Coleman, Helton challenge lobbyists’ narrative about ‘Jones Act jobs’

from Grassroot Institute

Advocates of the protectionist federal maritime law known as the Jones Act often claim it supports as many as 650,000 U.S. jobs. The study behind this claim, however, has never been made public.

In contrast, a new Grassroot Institute report titled “U.S. maritime jobs disappearing despite protectionist Jones Act,” relies on publicly available federal data and challenges that narrative. 

“The takeaway is really that the Jones Act has not contributed to the major growth of U.S. maritime over the past 30 years,” said Jonathan Helton, Grassroot Institute researcher and co-author of the report, during a Dec. 15 interview with radio host Johnny Miro on the H. Hawaii Media network. 

Helton explained that between 1990 and 2023, overall jobs in waterborne transportation and related industries declined by 2.6%, while “coastal and Great Lakes freight transportation” sector jobs — a sector directly tied to the Jones Act — dropped by 20% over the same period.

Helton was joined in the discussion by Mark Coleman, Grassroot managing editor and co-author of the report, who said the report’s findings should “give pause to lawmakers” and prompt a reevaluation of the Jones Act’s necessity. 

Coleman argued that far from being the cornerstone of the maritime industry, the Jones Act is actually hindering it.

“[It] creates all the problems that we now have in the American maritime shipping industry — ships that are too expensive; labor, crews, operational expenses that are really high …  Worldwide, we’re a minuscule portion of the worldwide maritime sector.” 

Coleman also noted the law’s broader impact on consumers, explaining, “It restricts competition in an industry, and that shows up — as in most cases where competition is restricted by the government — with higher prices,” particularly in states such as Hawaii and Alaska that rely heavily on waterborne shipments.”

Helton added: “We’re trying to work on a lot of issues at Grassroot to lower the cost of living here in Hawaii. Any sort of reform to make ocean transportation to Hawaii less expensive is going to be really good for the people who are in Hawaii.” 

TRANSCRIPT:

12-15-24 Mark Coleman and Jonathan Helton with host Johnny Miro on the H. Hawaii Media radio network

Johnny Miro: Great to have you along on this Sunday morning. Once again, it’s time for the H. Hawaii Media public access programming, available via our five Oahu H. Hawaii Media radio stations and five Kauai H. Hawaii Media radio stations. Also online at hawaiistream.fm and the app at Live365 if you’re away from the radio.

A big discussion on something that is starting to make headway again as far as the news, and we’ll see what goes with some new happenings in D.C. next year. It’s the Jones Act. It came about in 1920, and it’s a requirement that all cargo transported between U.S. ports to be on ships that are U.S.-flagged.

And there’s more to that, but we’ll let the two people joining me from Grassroot Institute of Hawaii — yes, two people today. We’re going to get a double dip of knowledge from a couple of very knowledgeable individuals from the Grassroot Institute of Hawaii who have been on top of this and have a great paper you can check out at grassrootinstitute.org.

Joining me first to say hello would be Mark Coleman, the managing editor and communications director. Mark, good morning to you. Thanks for joining me. 

Mark Coleman: Good morning, Johnny. Good morning, Honolulu.

Miro: And for multiple times, he’s really come about to be a great researcher, and he brings forth his information to make it easy to understand, policy researcher from Grassroot Institute of Hawaii, Jonathan Helton. Jonathan, good morning to you.

Jonathan Helton: Good morning to you too, Johnny, and looking forward to this discussion.

Miro: Let’s see who takes over with the very first question, where we go. It can be complicated for some people; I’m sure you guys do your best to make it easy. 

You just put out another policy brief — you two combined your efforts on that — about the national maritime employment and the Jones Act.

So, before we get to that takeaway, can you remind the listeners — I gave a little bit of a synopsis — but what the Jones Act is about?

Helton: I’m happy to lead off here.

Coleman: Go ahead.

Helton: The Jones Act is basically a law that says if you’re going to move any sort of goods — so imagine you’re shipping a car to U.S. ports — you have to move that on a ship that is built in the United States, that is flying a U.S. flag and that has a mostly U.S. crew and is mostly owned by U.S. citizens or companies. So if you’re moving that car from Los Angeles here to Honolulu, then you’re going to have to comply with that law.

Miro: Anything to add, Mark?

Coleman: Well, only that that’s the law that creates all the problems that we now have in the American maritime shipping industry — ships that are too expensive; labor, crews, operational expenses that are really high; and extra costs for consumers that we wouldn’t otherwise have if not for this law, which affects mostly areas of the country such as Hawaii and Alaska that are highly dependent on waterborne transportation for most of their imports.

So that’s why we’re interested in this. 

It’s a really weird law. It’s not a tariff in the sense that things get taxed when they’re brought into the country; it’s called a non-tariff law. It restricts competition in an industry, and that shows up — as in most cases where competition is restricted by the government — with higher prices for consumers.

Miro: And that’s basically why you two did this research. Where can they find that before we continue, your latest work. Is it just at grassrootinstitute.org, or did you put it out for the general public elsewhere?

Helton: Yeah, that’s the easiest place to find it. If you go to our homepage on our website, grassrootinstitute.org, it’ll be right there and you can click and read through the whole thing.

Miro: And are you going to do any Q&A sessions with the public on this to kind of inform them a little bit more, not just as far as the reading aspect, but also in person so they can ask questions? Is that going to be in the works for Oahu?

Coleman: We had a thought about that, actually, Johnny. I don’t think that this was that kind of study. 

We actually were aiming this more at a national audience. We sent this out to all the maritime publications in the country — all the ones we’re aware of — and to most of the leading big city newspapers and national newspapers, Wall Street Journal and so on. 

I can’t say the response has been overwhelming or anything, but we did think it was of national significance because this looks at waterborne transportation and related industries nationwide, not just Hawaii. 

So it wasn’t really something that seemed to us — at least to me, anyway — that should be about Hawaii. I don’t think an event in Hawaii related to this would be up our alley at this time at least anyway.

Miro: OK guys, what’s the overall trend of jobs in U.S. water transportation?

Helton: That’s the real crux of the report. A lot of people who support the Jones Act make the claim that the Jones Act supports thousands and thousands of jobs — hundreds of thousands of jobs even — and we’ll talk about that a little bit later. 

But the reason we did this report was to take on this claim and sort of look at how many jobs the Jones Act might support and what the overall trend has been — and the overall trend has been flat.

If you look from 1990 to 2023, which is the data that we had access to, this is data from the federal government — it’s the NAICS, which is a, if anyone is familiar with economics, is a pretty common way of classifying jobs … 

Coleman: North American Industry Classification System, is what it was called.

Helton: Yes. But the jobs that are related to waterborne transportation have declined by 2.6% from 1990 to 2023. So you could say it’s declined a little bit — it’s certainly been stagnant. So there’s not an argument to be made that the Jones Act has drastically increased maritime employment because the numbers certainly don’t suggest that that’s the case.

Coleman: And more specifically, the Jones Act doesn’t really affect the entire waterborne transportation industry. It specifically applies to just certain segments, and indirectly, shipbuilders, because you have to use U.S.-built ships, and then also the crews that are the mariners on the ships, and the companies that own those ships.

So if you factor out everybody else in the waterborne industry — navigational services, marine cargo handling, there are so many other categories  — the sectors directly affected by the Jones Act, they’ve actually gone down quite a bit more than 2.6%. 

And the way we’ve been looking at it, this 2.6% figure is actually kind of more complimentary to, if you assume that all waterborne industry jobs are Jones Act jobs, which we don’t, then that would make it look like it hasn’t had that much of an effect. But in fact, Jones Act-related jobs, particularly, have been affected more so than the whole entire industry. 

Miro: Jonathan, anything to add on that? It sounds like the claim … 

Helton: I’ll just look at one specific thing. If we look at the sector “coastal and Great Lakes freight transportation” right? So coastal, that’s going to be maybe you’re moving something from California up to Washington or from Texas to New England …

Coleman: Or from LA to Hawaii. 

Helton: Yeah, or from LA to Hawaii. Jobs in that sector are down by 20% from 1990 to 2023.

So that’s a sector that’s directly related to the Jones Act. It’s less related than something like, as Mark mentioned, like cargo handling. That’s not the transportation of goods; that’s just unloading goods. 

So the takeaway is really that the Jones Act has not contributed to the major growth of the U.S. maritime over the past 30 years.

Coleman: Well, I was just going to say that considering that the United States has thousands of miles of coastline in the Great Lakes, all up and down the East and West Coasts, out here to Hawaii, up there to Alaska, over there to Puerto Rico, all throughout the Gulf — and yet, water transportation in America is only like 3% of all transportation costs, all modes of transportation; it’s 3.7% or something ridiculously low considering the potential. 

And what is holding it back? Our conclusion would be protectionist maritime laws such as the Jones Act. 

That’s not the only protectionist maritime job law. There are also restrictions very similar to the Jones Act regarding passenger vessels, dredging vessels, towing vessels, and all those combined are really putting he noosed, really strangling the industry from growing.

Worldwide, we’re a minuscule portion of the worldwide maritime sector. In global shipping, we are definitely not a world maritime power in terms of commercial global shipping. Our shipyards are dropping off like flies, and most of their work is for military contracts — there’s like one ship a year now they’re building for the commercial ship sector. So this is why we’re concerned. 

We had a cartoon a couple of years ago on our website, back in January 2022, which was hilarious, by our cartoonist, Dave Swan. And it was, we keep hearing from the Jones Act lobby that they provide 650,000 jobs. “I provide 650,000 jobs.” We had this picture of this record on a record player supposedly by the “Jones Act’s greatest hits,” and the lyrics are going, “I provide 650,000 jobs. I provide 650,000 jobs.” And the dad is looking at his kid and pointing at the record player and he’s going, “That record is stuck again. Anybody know how to make it stop?”

So we looked into this claim of 650,000 jobs. That’s basically what this report was about. We got tired of hearing this number because it was just not that long ago that they were claiming it was 500,000 jobs. And before that, it was like 125,000 jobs — I forget what that actual first number was.

But you know, in 20 years .… Oh, it was 124,000 jobs in 1997 that allegedly owed their existence to the law. Then 20 years later, it’s 500,000, and now it’s 650,000.

So they’re saying, based on a study that showed about 98,000 direct jobs to the Jones Act, that were directly related, that you had roughly 500,000 more — even more than 500,000 more — jobs related to this law. So we wanted to look into that.

And the only way we could reasonably do that, Jonathan did a great job digging up this data and analyzing it, and I helped with the writing and looking at it and talking to him about it. We looked at all the maritime jobs that could reasonably be factored into the waterborne transportation industry, including related jobs. 

Then you get into this issue about the economic multiplier — your job creates a job down the line kind of, or at least stimulates or has an effect on a job down the line, like, for example, shipbuilding might help the steel industry. But how you make that connection is problematic, and there aren’t official numbers that can be applied to each of these sectors, whether it’s a multiplier of two or three or four. But in this case, we have a multiplier of, like, 6.8, which is really extreme. And we just question this whole …

But the thing is, the study that they use to come up with this information has never been made public. And that was another thing we wanted to bring out in our study, which was, where did you come up with these numbers, you know? 

In fact, they attributed about 98,000 jobs to the Jones Act industry; we think now it’s probably more like 80,000. I think they attributed about 40,000 to 43,000 to shipbuilding and 51,000 to 53,000 or something like that to other Jones Act-related jobs. 

We think those numbers are all down a bit more. Shipbuilding in America, like I said, isn’t really even mostly about commercial shipping anymore, at least not for the oceangoing ships. 

So that was our point. I think we’ve thrown the gauntlet down. I don’t know if they’re going to pick it up and run with it or try to respond, but I think we’ve shown pretty well that the numbers are really questionable. And this should give pause to lawmakers — particularly in Congress because it’s a federal law — that, you know, maybe this 650,000 jobs claim is not real and maybe you could reconsider how allegedly important this law is. In fact, we think it’s holding back this industry. If you got rid of it, there would be more jobs, in general. 

Miro: So it sounds, Mark, like if the Jones Act were reformed or repealed, let’s say tomorrow, lots of people wouldn’t end up losing their jobs. Hundreds of thousands, if you’re talking about the 90,000 or even lower than that. 

The bottom line, I guess, would be: Would a lot of people lose their jobs if this thing was repealed or reformed, say, tomorrow?

Coleman: Right. Yes. The shipping industry exists separate of the Jones Act. They like to call these things Jones Act jobs — they’re talking about 650,000 Jones Act jobs. You look through their literature, and that’s how they talk about these jobs, even though, specifically, fewer than 100,000 are actually related to the law.

The law has to do with shipbuilding and who owns it and who crews them. That’s it. It doesn’t have to do with the dock workers in the ports. It doesn’t have to do with the navigational services or port and harbor operations. It doesn’t even include repairing — most of the American Jones Act carriers get their ships repaired overseas because the U.S. shipyards are so expensive.

So if you were to get rid of the Jones Act, you’re not going to get rid of the waterborne transportation industry. Those are jobs that exist — the Jones Act is a law that tries to regulate how the industry behaves, but the industry is not the Jones Act. 

It’s like saying without the Department of Agriculture, there’d be no farmers, or without the Securities and Exchange Commission, there’d be no stockbrokers. That’s just not how it works. That’s putting the cart before the horse. 

And we think that because of the Jones Act … There’s other factors, you know, that could explain the decline of jobs, even though they have this 2.6[%] figure that we came up with, in general. There are other factors that could explain that: corporate consolidation, technological advances. A lot of things are being mechanized, automated, and so on.

But we think you could probably trace a lot of this to the Jones Act because it does coincide with the decline in industries that are related specifically to the Jones Act within the waterborne transportation field, in general.

Miro: Talking with Mark Coleman and Jonathan Helton of Grassroot Institute of Hawaii on the Jones Act in Hawaii and the effects, if any, if this were to be reformed — this act that’s been around since 1920 — or even repealed tomorrow. 

Jonathan, anything to add on what Mark just said?

Helton: I’ll jump in with one quick fact that I think is really important to note. Mark said that U.S. shipyards get a lot of their money from contracts with the federal government — it’s over 75% of the revenue.

If you’re talking about, maybe, let’s allow U.S. companies to buy oceangoing cargo ships that are built in other countries, if you did that tomorrow, shipyards in the United States would still have all of those government contracts. So you’re talking about maybe 20% of the revenue that might go away.

So this one of those examples where if we make a targeted change to the law —  repealing the build requirement — which Grassroot has talked about for a long time, what is the practical effect of that? You’re going to affect just a handful of shipyards, and the amount of employment there is going to be relatively low compared to the industry as a whole.

Coleman: Yes, especially when you factor in that if American shipping companies such as Matson, Pasha, if they could buy ships built overseas, which are as good as any American-built ships — which by the way, most of those American shipyards are now foreign-owned and they rely mostly on foreign designs for the ships that they build — that would lower the capital cost for American companies wanting to enter that business. You’d see more shipping companies than just Matson and Pasha serving Hawaii, very likely. You’d see more companies going to other ports. They could afford to enter the business. 

Right now, it costs about four to five times as much to buy an American ship. So naturally, not only does that keep out foreign competition since you have to buy an American ship to serve U.S. ports, but it even keeps out American competition because upfront capital costs are so high.

Matson just committed to spending $1 billion on three ships that they could buy for like half the cost overseas. I’m just throwing that half-the-cost thing out there, but basically, that’s five times more than what they’d have to pay if they bought those ships overseas. 

The only reason they can do that … There’s no other world in which that economic decision would make sense except in the world where you have the Jones Act, which basically forces them to do that if they want to buy new ships. 

And they are due for new ships. Those ships are generally among the oldest in the country. Not all of them, but generally. So Jonathan brings up a great point. 

Miro: So basically, it sounds like you just want these people to corroborate their numbers when you just have forwarded your numbers, your research, and your data to them. It sounds like that’s all you’re looking for. 

And say, if we’re showing you this and you’re showing us that, but you can’t back it up, why are we still continuing with this? Why can’t we do some sort of reform or actually repeal the Jones Act? And I guess, make it better for customers because bottom line it would bring the costs of the goods down, correct?

Helton: Yes, that is the bottom line and that’s our goal, right? We’re trying to work on a lot of issues at Grassroot to lower the cost of living here in Hawaii. If we can lower the cost of shipping, that’s going to affect everything — it’s going to affect food, it’s going to affect the cost of materials, which then goes into housing. 

So yeah, any sort of reform to make ocean transportation to Hawaii less expensive is going to be really good for the people who are in Hawaii.

Miro: It’s tough to get things reformed, especially when it’s been going on for decades. As we know here and elsewhere too, it takes sometimes a lot of voices to move to get an issue that’s been there for so long to get changed. 

So what are the chances of the Jones Act being reformed anytime soon? What are the odds?

Helton: Well, the odds, I think, have gotten better recently. 

Rep. Ed Case from Hawaii is still committed to looking at reforms to the Jones Act. The delegate to the U.S. Congress from Guam — he doesn’t have voting power, but he has the power to meet with other representatives — he is in favor of Jones Act reform as well.

There’s some really good news out of Alaska. U.S. Rep. Nick Begich won election in Alaska in 2024. And this is the first time in, I think, over 50 years that a representative from Alaska has been openly calling for Jones Act reform.

So that’s really encouraging because now you have multiple representatives from these territories and states most affected by the Jones Act who are calling for reform. 

And so I think there’s a lot of room to hope that there will be action taken, maybe in this next Congress or sometime, hopefully, soon, that would either introduce the bill, maybe get a bill to a hearing, or even further, that looks at how the Jones Act applies to all of these states and territories so dependent on getting their goods by ship.

Miro: Mark?

Coleman: Yeah, Jonathan nailed it. The outlook is good. 

Well, you’d think, with the Trump administration coming in, especially, there might be an opening for Jones Act reform. He’s talked about it in the past. But you never know what’s going to happen politically behind the scenes, what’s going on.

I know back in the [‘80s], it was a secret agreement that Reagan had with some of the labor unions that he would not attack the Jones Act in exchange for their support. So, as optimistic as I’d like to be, … and then during Trump’s first administration, when he had the opportunity to have waivers and even really get rid of the Jones Act or at least reform it, he never followed through. He had a lot of advisors that wanted him to, but senators from the Jones Act districts, where they build ships and have strong labor unions defending the Jones Act, they prevailed on President Trump to back off.

So, who knows? I’m not sure what the dynamics are, but the data is certainly leaning in favor of it, and I think our educational efforts through the years have been paying off. We get positive responses all the time from people now about it. More people are aware of it. 

It just doesn’t make any economic sense, except for a special few. And I would think progressives should be jumping on board, as much as you would think they would be against this kind of monopoly, duopoly situation that we have that affects consumers and favors wealthy people. There’s all kinds of reasons to be against this. 

And of course, from our point of view at Grassroot, we think this would be a major way to lower the cost of living, increase economic freedom and accountable government. 

This is really a hidden tax, and to bring it back to what you said, yes, we would like to collaborate with people in the maritime industry, even those who have a big stake in the continuance of the Jones Act. You know, we’d love it if Matson would see that there actually could be a life after the Jones Act. 

Matson and Pasha — I think everyone would benefit in the long run. There could be some shifting pains in the short run for some of these companies. 

We’re looking at the free market, individual liberty, economic freedom, lower cost of living. It has to be done sometime. This is just ridiculous how long it’s been going on. 

Miro: Mark and Jonathan, would anybody be bringing up — because I haven’t, in this discussion, heard this possibility — the national security impact? 

You’ve already just mentioned right there the economic efficiency of it. and we just mentioned the cost to consumers. Are they bringing up national security impact if things were to change with the Jones Act at all?

Helton: Yes, we’ve talked about the national security effect of the Jones Act in the past. The point of this report was very narrowly focused on the jobs. 

But just quickly, on the national security point of view, I would go back to the shipyard thing. If we allow U.S. companies to buy ships that are built in Japan or South Korea or Europe, and people start buying them there, for U.S. shipyards, they’re still going to have military contracts. The Navy is still going to get its ships built in the United States. We’re still going to have some shipyards in the United States that we can turn to in times of crisis to build ships. 

Miro: OK. And how about environmental concerns? 

Coleman: And by the way, Johnny, about that issue about the national security, one point has been brought up. 

As I mentioned, the Jones Act is a hidden tax. It’s not a tax per se in terms of, you know, you pay the federal government directly every year. This is a tax that comes out of consumers and not even evenly across the country. It affects some parts of the country, some American citizens, consumers, more than others. 

Here in Hawaii, the thinking is, based on the logic of the situation, that we’re paying more for the Jones Act than somebody in Ohio, who knows, or Nebraska. We’re doing a study about that too, to see actually who’s paying what. But basically, you can just assume you get most of your imports from a ship, then the Jones Act — the cost that they add to it because of the Jones Act to get our goods to Hawaii — that’s a tax on us in Hawaii.

Now, others are saying, “Well, if this is really a national security concern, then why don’t you make it a direct tax?” Figure out how much this really should be costing us. How much does the Jones Act tax — this hidden tax — really add up to? And then convert that to a general fund situation; make it part of our taxes. Don’t tax certain people in the country, like us here in Hawaii, more for our supposed national security needs than people elsewhere in the country. It has to be “even- Steven,” right? 

So that would be the argument there. It’s like, “OK. You think it’s really important for national security” — we happen to disagree about that — but if you do think that, then at least tax us directly. Don’t make it a hidden tax and pretend this is all really wonderful and it’s creating 650,000 jobs and whatever. Let’s cut to the chase and be real about it. 

Miro: It’s the “U.S. maritime jobs disappearing despite protectionist Jones Act. Supporters of the 1920 law seem to be citing numbers that just don’t add up,” by Mark Coleman and Jonathan Helton, who have been joining me here. 

So the new report challenges the common claim that the Jones Act jobs have been increasing. Check it out — it’s featured on the front of their webpage — Grassroot Institute of Hawaii, at grassrootinstitute.org. It’s right there. You can click on it, page down just a little bit, and it’s featured right there. 

Anything else to add, guys? And I appreciate everything you’ve brought forth so far. 

Coleman: Well, thank you very much, Johnny. I would just say thank you very much, Johnny, on my behalf at least, for giving us this forum to talk about this this morning. We really appreciate you giving us this opportunity. Good morning to all your listeners. I hope you have a great day.

Miro: Thanks, Mark. Go ahead, Jonathan. 

Helton: Yeah, I think the overall takeaway is, you know, if the Jones Act is there to protect the U.S. maritime industry, we have to ask honest questions about whether or not it’s doing that. 

The report suggests that might not be the case. We would welcome anybody who supports the Jones Act, who works in the maritime industry, to come and have a conversation about this, because it’s only through working together with people that we’re going to see any sort of progress on this or any other issue. 

Coleman: Hear, hear. 

Miro: Alright folks, once again, it’s grassrootinstitute.org. You can find out more about all of their research, but this one, in general — new report challenging the common claim that the Jones Act jobs have been increasing, and the numbers just don’t add up, by Mark Coleman and Jonathan Helton

Gentlemen, it’s been great listening to your wisdom, and I look forward down the road in the next year to bringing forward more discussions very pertinent to the state of Hawaii here. 

Thanks, Mark and Jonathan, and have a great weekend, the merriest Christmas and happiest of new year.

Coleman: Likewise. Likewise, Johnny. Happy New Year.

Helton: And Merry Christmas to everyone and a Happy New Year.