This WWII-Era Law Is Why Hawaii is So Expensive

The Jones Act Explained

You can fly round-trip to Honolulu for $400. Then you walk into a grocery store and spend $500 in a week.

A gallon of milk runs $8. A dozen eggs can hit $9.

Locals have a name for it: the cost of paradise. But paradise has nothing to do with it.

The real reason traces back to a 105-year-old federal law that most Americans have never heard of, and what it does to shipping costs explains why everything in Hawaii feels like a ripoff.

The Law That Controls Every Shipment

The Jones Act, officially the Merchant Marine Act of 1920, says all cargo moving between U. S. ports must travel on ships that are American-built, American-owned, and American-crewed. Foreign vessels cannot carry goods from Los Angeles to Honolulu.

They can sail from Shanghai to Honolulu with no problem. But Long Beach to Honolulu?

Illegal unless the ship was built in an American shipyard with an American crew earning American wages.

American Ships Cost a Fortune

Building a cargo ship in the United States costs four to five times more than building the same ship in South Korea or Japan. A container ship that runs $50 million overseas can cost $250 million here.

Fewer than 100 Jones Act-compliant ships exist today. With limited supply and captive demand, shipping companies charge whatever the market will bear.

Hawaii has no choice but to pay.

Hawaii Imports Almost Everything

The state sits 2,400 miles from California, the nearest mainland port. About 90 percent of Hawaii’s food arrives by ship.

So does nearly all its fuel, building materials, cars, furniture, and medicine. There is no rail line, no highway, no alternative.

Every container that lands in Honolulu traveled on an expensive American ship, and every dollar of that cost shows up at the register.

Families Pay an Extra $1,800 a Year

Economists at the Grassroot Institute of Hawaii estimate the Jones Act adds roughly $1,800 per year to the average household’s expenses. Other studies put the number closer to $3,000.

Either way, it functions like an invisible tax that hits lowest-income families hardest. When milk costs $8 and bread costs $7, people making minimum wage feel it first.

Gas Prices Never Come Down

Hawaii consistently ranks among the most expensive states for gasoline, often $1. 50 or more above the national average.

Part of that is state taxes. But fuel tankers must also follow Jones Act rules, which means gas cannot arrive on cheaper foreign ships.

When oil prices drop on the mainland, Hawaii sees smaller savings because shipping costs stay locked in place.

Puerto Rico Loses $1.5 Billion Annually

Hawaii is not alone. Puerto Rico, Alaska, and Guam all fall under the Jones Act.

A New York Federal Reserve study found the law costs Puerto Rico about $1. 5 billion per year in higher prices and lost economic activity.

After Hurricane Maria in 2017, the government briefly waived the Jones Act to speed relief supplies. Prices dropped immediately.

Then the waiver expired.

The National Security Argument Collapsed

Congress passed the Jones Act to protect American shipbuilding and ensure a merchant fleet ready for wartime. In 1950, the U.S. had about 2,500 merchant ships.

Today, fewer than 100 remain. The shipbuilding industry the law was supposed to protect has mostly vanished anyway.

Military officials have testified that the aging Jones Act fleet offers little strategic value, yet the law remains unchanged.

Foreign Ships Could Cut Costs in Half

Studies show that allowing foreign-flagged vessels to carry cargo between U. S. ports would slash shipping costs dramatically. One estimate found Hawaii shipping rates could drop 50 percent or more.

Goods that now take a week to arrive could come faster on more frequent routes.

But opening those routes would hurt the small number of American shipping companies that profit from the current system.

Reform Efforts Keep Dying in Congress

Hawaiian politicians have pushed for Jones Act exemptions since the 1990s. Every attempt fails.

The American Maritime Partnership, which represents domestic shipbuilders and operators, spends millions lobbying to keep the law intact. Labor unions back them because Jones Act ships require American crews.

The coalition is small but focused, and it has beaten back reform for decades.

The Pandemic Hit Hawaii Harder

When COVID-19 scrambled global supply chains in 2020 and 2021, Hawaii had no backup options. Mainland states could reroute shipments by truck or rail.

Hawaii could only wait for the same limited fleet of American ships. Store shelves went empty faster and stayed empty longer.

Residents who already paid premium prices watched costs climb even higher.

Why Nothing Is Likely to Change

The Jones Act survives because its beneficiaries are concentrated and its victims are scattered. A few shipping companies and shipyards gain billions.

Millions of consumers in Hawaii, Alaska, and Puerto Rico each lose a few thousand dollars a year. Lawmakers from mainland states have little reason to pick a fight with powerful maritime unions.

So the 1920 law stays on the books, and the grocery bills in Honolulu keep climbing.

This article was created with AI assistance and human editing.

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