The nationwide coin shortage has affected the economy for nearly four months and continues to be a big problem for the United States. But, what exactly is a “coin shortage?” How did the economy run out of coins and why can’t people use cash anymore?
At the rise of the global coronavirus pandemic, non-essential businesses and companies were forced to close down their stores to help curb the spread of the virus. While essential stores remained open, they eliminated cash payments to prevent spreading COVID-19 through touching dollar bills and only accepted payments with cards.
With these companies being out of business for several months or not accepting cash, there was a halt on the consistent amount of money supplying the economy. As reported by USA TODAY, the coin shortage is a result of the brief closure of the economy. During the first phase of the pandemic, there was not a steady exchange of cash and coins like usual, causing the low supply of coins once businesses reopened in June.
As society has slowly opened back up since the beginning of pandemic, businesses are starting to accept cash again under one circumstance. You must have the exact change of your payment.
If you have recently walked into your favorite fast-food restaurant, you may have noticed the walls are covered with “Card Only” or “No Cash unless Exact Change” signs. In the case where you may not have an exact change for your payment, you could cash in your coins at your local grocery store with a Coinstar kiosk. This machine allows you to turn your coins into money, while taking a 11% tax rate to give to banks. This is the economy’s way of making up for the loss of coins over the past few months.
In the climate that society is in with the pandemic resulting in job furloughs and unemployment, no cash payments can be a huge inconvenience to citizens around the country. According to the Wall Street Journal, 30 million jobs were cut this spring due to the economic closure, and the number continues to grow as the pandemic goes on. On top of unemployed workers making ends meet with the money they have left from their jobs, another grievance to add is not being able to use cash at their local stores.
In the time of the nation scavenging for the money they have lost, it leaves room for question; what if a society without cash payments is the future of money? Instead of using paper money to make payments, what if the future consists of card only payments and technological advances like Apple Pay or Cash App?
It would certainly eliminate the chance of spreading germs with touching dollar bills and get rid of the hassle of carrying around coins in the bottom of your purse. If you have access to a bank account with a debit or credit card, a card-payment only society may seem ideal.
But, people who use cash only would be neglected and left behind in society. According to the National Alliance to End Homelessness, there were over 560,000 people living in America without homes in 2019. With the addition of job closures and furloughs as a result of the pandemic, the number of homeless has a great chance of increasing.
The homeless population is more likely to use cash rather than card payments from whatever money they had saved up or donations they received from others. But, what will this money be worth in a society where they cannot use their cash without exact change?
Whether a person is homeless, does not have access to a bank account, or chooses to only use cash, this method is detrimental to several groups of people and could put them at a disadvantage compared to others.
Those who are working with their own bank accounts are put at a pedestal in this situation. With the rise of mobile banking apps, it could be more convenient for bank account owners to use card-only payments. But if this situation became a true reality, it poses yet another problem for the homeless and sets them further behind working people.
The national coin shortage has affected billions of Americans this past summer and continues to have a lasting effect. However, with the exact change in pay method and usage of Coinstar to turn cash to coin, society can expect a change coming soon.