MYTH: The Jones Act protects American jobs

The following is an excerpt from “Five myths about the Jones Act,” by institute research associated Josh Mason and Jonathan Helton.
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Jones Act supporters frequently say the law is responsible for about 650,000 U.S. jobs.¹ Again, they point to the private PricewaterhouseCoopers study, which estimates that about 95,470 U.S. jobs are “directly attributable to the Jones Act shipping industry.”²

The 650,000 estimate is the result of adding 552,750 “indirect or induced” jobs and rounding up, conflating all “indirect and induced jobs in other sectors of the economy” with jobs directly related to the Jones Act.³ Without access to the full study, it is impossible for anyone to review how any of these numbers were calculated. 

As for verifiable figures, we know that 300 U.S. shipyards closed between 1983 and 2013,⁴ with only four shipyards remaining as of July 2021 that build large oceangoing ships for the commercial market.⁵

Of those, only one is working on large vessels for the Jones Act market — two to be precise — and they are behind schedule.⁶

This belies the comments by the federal government’s new secretary of transportation, Pete Buttigieg, that, “The Jones Act ensures that we don’t lose our domestic ship building capability.”⁷

Ironically, three of those four shipyards are not even American owned. The Philly Shipyard in Philadelphia is owned by Aker Philadelphia Shipyard, a subsidiary of Norway’s Aker ASA. The VT Halter shipyard in Pascagoula, Mississippi, is owned by ST Engineering, the largest shareholder of which is the government of Singapore. And Keppel AmFELS, located in Brownsville, Texas, is a subsidiary of the Singapore-based Keppel Corp.⁸ Additionally, many of the Philly Shipyard ships are designed in South Korea, while VT Halter has worked with a shipyard in Croatia to provide its ship designs.⁹

The fourth shipyard, American-owned General Dynamics NASSCO, based in San Diego, reports on its website that for its commercial work, it “is partnered with Daewoo Ship Engineering Co. to provide its customers with state-of-the-art ship design and shipbuilding technologies.”¹⁰

As the output of these four shipyards has plunged, so has shipbuilding employment — by nearly in half, from 180,000 in 1980 to 94,000 in 2018.¹¹ The number of Jones Act ships has dropped from 193 in 2000 to 96 as of February 2021.¹² With a generous estimate of two 25-member crews for each vessel, that’s a loss of 4,800 seafaring jobs.¹³

Clearly, it’s a myth that the Jones Act protects or even helps create American jobs.

Just to be clear, dockworkers, stevedores, truckers and other “indirect and induced” maritime-related workers do not owe their jobs to the Jones Act. Maritime cargo transport would exist with or without the Jones Act, which serves only to limit competition. If more foreign shipping was allowed in, there would be more maritime-related workers needed.

Moreover, if Jones Act supporters really want to pad their numbers with “indirect” jobs, they should be consistent and account for employment that has disappeared because of the high cost of U.S. shipping, such as, sugar plantation jobs in Hawaii¹⁴ or pulp mill jobs in Alaska.¹⁵
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1. “The Jones Act,” American Maritime Partnership, 2020.
2. “Contribution of the Jones Act Shipping Industry to the US Economy: Executive Summary,” PricewaterhouseCoopers, prepared for the Transportation Institute, January 2019, p. 235.
3. Ibid, p. 236.
4. John Porcari, “Maritime Transportation: The Role of U.S. Ships and Mariners,” Hearing Before the Subcommittee on Coast Guard and Maritime Transportation of the House of Representatives Transportation and Infrastructure Committee, May 21, 2013, p. 1.
5.  Colin Grabow, “Rust Buckets: How the Jones Act Undermines U.S. Shipbuilding and National Security,” Cato Institute, Nov. 12, 2019.
6. Email correspondence with Cato Institute policy analyst Colin Grabow, July 4, 2021. See also Mike Schuler, “Pasha Hawaii Confirms For Two LNG-Powered Containerships at Keppel,” gCaptain, Aug. 24, 2017, and Casey Conley, “Pasha goes green with Ohana-class containership,” Nov. 20, 2020.
7.  Eric Watkins, “US continues to see Jones Act as key for trade and security,” Lloyd’s List, March 29, 2021.
8. “Keppel O&M secures two contracts worth approximately $200 million,” Keppel Corporation press release, Sept. 22, 2020.
9. Bryan Riley, “Are Jones Act ships really ‘made in the USA’? Well sort of,” The Hill, June 7, 2016.
10. “Ship Design,” General Dynamics NASSCO, 2021, accessed June 1, 2021.
11. Peter Navarro, “Buying American can help keep the Philly shipyard afloat,” The Philadelphia Inquirer, June 28, 2018.
12. “United States Flag Privately-Owned Merchant Fleet Report,” U.S. Department of Transportation, Maritime Administration, Feb. 17, 2021.
13. Number derived by subtracting 97 ships from 193 to get 96, multiplying it by two crews of 25 members each for 4,800. Crew jobs per vessel are “a generous average” estimated by Rob Quartel, “Three Myths About the Jones Act,” from the book “The Case Against the Jones Act,” Cato Institute, 2020, p. 20. See also: Colin Grabow, Inu Manak, and Daniel Ikenson, “The Jones Act: A Burden America Can No Longer Bear,” Cato Institute Policy Analysis No. 845, June 28, 2018. These authors estimate the crew per ship at between 13 and 22.
14. Michael Hansen, “Will the Jones Act cause Hawaii’s last sugar plantation to close?” Hawaii Free Press, Nov. 16. 2015.
15. William Murray, “End Protectionism in the Shipping Industry,” RealClear Policy, July 22, 2017.