COVID-19 has caused many disruptions in people's daily lives, and one of the unexpected obstacles facing businesses around the state and country - as if there weren't enough - is a shortage of coins.
University of South Carolina economics professor William Hauk explained: "The U.S. Mint was shut down a little bit due to social distancing requirements, and there weren't as many coins produced and put into circulation. That's largely over," he said, noting that the Mint is now back operating at full capacity. "What we are still having problems with, though, is...a lot of people just aren't going out and shopping as much, especially at what we might call small purchase stores like coffee shops and convenience stores. And when people are going shopping, what they're doing is paying more with debit and credit cards."
According to Hauk, there are actually plenty of coins around. "It's not like we've lost all the coins that are out there in circulation. The problem is that, due to the COVID situation, people aren't spending those coins. A lot of them are probably sitting in a jar at home or...in our couch cushions or something like that, and aren't being spent. And this is severe enough that it is starting to cause some problems for banks and certain stores."
The main problem for stores is that they often don't have enough coins to give change for cash purchases, said Dr. Ozgur Ince, professor of finance at USC. But some stores are using creative ideas to make up for it. "We are seeing stores put the change in store cards, or offer to donate the change, or give discounts on certain items if people bring in a certain amount of coins. For example, if you bring five dollars' worth of coins, you'll get a small discount. So they are figuring out ways to incentivize people to either donate or not to want the change back, or to bring coins into the business."
Stores also can exacerbate the problem at times, he said, if they choose to hoard coins that come their way, and not put them back into circulation.
Of course, there are some businesses that are unaffected by the shortage, Hauk said. "Online businesses that do transactions pretty much entirely electronically. Your Amazons are not affected that much because...people are paying with debit and credit cards."
There have been other coin shortages in American history, Ince said, the latest one being the 1974 penny shortage that resulted from high copper prices. But they have usually been short in duration, which is why Hauk believes the latest problem will resolve itself when the economy recovers from the COVID crisis and people start spending more. But for now, he said,"I think what we can do is, if you have exact change, go ahead and pay with that at stores. If you have a big jar of coins at home, you can either take them to your bank and exchange them or use a Coin Star machine or something like that. That will help."
Hauk added that the coin shortage may be a step in the country eventually developing a cashless economy. But he said not to look for that to happen for a long, long time.