Jonathon Allen, CFP®
Stop making cents?
You may not have noticed, but there is a coin shortage in the United States. National Public Radio explained:
“Supermarkets and gas stations across the U.S. are asking shoppers to pay with a card or produce exact change when possible. [A big box store] has converted some of its self-checkout registers to accept only plastic. [A grocery chain] is offering to load change that would normally involve coins onto loyalty cards.”
Social distancing, and other safety measures taken to slow the spread of COVID-19, also slowed the U.S. Mint’s coin production. In June, the Federal Reserve began rationing coins, and convened a task force to investigate the issue.
With coins in the public eye, it may be time to resurrect the ‘Kill the penny’ movement, suggested Greg Rosalsky of Planet Money.
In 2019, 60 percent of the coins produced by the U.S. Mint were pennies. The majority of the Mint’s coin-producing time was spent making about seven billion pennies. The problem is pennies cost more to produce than they are worth as currency.
According to the U.S. Mint’s 2019 Annual Report, “The unit cost for both pennies (1.99 cents) and nickels (7.62 cents) remained above face value for the fourteenth consecutive fiscal year.” In other words, the Mint lost more than $72 million making pennies last year.
How often do you use pennies and nickels?