Why is there a coin shortage?
Figure: Tamara Shopsin
Our government just rolled out a hot new neighborhood in which Maya Angelou poses with her arms raised dramatically in front of a bird’s huge wingspan. It is the first in a series each depicting women on their backs. (George Washington is still at the front.) The arrival of the long-planned quarter was greeted with glee tempered with amazement. Hey – aren’t we in a coin shortage?
The answer is complicated. For some time, the United States of America, among its other struggles, has indeed found itself in the silver clutches of a slowly progressing monetary crisis. It became clear in the spring of 2020 when our sudden lack of desire to get aired forced many of us to stop IRL money trading. The Federal Reserve found that as of April 2020, just a third of Americans had made a personal purchase in the past 30 days — and just over half of those people said they used cash. (In previous surveys, nearly everyone had recently made a personal purchase.) We had ceased to be cogs in the monetary system; We neglected our role as cash pollinators. It was another supply chain issue where you and I were the problematic link.
With this disruption to the constant depositing of coins into banks and coinstars and cash registers came a hiccup in currency issuance as well. That’s why, in the summer of 2020, you’ve seen stores put up signs to warn customers that cashiers can’t give change. A Dollar Tree in the Detroit suburbs offered to buy coins from customers; Kroger stores credited change to loyalty cards; and people in Belton, Texas, rushed into laundromats to use the change machines and then exited, violating the social contract of laundromat fairness and compounding the problem of finding housing. Meanwhile, the Federal Reserve began rationing coins to local banks, placing a temporary cap on the number of coins they could order.
Somewhat panicked by the US Mint and the Federal Reserve, an entity called the US Coin Task Force brought together governments, big retailers and commercial banks to make at least this one aspect of COVID less painful and less protracted. This group included friends and competitors with a vested interest in the fate of coins, such as Coinstar and the armored car people. (Brink’s makes a large portion of its revenue from ATMs and cash flow; a pillar of its cash-moving business is moving new currencies in and around the Federal Reserve System.) In the summer of 2020, this task force settled on a diagnosis: that we Americans are lazy simply refusing to exchange these coins frequently enough, leading to a “dramatic slowdown in coin circulation through the supply chain”. In other words, there was no shortage. America still had tens of billions of dollars worth of coins. It just so happened that, like the killer in the movies, they were in your house right now.
But the reasons our coins were piling up in our piggy banks and under our couch cushions turned out to be bigger than just our lack of personal purchases. While our bills have remained largely a transaction currency in the US (you give them $20 at the deli and you get a bacon and egg bun), our coins, which are only worth a few bucks, are primarily a settlement currency (the deli gives you the difference in change back). Many of us would only bother bringing this change back into our economy when it comes time to do the laundry or when we don’t make it to payday – off to Coinstar!
A hashtag emerged from the Coin Task Force, #GetCoinMoving, an echo of the classic 1989 Soul II soul track “Keep on Movin’. The task force created images and captions for social media, including “Calling all coin!” and “Spend your coins — they’re bored!” It urged Americans to empty their couches and car ashtrays as if it were military service.
It did not work. And in the meantime, the idea that the US was literally running out of quarters and dimes to keep our barely functioning society going had become a meme — obviously, self-reinforcing. (Twitter reactions to the Angelou district have included “During a coin shortage? Strange’ and ‘Are there no coin shortages? How the hell I am should get one 😒.”) Even after people started going back to the stores and trading more normally, we saw coin shortages everywhere. Some of New York’s retail darlings have stubbornly refused to open their checkouts despite a 2020 city law mandating that businesses accept cash. Last year the Van Leeuwen ice cream parlor was fined for repeatedly violating the checkout rules; As of November 2021, it still didn’t accept legal tender and hadn’t paid its fines, according to an Eater investigation. And while Roberta’s, owner of the Hipster Pizza crown, was known to be a cash-only business, its South Williamsburg location was fined $1,000 for not accepting cash at all.
“Pseudo scarcity is just as serious as actual scarcity, just as psychosomatic illness produces symptoms as real and painful as those caused by an actual illness,” said Rep. Dante Fascell at a 1964 House subcommittee hearing on the Lack of American coins was worth more as an investment than as actual currency. Congress moved pretty quickly as far as government was concerned. By the next year dimes and quarters were no longer made of silver. Case closed!
Now our coins are made from junk (apologies to the zinc industry!) and as currency they are worth less to us every year. Despite our indifference, the US Mint is ordered to keep up annual production – even if that means drowning us in shiny new coins that only add to our collection of coins we don’t use. But no matter how worthless they become, there is always someone who can make money from coins: count coins, pack them, transport them. And because of the constant deluge of free new coins, there is no actual (like financial) pressure on anyone involved in removing these old ones from our homes.
This coin issue was minted well before the pandemic. In December 2018, the US Mint privately gathered people in DC to brainstorm ideas on how to reduce the country’s reliance on the constant issuance of new coins. Ideas usually include eliminating or changing the composition of pennies or nickels. This is not a good deal for the hidden interests involved. The zinc industry, for example, invests heavily in the life of the penny (and pays Americans common cents for their lobbying power). And if you change a coin’s composition, you would be passing large one-time costs on to institutions that measure coins by weight, thickness, or metal.
Faced with the big issues of our time – global warming, a never-ending pandemic – we like to engage in individual choices: what to buy and how to throw it away, where to go or not to go. When it comes to our slow demise of coins, we also share the blame. But it will only be solved if someone finds a way to make money fixing it.
Meanwhile, scarcity takes all forms, including the lengths people still go to earn a few quarters. Last year, Aja Lans, a bioarchaeologist, moved to the Boston area from New York City. Her basement laundry room in New York had a card system, but her apartment in Boston was Quarter City. In the first month, she blew open a pineapple piggy bank. That dried quickly. Lans thought she would try her husband’s job, a large plumbing company. No – there were no more coins. Lans thought she was going to the bank; A neighbor told her not to bother. “She said, ‘I tried that. They don’t have either,’” Lans said.
In December, she drove home to upstate New York for Christmas. Her mother had amassed a small fortune in change in a classic clear family coin jar. Mom handed her a Ziploc bag full of coins in exchange for Venmo. That ends a household’s crisis – for now – and their Christmas celebration was mostly successful, although along the way the family lost some attendees to positive coronavirus tests, a suitably disruptive end to 2021. “So it was very small, and we had one little of a kind dinner,” Lans said. “But at least I got quarters of it.”