Most retail stores have signs posted at the checkout alerting people to a “national coin shortage” and imploring them to use exact change or card payments when making purchases. So what’s the deal with the coin shortage in the US? Is there REALLY a shortage or is this yet another government pandemic conspiracy (kidding!)? If it’s true – what’s causing the great coin shortage of 2020?
So, here’s the deal: it’s not that there are fewer coins in existence, but that there are fewer coins in circulation. While the US mint did scale back the number of employees working early on in the pandemic to allow for social distancing, they ramped back up to full production by mid-June. As the Federal Reserve puts it, we are not seeing the normal “circulation pattern” of coins in the US. Why, you ask? Well, there are a few reasons.
Business Closure
Many banks & businesses were forced to close due to the pandemic. In some cases coins are simply sitting in their vault.
Shift in Habits
With the rise of curbside pickup and food delivery, restaurants have shifted heavily to online ordering, which means taking card payments online. Some small businesses stopped accepting cash to minimize physical interaction between employees and customers.
The Germ Factor
“Money is dirty.” I cannot even guess how many times I’ve reminded my roommates that money carries germs, hands must be washed after touching it, and – seriously – just leave it alone if you do not need to touch it. And by roommates I mean my children. Children who love to play with coins. But, parents are not the only people who worry about coins being dirty. With Coronavirus able to live on surfaces long after they are touched, many people are wary of touching coins nowadays.
Scarcity Mindset?
Are people taking the idea of “penny pinching” literally? Scarcity has been a theme of this pandemic. From toilet paper to hand sanitizer to disinfectant wipes – the scarcity mentality has led to some major hoarding across the country. With the fear of not being able to acquire something – your grocery store not even giving you change as an option – are some people “hoarding” coins now? It’s possible. The scarcity mindset may not be the original cause of the coin shortage, but it might be extending it.
How Businesses are Responding
Many retail businesses are asking for exact change if possible, or card payments, at checkout. The grocery store chain Kroger is not offering change at all, and instead loading the amount you should receive in change onto a customer loyalty card for use on a future purchase. One Chick-fil-A is inviting people to bring rolled coins in exchange for cash and a free sandwich. Casinos are encouraging gamblers to use coins in exchange for free slot play, according to the Washington Post.
Coin laundromats have been hit especially hard. One laundromat owner reportedly drives to 6 banks daily to get quarters, and another drove 4 hours across state lines to stock up on quarters. If they can’t make change for customers, their business suffers.
The Bottom Line
Over the summer, a US Coin Task Force was formed to address the coin “shortage”. They stated there’s actually more than $40 billion in coins already in circulation in the US, but much of it is sitting in homes, cars, and businesses that are closed. No matter how many coins the US Mint produces this year (and it’s on track to produce a record number), the coin shortage could continue unless Americans get their coins into circulation.
Businesses can help by encouraging customers to bring in their coins, either for payment or to trade in for cash. You could run a coin trade-in campaign that offers a discount or freebie to customers who trade in $10 (or $20, or $50) in coins for cash. Be creative about how to be part of the solution. You may even increase your sales while you help get coins back into circulation.
