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Jones Act lobby sails with dubious job estimates to bolster defense
By Grassroot Institute @ 2:01 AM :: 1768 Views :: Jones Act

The numbers keep increasing, even as the “Jones Act industry” declines

Jones Act lobby sails with dubious job estimates to bolster defense

by Joe Kent and Jonathan Helton, Grassroot Institute of Hawaii, February 17, 2022

The Jones Act lobby constantly claims that the “Jones Act industry” supports 650,000 American jobs, with the implication that repeal of the law or any reform to it would see those jobs vanish.

It’s a figure we see repeated all over the place.

>> “America’s domestic maritime industry is responsible for nearly 650,000 jobs and more than $150 billion in annual economic output.” ~ American Maritime Partnership website.[1]

>> “The Jones Act, which turns 100 years old today, supports 650,000, maritime industry jobs and helps provide the ships and civilian mariners need for military sealift. The Jones Act protects America, and American jobs, which is why we need to protect the Jones Act.” ~ Tweet from the U.S. Maritime Administration.[2]

>> “The 40,000 Jones Act vessels operating in the domestic trades support nearly 650,000 American jobs and almost $154 billion in annual economic impact and $41 billion in jobs.” ~ Offshore Marine Service Association website.[3]

>> “The Jones Act contributes substantially to U.S. economic activity, creating 650,000 jobs.” ~ Mike Stevens, CEO of the Navy League of the United States.[4]

Just saying it over and over again, however, doesn’t mean it’s true. In fact, the 650,000 estimate is really nothing more than doublespeak.

Consider the source: Ultimately, the 650,000 jobs number comes from a January 2019 study conducted by PricewaterhouseCoopers for the Transportation Institute, a pro-Jones Act advocacy group backed by the maritime industry.[5] It was titled “Contribution of the Jones Act Shipping Industry to the US Economy.”[6]

Notably, a full copy of that study has never been made publicly available. However, a copy of its executive summary was eventually leaked, and in it lies the allegation that the “Jones Act shipping industry” supports 95,000 direct jobs and 553,000 “indirect or induced” jobs.[7]

To be clear, it is not saying the Jones Act is responsible for those jobs, but rather the “Jones Act shipping industry.” It’s a misunderstanding to conflate the industry with the law, since the law may support some industry jobs while destroying others. In fact, a 2019 study from the Organization for Economic Cooperation and Development found that the U.S. shipbuilding industry would expand output by 71% in the absence of the Jones Act’s build requirement.[8]

The maritime industry – its ships, mariners, longshoremen and other employees – exists independently of the Jones Act.

In other words, those alleged 650,000 jobs would exist even if the Jones Act were repealed or reformed.

In the case of Hawaii, the American Maritime Partnership, the nation’s premiere Jones Act lobby group,[9] released a study in 2020 stating: “Around 13,000 residents of Hawaii are employed in [the] U.S. Jones Act domestic maritime industry.”[10]

Similarly, a proposed resolution in support of the act in the 2022 Virginia General Assembly claims, “Virginia is home to over 19,280 maritime jobs supported by the Jones Act …”[11]

In both cases, the source of the estimates was the secretive 2019 PricewaterhouseCoopers study.[12]

Neither claim accounts for whether the jobs are direct, indirect or induced, but the point remains that whatever the breakdown, in both cases the jobs would exist with or without the Jones Act.

And it’s not clear that these job estimates are even accurate. The Hawaii Department of Transportation, for example, estimated there were only 2,486 positions in the state’s maritime cargo sector in 2016.[13] That is a sector involving international and domestic cargo, making the claim that Hawaii’s domestic sector alone supports 13,000 jobs more incredulous.

Similarly, in 2011, the U.S. Maritime Administration pegged the national jobs in the “water transportation” sector at 61,300 and those in “shipbuilding and repair” at 95,800.[14] Combined, these 157,100 jobs are a far cry from the 650,000 jobs that Jones Act supporters claim.

Inexplicably, the law’s supporters have even claimed the jobs attributable to the law rose substantially in recent years. In 2017, Larry Willis, president of the Transportation Trades Department of the AFL-CIO, claimed that the Jones Act “supports 500,000 jobs.”[15] This number was echoed by other outlets.[16]

How did the jobs created by the Jones Act jump from 500,000 to 650,000 in just two years? The large oceangoing fleet grew by only two ships, from 97 to 99, between 2017 and 2019.[17] Those two ships did not create those jobs, so which part of the industry did? The inland barge and tugboat industry? Since the Transportation Institute has refused to release the study, no one knows the reasoning.

No matter how many jobs the domestic maritime industry actually supports in Hawaii, Virginia or anywhere else throughout the United States, even more jobs could be created if the Jones Act were repealed or modified.

A 2020 study by John Dunham & Associates of New York, commissioned by the Grassroot Institute of Hawaii, found that eliminating the Jones Act could result in adding 5,600 direct jobs in Hawaii. Repeal could generate an additional 6,800 indirect and induced jobs, for a total of more than 12,000 jobs.[18]

Eliminating the U.S. ship-build requirement of the law alone, said the Dunham study, could result in 3,800 more jobs — primarily because such a reform would make it easier for U.S. companies to buy less expensive foreign-built ships for use in the domestic trade.[19] More U.S. ships would produce more shipping jobs for mariners, stevedores, truckers and anyone else involved in the maritime-related transporting of goods, from sellers to buyers.[20]

More shipping competition also would lower prices for U.S. consumers, who in turn would have more money to buy more goods, which again would benefit the shipping industry and create more jobs.

Referring to the PricewaterhouseCooper study, the Transportation Institute stated that the American domestic maritime industry contributes $3.3 billion a year to the Hawaii economy.[21] But again, without access to the full study, it’s impossible to know how that figure is calculated.

Assuming the $3.3 billion is correct, that benefit would presumably still exist if the Jones Act were relaxed, since the domestic maritime industry would still exist.

In fact, the benefits could be even greater if the Jones Act were repealed or reformed.

The John Dunham & Associates study found that Hawaii alone could see an annual $1.2 billion benefit if the Jones Act were repealed, or a $531 million annual benefit if just the law’s U.S.-build requirement for Jones Act-qualified ships were reformed. That would be in addition to the presumed $3.3 billion benefit that “the Jones Act industry” already provides.

The upshot is that repeal or reform of the Jones Act could actually increase the value of America’s — and Hawaii’s — maritime industry, both in terms of jobs and income.

And that is no exaggeration.   

---30---

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