood. But she said she has little sense of what’s happening in the rest of the city. What she does know, she learns not from local media but from talking to her older neighbors.

Still, she plans to vote in the local elections in November — and said to do so she needs to figure out what’s going on.

One of her would-be representatives, City Council candidate Sue Wilson, said the lack of a local newspaper means candidates often work to reach voters one-on-one, by going to their doors.

Lots of residents are in the dark about who’s running for office and their positions on issues. That may be one reason, some officials said, that voter turnout in local elections is abysmal.

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Wilson said Richmond’s tumultuous politics often make her think, “This seems like the sort of thing that would be in the newspaper.”

She paused. “But then there is no newspaper.”

The journalists at Richmondside hope to do their part to change that. On June 25, the site went live with what they hope will be dynamic coverage.

Richmondside is the latest offshoot of the Cityside Journalism Initiative, a nonprofit online news platform launched by journalists looking to reinvigorate local news coverage in the Bay Area. The effort is funded through grants and reader donations.

A boy walks by murals celebrating Richmond's history.

Surveys done by Richmondside, a new online news venture, found residents want “the rest of the world to know there are many positive stories” in their city.

(Josh Edelson / For The Times)

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Richmondside’s new editor, Kari Hulac, said the publication would have two full-time staffers and two interns, as well as editorial support from across the organization and contributions from freelancers. She said readers can look forward to air quality coverage, as well as stories on neighborhood issues, small businesses and public safety.

For Hulac, a veteran Bay Area journalist, the launch represents a welcome second chance to be involved in local news.

“I’ve locked the door on a newsroom,” she recalled of shutting a news bureau in Tracy. “I put the handwritten note on the door: ‘This office is closed permanently.’”

“If you had told me, I don’t know, a year ago, that I would be back in the Bay Area working in a local newsroom again, I never in a million years would have believed it,” she said.

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California’s news industry is shrinking while misinformation spreads. Here's what the numbers tell us

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California’s news industry is shrinking while misinformation spreads. Here's what the numbers tell us

As the world turned digital, people were quick to drop their Sunday papers and pick up their smartphones for news. Advertisers followed suit as digital platforms became more valuable real estate than print newspapers, leaving California news outlets desperate to find ways to stay profitable and relevant.

Supporters — including the California News Publishers Assn. and the Media Guild of the West which represents journalists at the Los Angeles Times — believe Assembly Bill 886, will give the industry a greatly needed boost by requiring online platforms like Google to pay news outlets when linking to their content. News outlets must spend at least 70% of the received funds on their staff.

A second bill being considered by California lawmakers, Senate Bill 1327, would charge Amazon, Meta and Google a “data extraction mitigation fee” for data they collect from users. The funds would go toward supporting local newsrooms.

California has lost one-third of its newspapers since 2005, according to a 2023 Northwestern Medill School of Journalism report. The number of journalists in the state has dropped 68% since then, and despite shifting efforts to digital, news outlets are struggling to attract readers and subscribers.

The Los Angeles Times cut more than 20% of its newsroom in January, representing one of the largest staff cuts in the newspaper’s 142-year history. Since L.A. Times owner Patrick Soon-Shiong sold the San Diego Union-Tribune to a hedge fund in July 2023, its staff has been cut by an estimated 30%. LAist is also facing “a significant budget shortfall” over the next two years and has offered voluntary buyouts to journalists ahead of a potential round of layoffs.

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Americans are turning to social media for news, citing its convenience and speed. The share of Americans using social media for news increased from 27% in 2013 to 48% in 2024, according to the Reuters Institute for the Study of Journalism’s Digital News Report 2024.

But concerns about unreliable sources and misinformation have been growing. Four in 10 Americans who get news from social media say they dislike the inaccuracy, up from three in 10 in 2018, according to a 2023 Pew Research Center survey. After the 2016 presidential election, about a quarter of Americans said they shared fabricated news stories, knowingly or unknowingly.

As conspiracies and misinformation spread and exacerbate polarization, local newsrooms meant to hold officials accountable and keep community members well-informed are becoming fewer and farther between.

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As the two bills make their way through the state Legislature, here’s what you need to know about California’s shrinking news industry and evolving media advertising scene.

Sunday circulation for some of the largest newspapers in California, including the Los Angeles Times, Orange County Register and San Diego Union-Tribune, has dropped at least 30% since 2015. The Fresno Bee has seen the largest percentage decrease in Sunday newspaper circulation, down 79% in just eight years. Its daily average of 110,400 papers in 2015 plummeted to 23,000 in 2023.

“There’s no mistaking that this is a brutal moment for journalistic employment,” Gabriel Kahn, USC professor of professional practice of journalism, said. “Jobs are shrinking, and local coverage is disappearing.”

The San Francisco Bay area saw the largest drop in journalism employment per 1,000 jobs in the state since 2009, according to U.S. Bureau of Labor Statistics data. In 2009, one out of 1,000 employed people worked as a journalist. In 2023, only a half of those jobs remain.

While the Bay Area saw a sharp decline in the number of journalists in the early 2010s, journalism employment has been inching back upward since 2015.

Kahn said the number of journalists in the Bay Area is dependent on the national relevance of Silicon Valley, which in recent years has consistently found headlines with topics like social media and artificial intelligence and tech figures like Elon Musk.

“Coverage about glitzy topics whether its celebrities in L.A., tech or politics … can gain national audiences, so there will always be demand for people to produce that kind of journalistic content,” he said. “Silicon Valley has always had ways to grow, and as they grow, journalists are added on to cover that surge.”

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Journalism jobs continue to be concentrated in metropolitan hubs such as Los Angeles, San Francisco, San Diego, Sacramento and San Jose. The number of journalists in Los Angeles and Orange County increased 34% in the past decade while the number in San Jose and San Diego remained roughly unchanged.

The number of journalists in the state’s capital, however, notably plummeted 57% in the last decade. The Sacramento area saw the largest drop in total journalism employment since 2013.

McClatchy, the publisher of the Sacramento Bee and dozens of other news outlets across the country, filed for bankruptcy in 2020 and was acquired by a New Jersey hedge fund later that year. TV stations have also consolidated news coverage in Sacramento by doing the same with less, Kahn said.

“The truth is, this is still the place where a $300-billion budget gets approved [and] lots of business [gets] transacted,” he said. “I’m surprised there’s not more [coverage].”

As social media and search engines dominate the advertising business that once fueled the journalism industry, many California news outlets that have stuck to old business models are watching money go down the drain, Kahn said.

National digital advertising expenditures in California increased 54% since 2018 while print media advertising decreased 27%, according to Borrell Associates.

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The most popular social media for California registered voters for election-related news is YouTube, followed by Facebook, Instagram, X and TikTok. And as more Americans experience news fatigue and turn to social media for news and comedic relief, news outlets continue to lose digital readership.

Ten major California news websites, including latimes.com, sfchronicle.com and ocregister.com, have seen at least a 35% drop in total unique visitors since January 2021.

The OC Register’s website saw one of the largest percentage decreases in the past three years at 72%.

Kahn attributed some of the digital readership loss to difficulties optimizing journalism content for search engines.

“One of the major woes that journalism is feeling is that their audience is dependent on Silicon Valley giants and their algorithms,” Kahn said.

A poll from the UC Berkeley Institute of Governmental Studies conducted from May 29 to June 4 found that California registered voters rely on Google and other search engines almost as much as newspapers and magazines to get news about election-related issues.

Digital advertising has become a major business for Google’s parent company, Alphabet, with revenue nearly quadrupling in the past decade. Google advertising, which includes Google search, YouTube ads and other networks, racked in an unprecedented $237.8 billion in 2023.

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The U.S. Justice Department and eight states, including California, brought a landmark antitrust case against Google in 2023, accusing it of abusing its power to monopolize the digital advertising market.

“Any money falling into these [journalism] institutions is going to be positive, because they have basically been watching the water drain out of the bathtub for the past decade and a half,” Kahn said.

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