Visitors to Hawai‘i probably experience sticker shock when shopping at our local grocery stores. But Hawai‘i residents are shocked by those prices every day, and for that they can partly blame the 101-year-old Jones Act.
The federal law requires that all goods carried between American ports be on ships that are U.S. built and flagged and owned and crewed primarily by Americans.
Its alleged purpose is to protect national security and boost the maritime industry. But it isn’t paid for through general taxes. It is a “nontariff barrier” that falls most heavily on residents of Hawai‘i, Alaska, Puerto Rico and Guam, since they rely on waterborne transport for most of their imports.
In July 2020, the Grassroot Institute of Hawai‘i released a study that pegged Hawai‘i’s Jones Act losses at about $1.2 billion a year, or about $1,800 per average family, and 9,100 fewer jobs.
Hawai‘i Democratic U.S. Rep. Ed Case said at the time that the institute’s study lent credibility “once and for all” to the “basic underlying conclusion that the Jones Act does, in fact, result in major negative impacts to Hawai‘i in particular and, of course, to other noncontiguous areas of our country.”
U.S. Sen Mike Lee, a Republican from Utah, said the study “brings home something that frequently goes unaddressed in Washington, and that is the problem of concentrated benefits and dispersed costs. You basically have the rich taking from the poor, and (this) data, I think, bears that out.”
Said Case: “Sen. Lee and I, who come from different parties, agree on this one. We (are) both saying that it’s wrong for government to create a monopoly that is harmful to the majority of the people. Frankly, I’m disappointed in some members of my own party (for not supporting Jones Act reform) because, after all, my party was the monopoly-busters of a century ago.”
Thanks to the Jones Act, everything in the Aloha State — from Hawai‘i Island to Kaua‘i — costs a little more. According to the Grassroot Institute study, it adds about a dollar a day to the average family’s housing costs, 40 cents to food bills, and 14 cents to electricity bills. Every single day.
In other words, the institute’s comprehensive study shot elephant-sized holes through maritime-industry allegations that the Jones Act has “no effect” on consumer prices in Hawai‘i.
As a fallback position, Jones Act supporters also allege that the law protects our national security and the maritime industry. A new institute booklet, “Five myths about the Jones Act,” demolishes those, well, myths. Suffice it to say here that both have fared worse under the Jones Act, and likely would do better if the Jones Act were reformed.
We could start by eliminating the law’s U.S.-build requirement. If carriers such as Matson and Pasha could buy ships on the open market, they could save hundreds of millions of dollars. This also would help increase the number of U.S.-owned ships at sea, add jobs and bring down prices. This would apply to interisland shipping as well, since Young Brothers, too, must use expensive, U.S.-built vessels.
For Hawai‘i, eliminating the U.S.-build requirement alone would save $532 million a year, add 3,800 jobs and produce $67 million in taxes, according to the Grassroot Institute study.
With so much data showing that it really does cost Hawai‘i extra, it is clear that the Jones Act needs to be updated for the 21st century.
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Keli‘i Akina, Ph.D., is president of the Grassroot Institute of Hawai‘i.
