The Jones Act: A disastrous legacy for the U.S. economy and security
The Jones Act (officially known as the Merchant Marine Act of 1920) was passed in the wake of WWI. In the new, post-war world, the U.S. felt compelled to strengthen its maritime capabilities and bolster national security. So Congress passed the Jones Act, which requires all ships transporting goods between U.S. ports to be U.S.-built, U.S.-owned, and crewed by U.S. citizens.
However, over a century later, the law has proven to be a monumental failure on all fronts. Despite its lofty goals, the Jones Act has significantly increased the cost of domestic shipping, stifled competition, created glaring inefficiencies, and ultimately weakened the very industries it was designed to protect.
The economic strain
One of the most glaring failures of the Jones Act is the profound negative impact on the economy, particularly for regions dependent on maritime shipping, such as Puerto Rico, Alaska, and Hawaii. The law’s stringent requirements have driven up shipping costs, which then translates to higher prices for both consumer goods and capital goods like equipment and raw material.
Shipping is a critical component of the U.S. economy, and under the Jones Act, transporting goods by sea has become an unnecessarily expensive undertaking. The cost of building ships in U.S. shipyards, which are far less efficient and more costly than foreign shipyards, has skyrocketed. This alone drives up costs for businesses and consumers alike. Moreover, U.S.-flagged vessels are typically less fuel-efficient than their foreign counterparts, making them even more costly to operate. As a result, the price of shipping goods between U.S. ports is much higher than it would be if the law allowed for foreign vessels to compete.
Perhaps most egregiously, the law has crippled competition by effectively creating a monopoly for a small number of U.S.-owned, U.S.-flagged vessels. There is a severe shortage of ships that meet Jones Act requirements, which results in limited shipping capacity and an inability to modernize the fleet. This lack of competitive pressure means that many U.S. vessels are old, inefficient, and incapable of keeping up with the demands of modern shipping.
The devastating impact on U.S. territories and non-contiguous states
While the Jones Act’s harm is felt throughout the U.S., its most destructive consequences are felt in U.S. territories and non-contiguous states, particularly Puerto Rico. Puerto Rico has long been a vocal critic of the Jones Act, which has led to exorbitant shipping costs for the island’s residents. Because Puerto Rico is geographically isolated from the mainland, it relies heavily on maritime transport for the delivery of goods. Under the Jones Act, Puerto Rico is forced to use U.S.-flagged ships, which are more expensive to operate and maintain than foreign vessels. This has driven up the cost of living for Puerto Ricans, who pay significantly higher prices for everyday goods like food, medicine, and construction materials.
The Jones Act also leaves territories and non-contiguous states unable to effectively address crises. For example, following Hurricane Maria in 2017, Puerto Rico faced an even more critical situation, with vital supplies and humanitarian aid being delayed or blocked due to the Jones Act’s restrictions. Despite a temporary waiver of the law to allow foreign ships to deliver aid, the damage was already done: The island’s economy was severely impacted by years of inflated prices and inadequate shipping infrastructure. Even now, Puerto Rico continues to bear the brunt of the Jones Act’s economic devastation.
U.S. states, such as Hawaii and Alaska, also suffer from the same issues. For Alaska, shipping costs are already high due to its remote location, and the Jones Act has only exacerbated the problem. In Hawaii, the lack of affordable shipping options means that residents pay more for basic goods and services. And the faulty shipping infrastructure imposed by the Jones Act would put Hawaii in dire straits in the event of an emergency or crisis.
A national security failure
The Jones Act was originally passed with the idea that a strong U.S. merchant fleet would be essential for national security, ensuring that the U.S. could rely on its own ships to transport military personnel and supplies in times of war. However, today’s reality is far from the law’s vision. Rather than strengthening the U.S. military’s logistical capabilities, the Jones Act has weakened the merchant fleet and left the U.S. vulnerable in times of crisis.
The U.S. merchant marine fleet has dramatically declined over the years. In practice, the law has left the U.S. reliant on an aging, underfunded fleet that is woefully inadequate for modern military logistics.
The law’s impact on shipbuilding is also a key issue for national security. The U.S. shipbuilding industry, which was once a global leader, has been decimated by the Jones Act. While foreign shipbuilders have modernized and built more efficient, larger, and faster vessels, U.S. shipyards are left struggling to keep up with the pace of innovation. With no competitive pressure, innovations are slow in the making. This leaves the U.S. at a severe disadvantage in both commercial and military maritime affairs.
The Jones Act and employment
While one of the original goals of the Jones Act was to create jobs for U.S. workers in the maritime industry, the law has led to a distorted labor market that benefits a tiny number of favored businesses at the expense of the broader workforce. The Act guarantees that U.S.-flagged ships are crewed by U.S. workers. However, these jobs come at a high cost, with U.S. maritime workers receiving artificially inflated wages relative to their foreign counterparts. While this may seem like a positive outcome at first glance, the higher cost of employing U.S. workers makes U.S. shipping services less competitive in the global market, further driving up costs for American consumers and driving down employment in the industry.
Indeed, the number of jobs in the U.S. maritime industry has been in steady decline for years, as the number of U.S.-owned and operated ships dwindles. Instead of bolstering the American workforce, the Jones Act has contributed to stagnation in the maritime sector and left many workers facing fewer opportunities.
Need for repeal
It is clear that the Jones Act has been an unmitigated disaster for the United States. From economic harm, particularly for U.S. territories, to national security vulnerabilities, the law has failed to deliver on its promises. Instead of protecting U.S. industries and promoting jobs, it has inflated costs, limited competition, and weakened the very sectors it was intended to support. The time has come to acknowledge that the Jones Act is no longer serving the best interests of the United States. Repealing the law or defeating it in court not only would lower costs for consumers and businesses, but it also would allow the U.S. to modernize its maritime industry, improve national security, and ensure a more competitive and sustainable future for American shipping.
But the law has remained largely unchanged despite repeated calls for reform, surviving through a combination of political inertia and lobbying efforts from the small but powerful groups that benefit from its restrictions. Yet, as economic pressures mount and the inefficiencies of the Jones Act become more apparent, the solution is clear: The Jones Act must go.
