Customer, can you spare a dime? Pandemic leads to national coin shortage
At fast-food restaurants, supermarkets, banks and other businesses across the country where cash normally changes hands, customers are being warned that coins are in short supply.
Scott Talan found that out last weekend when he used a Starbucks drive-thru in Virginia and was met by a handwritten sign that read, "Due to the national coin shortage, we can only accept exact change or electronic payment at this time."
He thought it was a prank.
"I was going to email the store manager or Starbucks headquarters because it didn't look official," Talan, an assistant professor at the American University in Washington, D.C., said. "It's all very strange and fitting of the times we're in."
Starbucks did not immediately respond to a request for comment Wednesday.
This week I saw a sign at a Starbucks an hour outside of dc and no idea about any coin shortage. pic.twitter.com/aPmLswRgNf
— Scott Talan (@talan) July 14, 2020
The apparent absence of enough coins in the nation's marketplace has alarmed the federal government enough that last month the Federal Reserve established a U.S. Coin Task Force to "mitigate the effects of low coin inventories caused by the COVID-19 pandemic."
The 22 members of the task force were announced Friday, representing government agencies, banks and businesses, and they will meet this month with the goal of sharing recommendations in early August to identify "actionable steps that supply chain participants can take to address the current coin circulation issue."
Daniel Soques, an assistant professor of economics at the University of North Carolina, Wilmington, called the situation a "perfect storm" of circumstances born out of the pandemic, during which businesses that deal heavily in coins, such as laundromats, may have closed, while the fear of getting the coronavirus by touching cash may have spurred people to avoid physical monetary transactions altogether. Coinstar, which operates about 22,000 coin-cashing kiosks nationwide, said volume slowed amid state and city lockdowns. New coin production was also hampered at the U.S. Mint's production facilities in March and April.
And, when the economy started tanking with record losses in the spring, it was enough for some people to "start hoarding coins and hoarding money in general," Soques added.
Last month, Federal Reserve banks began allocating money from existing coin inventories to banks as a "temporary measure." As of April, there was nearly $48 billion of coinage in circulation, the U.S. Treasury estimated.
The Federal Reserve said in a statement that it "is confident that the coin inventory issues will resolve once the economy opens more broadly and the coin supply chain returns to normal circulation patterns," although it "recognizes that these measures alone will not be enough to resolve near‐term issues."
Federal Reserve Chair Jerome Powell acknowledged at a House Financial Services Committee hearing last month that banks are also suffering through the lack of a "flow of coins."
"We're working with the mint to increase supply, and we're working with the reserve banks to get that supply where it needs to be," Powell said. "So we think it's a temporary situation."
I just saw this at the Wendy's drive-thru. What's this coin shortage all about? pic.twitter.com/oMCkwLNXQJ
— Jake Morphonios 🌎 www.blackstoneintel.com (@morphonios) July 13, 2020
While the Federal Reserve has stopped short of labeling this a "coin shortage," that's exactly what it is, Soques said.
A dearth in circulating coinage is not unheard of. In 1999, a "penny drought," presumably caused by people disinterested in using them or stockpiling them in jars, forced some businesses to ask customers for help or ration the coins.
Today, some businesses are notifying customers that they have no change to give, while others are telling them that they're rounding prices to exact amounts since bills aren't in short supply. In other cases, businesses are only doing electronic transactions.
But that, too, can be a cause for concern, Soques said.
"While it's not necessarily a bad thing to move away from physical cash and coins, it will disproportionately hurt the people on the lower end of the financial spectrum," he said. "They're the ones who typically don't have a bank account, so if you move to all-digital, they're at a disadvantage."