In the wake of COVID-19, we’ve had shortages of toilet paper, cleaning supplies, and meat. Now we can add coins to the list of what’s in short supply in the United States. There are no pennies available to obtain your thoughts, your brother can’t spare a dime, and the NFL may not be able to find a quarter to toss before games. At least we don’t have to worry about being nickeled and dimed to death if we survive the coronavirus. What’s going on to cause this coin shortage?
The short answer to the shortage question is that thing AREN’T going on.The typical flow of coins has been halted by the COVID-caused partial shutdown of the U.S. economy. With businesses shuttered, coins were not being used at car washes, laundromats, transit authorities, and vending machines. Circulation of coins depends on locations like these regularly deposit coins in the bank. Additionally, bank lobbies were also closed meaning individuals couldn’t bring in the contents of their piggy banks to exchange for bills.
Not only has circulation of coins been disrupted by the pandemic, but a slowdown of coin production also occurred. A 10% decrease in coins being rolled out was seen in April and a 20% decrease in May. Steps taken in the interest of worker safety in light of the pandemic caused the drop in coin production. “Only” a little over 3.2 billion (that’s billion with a “b”) coins were minted in the first three months of 2020.
And just who is producing coins in this country? Well, it’s a government operation. The U.S. Mint is the issuing authority for U.S. coinage. Mint plants located in Denver and Philadelphia manufacture all of the American coins used in commerce. The penny, nickel, dime, and quarter are the circulating coins currently used in everyday transactions. Although the U.S. Mint produces half dollar and dollar coins, those coins are produced merely as collectibles.
An estimated 48 billion coins are in circulation in the United States. With that mind-boggling number jangling in people’s pockets, saved up in piggy banks, and filling business tills, how can there possibly be a shortage? While adequate coins are out in society, the slowed pace of their circulation has resulted in an insufficient number of coins available where needed. If a large number of them are in coin jars in citizens’ homes, then those coins are not available to merchants who need to make change.
This lack of change is changing the way retailers conduct their business. Some retailers are asking customers to tender exact change so change does not have to be made. Others are offering to place shoppers’ change on loyalty cards or convert what’s due into charitable contributions. Another option is to only accept payment by debit or credit cards. Of course, requiring forms of payment other than cash exacerbates the coin shortage because it means less coins are moving around.
Going cashless does help on two counts. First, it eliminates the need for change to be made. Second, it also prevents employees from having to handle money which may have coronavirus lurking on its surface. Some are concerned that these developments are pushing the U.S. towards becoming a cashless society. That’s cashless in that money isn’t accepted; many are already cashless because they are unemployed and have no cash or even money in the bank as a result of the pandemic.
So what’s being done to address this nationwide coin shortage? The Federal Reserve is working with the U.S. Mint to produce more coins. Well, that’s a no-brainer. There aren’t enough coins so make more. DUH! I wonder how many bureaucrats it took to come up with that creative solution. The Mint returned to full-capacity production in mid-June and is even boosting production. At current levels, the Mint is on pace to produce 1.65 billion(that’s billion with a “b”) coins per month for the remainder of 2020. This amount is above the approximately 1 billion per month recorded in 2019.
Until more coins are rolled out literally and figuratively, coin rationing has been implemented effective June 15th.The Federal Reserve’s 12 regional banks are in charge of supplying coins to commercial banks. Monthly coin orders from commercial banks are not being completely filled since coin inventories are being rationed.
And what would a societal problem be without a task force created to look into it? The Federal Reserve announced on June 30th that it has started a U.S. Coin Task Force whose goal is (another DUH!) to accelerate the circulation of coins. Serving on this task force are bankers, retailers, and the mysterious “others.”
So, what can the average American do to help combat our country’s current coin calamity? Pay with exact change if you have it available.. If you are stashing coins at home for some rainy day, now is the time to take them into the bank; keeping them in the ceramic pig’s belly just exacerbates the problem. Finally, forget the adage, “A penny saved is a penny earned,” often attributed to Ben Franklin. The U.S. Mint produces more pennies than any other coin, and the production costs exceeds the face value of that coin. But the coin is utilized so frequently in commerce that it is worth paying the price to produce it. Don’t save those pennies. Spend them to get those coins circulating!
Do you have a stash of coins in your house in a piggy bank or jar? Have you experienced a retailer’s request for exact change or payment being limited to credit or debit cards? Knowing there’s a coin shortage, are you likely to pounce on a coin you spy lying on the ground? Are you surprised to learn that it costs more to make a penny than its face value?