The COVID-19 pandemic has created a nationwide coin shortage. Shoppers are relying on debit and credit cards to avoid touching cash, which can carry germs, but that’s left parts of the nation short on spare change.
Here’s what the Federal Reserve recently said on that topic:
Business and bank closures associated with the COVID-19 pandemic have significantly disrupted the supply chain and normal circulation patterns for U.S. coins. While there is an adequate overall amount of coins in the economy, the slowed pace of circulation has reduced available inventories in some areas of the country.
But regardless of the cause, the current coin shortage has revived the debate on whether or not we actually need the humble one-cent coin or penny anymore.
Former Arizona Congressman Jim Kolbe (R-AZ5 and AZ8) spent several decades trying to kill the penny – by introducing legislation every year, but always got blocked.
Today – amid a coin shortage – experts are now debating the fate of the penny again.
The purchasing power of the penny has fallen because of inflation, while production costs have climbed.
In fact, the government loses money every year on minting pennies. It costs the government about two cents to make a penny. Indeed, the United States Mint manufactured more than seven billion pennies in the 2019 fiscal year, at a loss of nearly $70 million, the New York Times reported.
While it could be a cost-effective move for the government to say goodbye to the penny, there are many, however, who believe the penny should remain part of our coinage. It was one of the first coins minted by our country, after all.
Notably, older pennies are made primarily of copper – which, it turns out, is antimicrobial. New pennies are made primarily from zinc, not copper.
The U.S. wouldn’t be alone if it makes this decision. Other countries like Canada, Britain, and Australia have stopped making their smallest denomination coins. There is historical precedence; in 1857, Congress discontinued the half cent, and indeed, many denominations (such as two-cent and three-cent coins) have been introduced and discontinued as economic need dictated over the Mint’s 228-year history.