Our authors give us Microsoft Word files for stories, but I can't figure out how to give them the word count they should be aiming for. I can set and style placeholder text in the layout file, but how can I then count the words so I can tell the authors what their target count is before they start to write? InDesign doesn't have a Word Count function like Microsoft Word.

Indeed it do! After you fill your frames with dummy text (choose Type > Fill with Placeholder Text), click anywhere in the frame with your Type tool and look at the Info palette. You'll see a count for that story's characters, words, lines and paragraphs. Or, if you select some text, you'll see a word count for that selected text.